Idaho’s attorney general, Lawrence Wasden, is one of 22 attorneys general asking Congress to do something about what they claim is a loophole in federal law that permits for-profit schools to receive all or most of their revenue from federal sources, according to a story in Idaho Statesman.
The law was authorized 14 years ago. It says for-profit schools may realize not more than 90 percent of their income via federal loans and grants. The problem, says the letter, rests with money from the GI Bill and Veterans Assistance aid programs because they are exempt from that rule. That “violates the intent of the law,” says the letter.
The Idaho AG is way off track — in fact he is just plain wrong. If Congress had wanted veterans’ educational benefits to be included in 90-10, then they would have stated as such. Veterans benefits are not Title IV funds — they are benefits that veterans have earned through their service – completely different from Pell grants, for example. Denying a veteran the choice of using earned benefits at the institution of higher education that best meets his or her needs is an insult to the veteran. Let the money follow the students to be used as they see fit — they earned the benefits and earned the right to decide how best to use them. AG Wasden has been drinking the Tom Harkin Kool-Aid without bothering to check facts.
First of all the law being referred to, commonly called the 90/10 regulation, is poorly conceived. It was modeled after a regulation that said schools could not have more than 85% of their students receiving veteran benefits, which made sense, because veterans should not be a school’s only target market. But the regulation being refereed to applies to federal loans and grants, and anyone can obtain a federal loan to go to a college- anyone, regardless of income.
Second – the Department of Education insists that any participating school inform a student of all the federal loans available and have the student turn them down in writing if the student does not want the total amount. If the student wants more loan money than even the tuition and fees, the school is obligated to give the student the excess loan money. I have personally asked several members of congress to allow schools to limit student borrowing, but to no avail.
Third – the 90/10 regulation was seen as a surrogate for quality, but it has little to do with quality and more to do with the state in which the for profit school is located, the tuition being charged, the program offered, or the demographics and unemployment in the surrounding area of the school. If the state has a grant program in which for students at for profit schools can participate, then the 90/10 rule is usually easily met because the state grant applies to the 10%. If the school primarily has a program with a clinical component, the school can count the clinical income in the 10% and usually pass the test. If the tuition is high enough, then the federal financial aid cannot cover the cost and it is easier to pass the test ( talk about unintended consequences of pushing tuition higher). Also, if the school happens to be in an area of economic hardship, most of its students, who typically are adult commuting learners, need help with almost all of their tuition.
Conclusion: Rather than tinkering with a bad regulation which does not and cannot do what it is supposed to, that is reflect some measure of quality, why not measure student retention and outcomes for all institutions serving similar students. Would that be just too straight forward and obvious?