For-Profit Colleges' 90/10 Loophole Latest Target For Democrats With Military And Veterans Education Protection Act

Three Democratic senators have introduced legislation that would close a loophole allowing for-profit colleges to take in increased amounts of federal money by collecting veterans' tuition. Sens. Tom Carper of Delaware, Dick Durbin of Illinois and Richard Blumenthal of Connecticut formally announced their Military and Veterans Education Protection Act on Wednesday.

"As you well know, some for-profit colleges lure veterans into deals that fail them and do not provide them with the education and the qualifications they think they are going to receive," they wrote in a letter to Veterans Affairs Secretary Bob McDonald earlier this week. “Ultimately, the victims are not just those veterans but also taxpayers because it is taxpayer money that often is lost."

The bill aims to stop for-profit colleges from exploiting a technicality in a government rule mandating that they receive no more than 90 percent of their revenue from federal sources. Often called the 90/10 rule, the law doesn't designate military and veteran educational assistance as federal funds. For-profit colleges, then, can take in money from the GI Bill and other aid programs through the "90/10 loophole." For example, the recently shuttered Corinthian Colleges Inc. collected more than $180 million in Post-9/11 GI bill dollars, according to a news release.

The Democrats want to stop this as part of their efforts to regulate for-profit schools, which they've called out in recent years for predatory lending and rigged job placement rates. Just Tuesday, a federal court upheld a policy from the Education Department requiring for-profit colleges to prove their students were making enough money after graduation to pay off their loans.

Democratic presidential front-runner Hillary Clinton proposed closing the 90/10 loophole in a speech last weekend, and Carper has put forth similar bills in the previous two congressional sessions. This time he hopes to push it through with Durbin, Blumenthal and about 20 other senators by his side.

"While not every for-profit college is a bad actor, one veteran mistreated is one veteran too many," Carper said in a statement. "It doesn’t make sense for taxpayers to send veterans to for-profit schools that can be 100 percent subsidized using taxpayers’ dollars. Closing the 90/10 loophole is a common-sense approach that demonstrates we’re serious about improving education outcomes for our veterans and that we’re serious about protecting taxpayers."

As of 2013, more than 1.1 million people had received benefits under the GI Bill and similar initiatives, like the National Call to Service and Survivors and Dependents' Educational Assistance programs. Payments totaled about $12 billion during fiscal year 2013, says the U.S. Department of Veterans Affairs.

The politicians also want the VA to create a "risk index" to accompany data about colleges on its website, the Military Times reported. The index would indicate whether a school is at high, medium or low risk based on state and federal investigations because "veterans deserve to know this information," they wrote in the letter to McDonald. The system would also be updated to indicate whether class credits can easily be transferred to other institutions.

Co-sponsors of the trio's proposal include Sens. Dianne Feinstein, D-Calif., and Elizabeth Warren, D-Mass. No Republicans have signed on in support of the bill, which you can read in full here.