Military Friendly®, a ratings program that identifies organizations providing sustainable economic opportunities to America’s veterans, will use its Military Friendly® Schools methodology to help close the 90/10 loophole in federal regulations that critics say encourages for-profit schools to aggressively target military and veteran students.
Closing the “90/10 loophole” has proven difficult for Congress after multiple attempts. While Military Friendly® can’t close the loophole through legislation, which requires federal or state action, it will leverage its methodology to apply the higher standard to institutions seeking the Military Friendly® Schools designation.
What is the 90/10 loophole?
The 90/10 loophole refers to a rule in the Higher Education Act that requires proprietary schools to earn at least 10 percent of their revenue from sources other than Title IV Department of Education funds, which are the primary source of federal financial student aid. This quality assurance measure is intended to prevent for-profit institutions from relying entirely on federal dollars and ensuring that at least 10 percent of their students are willing to commit their own personal funds toward the school’s education program.
The “loophole” refers to the fact that the Department of Veterans Affairs (VA) GI Bill funds and Department of Defense (DoD) tuition assistance funds are not defined as Title IV Department of Education funds. This provides a loophole allowing GI Bill and DoD tuition assistance to be counted in the 10-percent category that is supposed to come from private student tuition. That unintentional oversight, critics say, incentivizes for-profit institutions to target military and veteran students.
“The current 90/10 loophole allows for-profit colleges to receive 100 percent of their revenue from the federal government – flouting the law’s intent and incentivizing for-profit colleges to aggressively recruit veterans and service members,” Sen. Richard Durbin (D-Ill.) said in March 2019 after co-sponsoring the PROTECT Students Act of 2019. The bill would close the loophole and change the percentages to 85/15. It was referred to committee, where several similar bills have languished.
Military Friendly® Steps In
Military Friendly®, which rates employers and schools to identify organizations that have better outcomes for veterans, decided to close the loophole through the methodology for its annual Military Friendly® Schools (MFS) designation. Beginning with the 2020-2021 designation process, which starts in August 2019, Military Friendly® will collect and analyze government data to determine whether a for-profit school earns more than 90 percent of its revenue from federal funding when VA and DoD funds are included with Title IV funds. Schools that exceed the 90 percent cap will not be eligible for the MFS designation.
“The lack of transparency on schools taking advantage of the loophole has clearly hindered veterans ability to be informed consumers. Military Friendly®’s new methodology has effectively inoculated this unscrupulous tactic, and provides an excellent service to veterans charting their educational pathways.” – John Kamin, Assistant Director for the American Legion’s Veterans Employment and Education Division Army veteran
“For nearly 10 years, the 90/10 loophole has been a regrettable footnote to the Post-9/11 GI Bill that allows proprietary institutions to leverage veteran recruitment to maximize federal student aid,” said John Kamin, an Iraq veteran who serves as assistant director for the American Legion’s Veterans Employment and Education Division. “The lack of transparency on schools taking advantage of the loophole has clearly hindered veterans ability to be informed consumers. Military Friendly®’s new methodology has effectively inoculated this unscrupulous tactic, and provides an excellent service to veterans charting their educational pathways.”
The decision to close the loophole was made by the Military Friendly® Schools Advisory Council (MFSAC) after considerable debate. The MFSAC consists of 17 school administrators and veteran students who advise the Military Friendly® Schools program.
“We are an organization of veterans whose sole purpose is to support veterans and their families. Closing the loophole is a decision based on both our mission and our goal to provide the best data and support possible.” – James Dubinsky, MFSAC member, Associate Professor of rhetoric and writing at Virginia Tech and chairman of the VT Veterans Caucus
“We are an organization of veterans whose sole purpose is to support veterans and their families. Closing the loophole is a decision based on both our mission and our goal to provide the best data and support possible,” said MFSAC member James Dubinsky, associate professor of rhetoric and writing at Virginia Tech and chairman of the VT Veterans Caucus.
MFSAC member Paul Esposito said closing the loophole is not an effort to single out proprietary schools, which are represented on the council. But since the 90/10 rule in the Higher Education Act addresses only proprietary institutions, it makes sense to start there.
“It does not matter to the council whether a school is for-profit or nonprofit. The goal is to ensure that our veterans receive a quality education while we remain vigilant stewards of our tax payer-based funds.” – Paul Esposito, Director, Auburn University Veterans Resource Center Auburn University in Alabama
“It does not matter to the council whether a school is for-profit or nonprofit. The goal is to ensure that our veterans receive a quality education while we remain vigilant stewards of our tax payer-based funds,” said Esposito, who serves as director of the Auburn University Veterans Resource Center at Auburn University in Alabama.
“It is kind of hard to draw the line at just doing this calculation with the for-profit colleges if the premise that an institution that has 10 percent of its tuition revenue paid by consumers out of pocket is an indicator of quality.” – Bill Brown, MFSAC member, Executive Director of Military Education at ECPI University
Bill Brown, a MFSAC member who is executive director of military education at ECPI University, disagreed with the decision.
“It is kind of hard to draw the line at just doing this calculation with the for-profit colleges if the premise that an institution that has 10 percent of its tuition revenue paid by consumers out of pocket is an indicator of quality,” Brown said.
“We think that schools that offer quality education and degrees should not have difficulty finding students to pay out of their own pockets.” – Patrick Murray, Deputy Director for the Veterans of ForeignWars (VFW)
The MFSAC considered opinions from both sides of the issue, including input from Patrick Murray, deputy director for the Veterans of Foreign Wars (VFW).
“We think that schools that offer quality education and degrees should not have difficulty finding students to pay out of their own pockets,” Murray said.
Many veterans service organizations (VSOs) have lobbied Congress to close the 90/10 loophole, including the American Legion, Student Veterans of America and Vietnam Veterans of America. In January 2019, 49 veterans organizations signed a letter urging Congress to close the loophole.
Brian Hucik, a retired Army first sergeant who heads the Military Friendly® ratings program, said he hopes the MFSAC’s decision to close the loophole through the Military Friendly® Schools methodology will support efforts by members of Congress trying to update the law to formally close the loophole.
“Our advisory council believes that closing the 90/10 loophole using the MFS methodology will influence college behavior in a way that will create better outcomes for veterans,” Hucik said.
The evaluation period for the 2020-2021 list of Military Friendly® Schools begins in August 2019, and the list will be released in January 2020.
Covering the Loophole
G.I. Jobs has previously published articles covering the 90/10 loophole. In the October 2017 issue, the cover story focused on the Forever GI Bill. The package included an article on the 90/10 loophole. You can read it HERE.
The May 2019 issue of G.I. Jobs included an update on the latest efforts to close the 90/10 loophole. To read that article, click HERE.
Military Friendly® is owned by VIQTORY, a service-disabled, veteran-owned small business that publishes G.I. Jobs.
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