Reed, Durbin, Blumenthal, Warren: Congress Should End Loophole that Encourages For-Profit Colleges to Target

Press Release

U.S. Senators Jack Reed (D-RI), Dick Durbin (D-IL), Richard Blumenthal (D-CT), and Elizabeth Warren (D-MA) today introduced legislation in the Senate that would help put an end to the for-profit industry's predatory marketing campaigns and aggressive recruiting of veterans, servicemembers and their families. The Protecting Our Students and Taxpayers (POST) Act would prohibit for-profit colleges and universities from receiving more than 85% of their revenue from the federal government and change the calculation of federal revenue to include all federal funds.

In 2014, an estimated $2 billion in Department of Veterans Affairs (VA) GI Bill funding and $248 million in Department of Defense Tuition Assistance and MyCAA funding went unaccounted for in the federal revenue calculation for for-profit colleges and universities.

"Reinstating the 85/15 rule will help hold for-profit colleges accountable and prevent them from preying on veterans and servicemembers," said Reed. "Too much federal funding has poured into these for profit-college companies without adequate results for veterans or taxpayers. We need to ensure veterans and taxpayers alike are getting better value for their investment and we can start by closing the 90/10 loophole."

"By law, for-profit college companies are allowed to receive no more than 90% of their revenue from federal financial aid programs. This high threshold allows far too much federal money to funnel to an industry that often provides a greater return on taxpayer investment to its administrators and investors than it does to its students. But there's a catch," said Durbin. "Money from the new Post 9/11 GI Bill and from Department of Defense tuition assistance programs isn't counted which leaves hundreds of millions of taxpayers' dollars virtually unregulated. Consequently, these schools aggressively target veterans and servicemembers who too often don't receive the quality of education they deserve. We can't let this invitation to exploit our veterans continue."

"With mounting evidence of pernicious practices that prey upon servicemembers and veterans, it is past time to close the glaring 90-10 loophole and stop for-profit schools from conducting shameful recruiting campaigns that target the men and women who have dedicated their lives to serving our country," said Blumenthal. "This unacceptable loophole has allowed for-profit schools to rake in over two billion dollars in VA education benefits last year, including Post-9/11 GI Bill benefits. The POST Act would cut off bad actors in the for-profit industry and protect taxpayers, servicemembers, and veterans."

"Too many servicemembers and veterans have been targeted by predatory for-profit colleges, and our men and women in uniform deserve better," said Warren. "The POST Act will tighten the rules and help protect veterans by closing the loophole that permits for-profit schools to prey on our servicemembers."