First on CNN: New Biden administration rule closes loophole for for-profit colleges to target veterans

For years, closing the gap, known as the “90/10 rule,” has been a top priority for veterans and military organizations. They have argued that some for-profit colleges use aggressive practices and deceptive marketing to specifically recruit veterans and service members.
Congress included a provision to close the loophole in the America’s Rescue Plan, a pandemic aid package that President Joe Biden signed into law in 2021. This provision delayed the implementation of the change for two years. In the meantime, the Department of Education has consulted with experts in a formal rulemaking process to finalize the details of the new regulations.

The new rule will enter into force in January 2023. Schools will be required to complete it each time a new fiscal year begins.

Rule 90/10 seeks to limit the amount of revenue that for-profit universities receive from the federal government. Requires 10% of an organization’s revenue to come from non-federal sources.

But the rule allows these universities to count GI Bill and Department of Defense Tuition Assistance benefits up to 10 percent of their revenue from non-federal sources. This created a financial incentive for for-profit colleges to enroll more veterans and military personnel.

Starting in 2023, for-profit colleges will no longer be able to count money toward the 10% income requirement for veterans and servicemember benefits.

As it happens now, the schools IV. Students who fail the 90/10 calculation for two consecutive years will lose their right to participate in undergraduate student aid programs. That would make them ineligible for federal student loans and grants, a move that could deal a devastating blow to a school’s enrollment.

Closing this loophole is one of two rules the Biden administration finalized Thursday aimed at holding for-profit universities accountable for their actions.

The second rule aims to strengthen the conditions of higher education institutions undergoing ownership changes, especially non-profit institutions that wish to convert to non-profit status. The rule will enter into force in July 2023.

While a for-profit university can convert to nonprofit status for a number of reasons, the US Government Accountability Office cautions that in some cases former owners or other individuals may profit disproportionately from the conversion.

“These new rules curb some of the most deceptive practices we see in higher education, such as predatory marketing tactics targeting US service members and veterans, and ownership changes designed to avoid accountability to taxpayers,” said Education Secretary Miguel Cardona. a news

According to Biden, the Department of Education has also expedited the processing of claims by former students who say they were defrauded by for-profit schools. When Biden took office there was a backlog of those requests, known as borrower defense claims. Since then, the Department of Education has approved approximately $14 trillion in student loan forgiveness under this program for more than one million borrowers.

The Education Department also finalized another rule Thursday that would make incarcerated inmates enrolled in prison education programs eligible for federal Pell grants, which can be worth up to $6,895 a year for low-income students.

Congress authorized the change in 2020, lifting a years-long ban on Pell grants for people in prison as part of a major federal spending package. The provision will not take effect until July 2023.