The U.S. Department of Education released a report Wednesday on a number of for-profit colleges that are almost entirely dependent on federal funds such as the G.I. Bill and military tuition assistance.
Veteran and military organizations called on Congress to close the so-called 90/10 loophole, which some for-profit colleges manipulate to count G.I. Bill dollars and Defense Department college funding as private dollars to offset the cap on federal funds the colleges face.
According to the report, 191 colleges receive more than 90 percent of their revenue from federal student aid, G.I. Bill education benefits and Defense Department education programs such as tuition assistance.
Holly Petraeus, the assistant director for service member affairs at the Consumer Financial Protection Bureau, said this loophole “gives for-profit colleges an incentive to see service members as nothing more than dollar signs in uniform and to use aggressive marketing to draw them in.”
For every dollar a for-profit college receives from the G.I. Bill or the Defense Department, that college can get $9 more from Education Department student funds.
Of the colleges either on Fort Hood or used by soldiers and families on the post, a few receive the majority of their budget by targeting military, veterans and their eligible family members.
Southern Careers Institute, located in Austin, receives more than 98 percent of its budget from federal funds. By Dec. 31, 2014, the school had received $32.5 million of it’s annual $33 million revenue from the federal government.
Kaplan Career Institute, out of Brooklyn, Ohio, received 91 percent of its $2.36 million annual revenue from the government; Vista College in El Paso nearly 86 percent of its $60.2 million in revenue; and the University of Phoenix received more than 80 percent of its $2.5 million in revenue through the government. Both Vista and University of Phoenix have campuses in Killeen.
The idea behind the 90/10 rule was that taxpayers should not prop up low-quality schools. Senate Education Committee staff who drafted the 90/10 rule as part of the 1998 Higher Education Act Amendments, did not include G.I. Bill and Defense Department funds in the statute because there was no war at the time, no robust G.I. Bill and because for-profit colleges were not then targeting military students.
See the full report that includes detailed information about the amount and percentage of each for-profit institution’s revenues from Title IV and non-Title IV sources.