A drive to protect veterans and members of the Reserve and National Guard, originating with misplaced bias against for-profit schools, will gut options for these patriots when they try to use their GI Bill to get a useful education. That’s the impression one could reach upon examining the federal government’s campaign to hobble the ability of “proprietary” for-profit schools to enroll GI Bill-wielding applicants.
For any college, university or vocational school, government dollars can make a huge — even a make-or-break — difference. Applicants bringing GI Bill benefits are, in that regard, a bonanza.
But a paternalistic Congress, unwilling to grapple with second- and third-order legislative effects — advised by those who want less competition from the private sector — is hobbling education options through murkily concocted ratios that limit how much GI Bill money the for-profits can receive. This limitation doesn’t, however, affect the more favored conventional education sector.
The 9/11-G.I. Bill of 2008 is used by more than 700,000 beneficiaries at a taxpayer cost of $10.7 billion, nearly twice the 2010 amount, showing its utility. Unlike many federal expenditures, this one, like its 1944 ancestor, truly can be regarded as in investment in America’s future.
Responding to student loan defaults, which peaked in 1992 at 22 percent, the Higher Education Amendments of 1998 mandated a ratio for student loans, requiring “that a proprietary institution of higher education have at least 10 percent of its revenues from sources that are not derived from funds provided under HEA Title IV [federal financial aid funds].” At most, 90 percent of a proprietary (for-profit) institution’s funds can come from various federal financial aid sources (including the GI Bill). At least 10 percent must come from students and other funding instruments.
According to a January 2019 Brookings Institution report, if a school or program is good enough, someone other than the federal government should be willing to pay for it — i.e., the student. Called the 90/10 rule, it sought to reduce loan defaults by enrollees in for-profit schools, which in 1992 accounted for nearly half of student loan defaults. (One may ask what other educational institutions accounted for the other half.)
This legislation would only worsen the prospects of a given GI Bill beneficiary getting the education he or she wants and has earned with service to our nation. It makes things tougher on proprietary schools, where many valuable skills for America are taught — technicians, culinary arts, aviation, commercial driving, etc…. (continue reading)