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New Coronavirus Relief Package May Close 90-10 Loophole

Wednesday, February 24, 2021

As is the case with many packages debated and passed by Congress, the new Coronavirus Relief Package has provisions that extend beyond the scope of Coronavirus-related issues. House Democrats are fighting for a provision of the package that will eliminate a GI Bill loophole that has been exploited for years, at the cost of taxpayer dollars. 

So what is the 90-10 loophole? The 90-10 rule was put in to effect in 1998 to prevent the waste and abuse of federal education dollars. It ensures that for-profit schools must collect at least 10 percent of their revenue from non-federal sources. The tricky part is that the rule does not count the GI Bill as federal revenue, despite being funded by federal dollars. As a result, for-profit schools have been able to satisfy their 10 percent requirements with revenue from veterans’ GI Bills. House Committee on Veterans’ Affairs Chairman, Mark Takano, has held that “for-profits have exploited the loophole to earn millions in profits.” 

Allowing the GI Bill to count as non-federal revenue has created an incentive among for-profit colleges to recruit veterans to stay in business. Veteran advocates have been fighting the rule that creates this incentive for years. Carrie Wofford, president of advocacy group, Veterans Education Success, said that “closing the 90/10 loophole has been the top higher education priority for nearly all veterans and military organizations for many years, and we are relieved and hopeful that this will finally remove the target from the backs of service members, veterans, and military families.” 

The for-profit school industry has seen much scrutiny over this phenomenon over the past years. Much of the attention has to do with the questionable business practices used to recruit these veterans. The University of Phoenix was ordered to refund $50 million and cancel another $141 million in debt for its marketing practice towards veterans in 2018. 

Advocates also argue that closing the loophole will protect taxpayer funds moving forward. 

Congress is currently debating the bill and will hopefully put it to vote in the near future. 

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