FORTUNE: Obama’s budget aims to eliminate for-profit colleges’ GI Bill loophole
Career College Central Summary:
President Barack Obama’s free community college plan stole the education spotlight, but his $4 trillion budget for next year contained another proposal that could alter higher education for many Americans.
The President proposed closing a loophole that allows for-profit colleges’ to cash in on veterans’ GI Bill benefits.
As it stands now, for-profit colleges must abide by the so-called 90-10 rule, which keeps them from getting more than 90% of their operating revenue from federal student aid money. But that rule doesn’t consider GI Bill benefits government funding. Meanwhile, veteran enrollment at for-profit colleges has soared. Thirty-one percent of veterans attended for-profit schools in 2013, up from 23% in 2009, giving such institutions access to $1.7 billion in post-9/11 GI Bill benefits in the 2012-2013 academic year, up from $640 million in 2009-2010. Obama’s budget proposal aims to curb that trend by counting veterans’ education benefits toward for-profit schools’ federal money cap.
If the GI Bill loophole were closed, dozens of for-profit institutions would be in violation of the 90-10 rule, according to a Department of Education analysis, which found that 133 for-profit schools receive more than 90% of their revenue from a combination of Pell Grants, Stafford Loans, and GI Bill funds.
Senate Democrats have tried to rein in for-profits colleges’ access to GI Bill benefits in the past, but such efforts have gone nowhere (and with Congress controlled by Republicans, Obama’s budget could meet a similar fate.)
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