Senators Mull Changes in 90/10 Rule to Rein In For-profits

Eight months after Sen. Tom Harkin, Democrat of Iowa, began his much-publicized crackdown on for-profit colleges, key senators appear to be coalescing around a plan to limit the amount of federal money flowing to the sector.

Their solution, for-profits and their critics say, would be to count military aid in the federal share of the 90/10 rule, which requires for-profit colleges to receive 10 percent of their revenue from nonfederal sources to be eligible to receive federal student aid. Many of the colleges would fail that test if they had to count military aid as federal money.

Lawmakers have been building a case for changing the formula for months, sending letters and issuing reports that raise concerns about the growing share of military money going to the for-profit sector, and the questionable recruiting tactics of some of its institutions.

On Wednesday, Sen. Thomas R. Carper, Democrat of Delaware, held a hearing on a report by the Government Accountability Office that found gaps in the Defense Department’s oversight of its tuition-assistance program for active-duty veterans. While the report did not single out any institutions for criticism, it described a few examples of "improper or questionable marketing practices" by for-profit colleges.

In an interview after the hearing, Mr. Carper said he had been "surprised" to learn that military tuition assistance isn’t counted as federal aid in the 90/10 calculation. Asked if he supported including it, he said it was "something we should consider."

"I’m a big advocate of skin in the game," he said. "There has to be skin in the game for markets to work."

Senator Harkin, who has held three hearings on for-profits, has also expressed interest in expanding the categories of funds counted as federal money in the 90/10 rule. But the idea is certain to run into opposition in the Republican-led House of Representatives, where many lawmakers favor softening the formula. One possible compromise would be to include military and veterans benefits in the federal share, but allow a larger share of colleges’ revenue to come from the federal government.

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