Student Veterans No Longer Filling That Last 10%

Notes on the Closing of the 90/10 Loophole

Veterans have long been a target for postsecondary education recruitment. They bring a lot of great experience and perspectives to the classroom, they are often highly engaged learners, and - let's just be frank - they come with GI Bill tuition benefits. This has resulted in some colleges and universities engaging in targeted marketing to veterans. In October 2022, the U.S. Department of Education finally closed the '90/10 Loophole' that created an additional incentive for for-profit institutions to recruit veterans for their GI Bill tuition benefits. 

Developing a focused recruitment strategy for veteran students isn't inherently bad, but some institutions have done so without a real plan for how to support these students once they enroll, and this has led to many veterans exhausting their tuition benefits with little to show for it in the end. 

The need for a change in the 90/10 rule has been on the agendas of many student veteran advocates for the last decade. This is, perhaps, a lesson in how a good and well-intentioned policy (the GI Bill and its successor, the Post 9/11 GI Bill) can sometimes have unintended negative consequences - but then can be fixed! 

First, a Little History

Veterans have long had access to educational benefits through the many variations of the GI Bill. The most significant recent version is the Post 9/11 GI Bill. Back in 2008, as the country was still engaged in wars in Iraq and Afghanistan, service members were rewarded with greatly improved benefits through the Post-9/11 Veterans Educational Assistance Act of 2008, a.k.a. the Post-9/11 GI Bill. This act improved overall education tuition benefits, established the Yellow Ribbon program that created a cost-sharing way for veterans to attend more expensive private colleges, provided a monthly living stipend while service members/veterans were enrolled, and much more. 

The Post 9/11 GI Bill in the Early 2010s

The Post-9/11 GI Bill had good timing to support an influx of veterans in higher education. In the first several years after its passage, Americans were dealing with the Great Recession and its high unemployment rates just as hundreds of thousands of service members were being discharged after their service (often after multiple overseas deployments to war zones). With civilian jobs in short supply, and the promise of good careers made possible through a college degree, many new veterans opted for an educational path as the first step in their transition to civilian life, particularly since it came with a GI Bill-funded living stipend. 

Colleges and universities started to see more and more veterans enrolling in postsecondary programs, and these institutions often struggled to know how to support these student veterans. Organizations like CAEL stepped in and provided support to these colleges on how to provide a welcoming environment for student veterans, how to understand the culture changes they experience, how to help them maximize their combined benefits, how to connect them with enhanced support services, and how to help them leverage their military skills and knowledge through credit for prior learning programs. (We also host several veteran-focused sessions and a veterans-focused pre-conference session at CAEL's annual Conference.)

A 2012 Senate Study: The For-Profit Loophole and the Consequences for Student Veterans

But also around that time, the U.S. Senate's Health, Education, Labor and Pensions Committee released a report, 'For-Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success,' which, on the one hand, recognized the important role that for-profit colleges play in educating students, but on the other hand, found that there were a number of for-profit institutions that charged high tuition rates, provided lower-quality education, and offered minimal support services to help students succeed. The result: a large number of students at for-profit colleges leaving without a degree while having spent down their tuition benefits or acquiring significant student loan debt. 

The report noted that one of the federal government's main checks on for-profit institutions was the 90/10 rule, which was that a for-profit college cannot have more than 90% of its tuition paid for through federal sources. The thinking was that if 10% of revenue is coming from a group of students willing to pay with their own money, that would be a sign of quality, endorsed through the regular functioning of the education marketplace. But guess what? There was a loophole: Department of Defense and Veterans funds weren't counted in that 90% number. So, for-profit institutions could use veterans funded by the GI Bill to fill that 10% gap.

Closing the Loophole: Does It Fix the Problem?

The new rule from the Department of Education is finally closing that loophole. With the new regulations, military benefits are now considered part of the federal education funding in the 90% calculation. U.S. Secretary of Education Miguel Cardona said:

"Today, we're raising the bar for oversight and accountability for colleges and career schools that prioritize profiting off federal financial aid programs over preparing students for success in the workforce'These new rules crack down on some of the most deceptive practices we see in higher education, such as predatory marketing tactics that target U.S. service members and veterans, and changes in ownership designed to evade accountability to taxpayers.'

Does this new regulation completely solve the problem of veterans being targeted for their GI Bill tuition dollars? Or of students amassing student loan debt with no degree to show for it? Or students earning degrees with no labor market value? Probably not. 

As noted above, for-profit colleges have not been the only ones aggressively marketing to veterans, and there are plenty of other non-profit and public institutions and education providers who have failed to deliver high-quality programs with good career outcomes, or failed to provide the kind of support that student veterans may need. In fact, serving student veterans was not something many postsecondary institutions were doing well 10 or 15 years ago - public, private, or for-profit. And a lot of institutions still face a learning curve when it comes to understanding how to support today's students, whether veterans, student parents, working learners, or other adult learners.  

But closing the 90/10 loophole could be a start to veterans not being quite such a primary target by institutions that may not provide the educational payoff these veterans seek.