For-Profits and Federal Revenue

Inside Higher Ed

By Ashley Smith

A Brookings Institution report examines what would happen if the U.S. Congress dropped a federal regulation that limits the share of federal revenue for-profit colleges can receive.

The paper, which was released this month, examined the effects of the so-called 90-10 rule on for-profit, private and public colleges. The rule requires 10 percent of federal aid-eligible for-profit institutions’ revenue to come from nonfederal sources. But the cap doesn’t apply to revenue from U.S. military and veteran student benefits.

Enacted by Congress in the ’90s, the rule’s intent is to be a market-based form of quality control by requiring for-profit programs to attract some students who pay out of pocket, and to prevent for-profits from relying solely on federal aid revenue.

However, congressional Republicans recently have challenged the fairness of the rule because it only affects the for-profit sector. The Trump administration has echoed that call with its broad effort to eliminate regulatory differences in the way for-profit and nonprofit colleges are treated.

Senator Lamar Alexander, the Tennessee Republican who chairs the Senate’s education committee, wrote last year that what the rule “really measures is the socioeconomic status of students enrolled at the… (Continue reading)