Senators Introduce ‘Landmark’ Bipartisan Bill to Protect Student Veterans, Close 90/10 Loophole

By Joelle Fredman, NASFAA Staff Reporter

A group of lawmakers last week introduced the first bipartisan Senate bill aimed at protecting student veterans by imposing new funding restrictions on the for-profit colleges that enroll them. Specifically, the bill would target the “90/10 loophole,” which the lawmakers argue has allowed certain schools to skirt requirements to receive no more than 90% of their funding from federal funds, because military education benefits are not currently counted as federal revenue.

Led by Sens. Tom Carper (D-Del.), James Lankford (R-Okla.), Bill Cassidy (R-La.) and Jon Tester (D-Mont.) — and supported by the top Republican on the Senate education committee — the Protect Veterans’ Education and Training Spending (Protect VETS) Act of 2019 would require institutions to begin counting Department of Veterans Affairs (VA) and Department of Defense (DoD) funds as federal funds, and allows schools three years to comply with the new law. The bill — which advocates have dubbed “landmark legislation” — would also create a caution flag within the GI Bill Comparison Tool next to institutions that do not meet the newly configured 90/10 ratio, an appeal process for high-quality schools, and, for a limited time, would apply the new rule to for-profit schools that converted to nonprofits. 

The bill also creates a “system of tiered penalties” for institutions that violate the rule — moving away from current law, which puts institutions that fail the 90/10 test for two consecutive years subject to the loss of federal funds. According to the bill, institutions that fail to comply for one year would not be able to enroll new veterans with education benefits, for two consecutive years would face caps on their total enrollment, and for three consecutive years would lose eligibility for federal funds for two years.     

“Our commitment to care for our veterans is a sacred obligation and ensuring their hard-earned GI Bill benefits are safeguarded is part of that sacred obligation. The common sense and bipartisan reforms in the Protect VETS Act will finally close the 90/10 loophole and help better protect military and veteran students, while also saving taxpayer dollars,” Carper said in a statement.

NASFAA facilitated a group of higher education professionals last year — the Higher Education Committee of 50 — to think through how best to help students succeed in higher education. This past spring, the group published its recommendations for Congress, which included returning the 90/10 rule ratio to 85/15 — such as it was when it was first created — and including military tuition assistance benefits and VA benefits as part of the calculation of federal revenue.

House Democrats have also expressed their support for those changes to the 90/10 rule. While marking up their bill to reauthorize the Higher Education Act (HEA) late last month, the House education committee accepted an amendment from Rep. Donna Shalala (D-Fla.) to include military benefits in the 90% of the ratio and change the ratio to 85/15, and rejected one from a Republican member to strike the rule entirely, which House Republicans sought to do in the last session of Congress.

Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, who is leading the reauthorization effort in the Senate, said on Tuesday that he is planning to include the legislation in a comprehensive HEA bill in the coming weeks, according to POLITICO. This stance differs greatly from Alexander's priorities for HEA that he published last year, which included eliminating the 90/10 rule.  

While the Senate may be moving in a bipartisan manner, the House is still struggling to find a compromise on the future of the 90/10 rule. During a House subcommittee on veterans affairs hearing in July, Democratic members pushed to adopt legislation they proposed to close the loophole, while Republican members continued to argue that changing the rule would have unintended consequences on limiting school choice.        

The advocacy group Veterans for Career Education expressed a similar concern after the Protect VETS bill was introduced, arguing it would restrict veterans from being able to afford quality career, technical, and trade schools. 

“Manipulating the 90/10 rule to include military and veteran benefits on the 90 side is a way to restrict choice for veterans at career, tech and trade schools. It is no coincidence that proposals to change the 90/10 rule do not extend to public colleges and universities,” Michael Dakduk, the group’s co-chair and a veteran, said in a statement. “... We look forward to working with Congress to hold all schools accountable, regardless of tax status, and to support veterans' choice at private career, technical and trade schools.” 

Many other advocacy groups, however, came out in support of the legislation. 

Carrie Wofford, president of Veterans Education Success, said closing the 90/10 loophole “has been a priority for the nation’s leading military and veteran service organizations for a decade,” adding that “this bipartisan compromise bill makes that priority a real possibility.”

John Rowan, national president of Vietnam Veterans of America (VVA), said that “for far too long, predatory for-profit institutions of ‘higher learning’ have lined the pockets of their top administrators and investors in cahoots with the 90/10 loophole ignored by most senators and representatives — until now.”

“With the enactment of this legislation, the open cash spigot will finally be turned off,” he said in a statement.

While Student Veterans of America policy fellow Justin Hauschild called the bill “a pivotal moment in the effort to close this loophole,” he urged lawmakers to include the legislation in their HEA bill. “For years, bad actor schools have used this loophole to evade and undermine a cap on federal funds by aggressively targeting student veterans, servicemembers, families, and survivors of their educational benefits,” he said in a video on Twitter. “... While we’re excited about this bill, we’re also incredibly hopeful that it will be included as part of a larger, comprehensive HEA package that truly meets the needs of the twenty-first century higher education system."


Publication Date: 11/19/2019

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