Under the previous 90/10 rule, for-profit education institutions were required to derive at least 10% of their annual revenue from non-Title IV sources. However, because Post 9/11 GI Bill counted as a non-Title IV source, many of the more unscrupulous for-profit schools used predatory marketing practices to entice veterans to attend their school so that they could count the Post 9/11 GI Bill money received as part of that 10%. In many cases, veterans came out of these schools’ programs with a lot of student loan debt and a worthless education, because those schools were focused on getting the money and not providing a quality education.
Funding Sources Affected by the Change
In October 2022, the Department of Education changed the 90/10 rule so that after January 1, 2023, Post 9/11 GI Bill money received no longer counts toward the 10%. The goal was that if that money no longer counted toward the 10% goal, for-profit schools would no longer use unethical recruitment practices to target veterans. The rule change also applies to these other Department of Defense funding sources:
- Advanced Civil Schooling
- Army/Navy/Air Force Health Professions Scholarship Program
- Civilian Career Program/Civilian Tuition Assistance
- Credentialing Assistance
- Military Spouse Career Advancement Account
- Military Tuition Assistance
- Navy Advanced Education Voucher Program
- Navy Graduate Education Voucher
- Navy Seaman to Admiral
- Reserve Officers’ Training Corps Scholarships
Another Change – Transfer of Funds
One other rule change has to do with when for-profit institutions can request a transfer of funds. Under the Higher Education and Opportunity Act of 2008, an institution would lose its funding if it failed to meet the 90/10 rule two years in a row.
But institutions were gaming the system by timing their request of funds transfer so that they could avoid failing the two-year rule. Now with the 90/10 rule change, the Department of Education created a disbursement rule that imposes deadlines when institution must request a transfer of funds, thus eliminating them from delaying the transfer of funds until the next year in order to get around the two-year rule.
Ironically, none of these rule changes would have been necessary had all for-profit institutions played by the existing rules, but with so much Department of Defense dollars at stake, the temptation was too great for many of them to ignore.
Now all for-profit institutions – even the ones that have played by the rules – must conform to the new changes when the institution’s fiscal year starts after the new year. That start date can vary by institution; some start their new fiscal year on January 1 while others use a date of July 1.
With the new rule in place, the Department of Education stated the change will “promote accountability…and strengthen protections for veterans, service members, students, and borrowers.”
