President Obama's FY16 Budget and the 90/10 Rule
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Date
2015-05-11
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Johns Hopkins University
Abstract
The higher education community, and more specifically the for-profit college sector, remains a highly regulated industry. One regulation designed to restrict the for-profit college sector’s access to federal financial aid and acts as a quality-control measure, the 90/10 rule, currently omits military and veteran benefits as federal aid. President Obama’s FY16 Budget proposes to capture military and veteran education benefits in the 90/10 rule similar to current financial aid programs administered by the Department of Education. Through an analysis of policy papers, government records, and other academic publications, this policy memo reveals the detrimental impact of including military and veteran benefits into the rule. Specifically, the promotion of perverse incentives under 90/10 is discussed: discrimination of the military community; restricting enrollment; and raising tuition prices. For-profit colleges, however, face increased scrutiny for questionable recruiting practices, high tuition prices, and subpar student outcomes. This memo proposes alleviating the regulatory burden and the cultivation of perverse incentives by providing an exemption clause for military and veteran benefits under the 90/10 rule. This memo also acknowledges recent criticisms of the sector. It further recommends that for-profit institutions comply with tuition caps and previously established guidelines created to support the military community in exchange for an exemption.
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Keywords
for-profit college, higher education, 90/10 rule, private sector colleges, proprietary institutions, career colleges, GI Bill, military tuition assistance, student veterans, veterans education