Carper, Durbin: Education Department Releases Data Showing Many For-Profit Colleges Receive More Than 90 Percent Of Revenue From Federal Taxpayers

Senators asked for data more than a year ago; have led efforts in Congress to close loophole that exempts Department of Defense and Veterans Affairs education benefits from restrictions on federal revenue and incentivizes exploitation of servicemembers and veterans by for-profit colleges

WASHINGTON – U.S. Senators Tom Carper (D-Del.) and Dick Durbin (D-Ill.) issued the following statement after the Department of Education (ED) released data providing a more accurate picture of for-profit colleges’ dependence on federal funding by counting Department of Veterans Affairs GI Bill and Department of Defense Tuition Assistance funding. The current federal “90/10 rule” bars for-profit colleges and universities from deriving more than 90% of their revenue from the Department of Education’s student aid programs but does not include these additional federal sources, encouraging for-profit colleges to target veterans and members of the military. The data was released in response to a request by Sens. Carper and Durbin – along with 18 other Democratic Senators – for public data on how much for-profit colleges actually receive from American taxpayers. Sens. Carper and Durbin were joined by 29 Senators in sending a similar letter to the Department in June.

“Not all for-profit schools are bad actors, but all for-profit schools should demonstrate their financial well-being by securing at least 10 percent of their income from non-federal sources. We now have a crystal clear picture of which for-profit colleges are avoiding this requirement by exploiting the 90/10 loophole and relying too heavily on taxpayers,” said Senator Carper. “Unfortunately, for many students who attended the schools that have closed in the last year, including ITT Tech, the data released today comes much too late. The 90/10 loophole has also led to the disproportionate harm of our nation’s veterans, servicemembers, and their families. They deserve to be treated as more than ‘dollar signs in uniform’ as Holly Petraeus said. They deserve to attain a high-quality education and meaningful degrees. Congress must finally close this dangerous loophole to protect veterans, servicemembers and taxpayer dollars.”

“The data released today by the Education Department confirms what we already knew: for-profit colleges are some of the most highly-subsidized companies in America; many receive nearly all of their revenue straight from federal taxpayers. The current 90/10 rule, with its failure to include GI Bill and Defense Tuition Assistance makes our nation’s servicemembers and veterans an attractive target for predatory for-profit colleges,” said Senator Durbin. “Today’s data should encourage Congress to close this loophole and reduce the amount of revenue these so-called private sector companies receive from taxpayers.”

Data released today shows seventeen for-profit colleges currently derive more than 90% of their total annual revenue from Title IV federal student aid. If GI Bill and Defense Tuition Assistance are considered, the number of for-profits in violation of the 90/10 rule jumps to nearly 200. The Department of Education found that if the 90% threshold was rolled back to its original 85%, 563 schools could not comply with the new rule.

Last year, Sens. Carper and Durbin introduced the Military and Veterans Education Protection Act of 2015 to close the 90/10 loophole by counting DoD and VA education funds in the calculation of federal revenue for purposes of the 90/10 rule. In addition, Durbin is the author of the Protecting Our Students and Taxpayers (POST) Act to include these other federal funding sources and reduce the amount of allowable federal revenue from 90% to 85%.