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Press Release

July 10, 2014

Rep. Susan Davis Pursues Goal to Protect Students Enrolled in For-Profit Colleges




WASHINGTON – U.S. Rep Susan Davis (D-San Diego) continued her effort to strengthen accountability standards of for-profit colleges and put stronger protections in place for-profit college students. Davis offered an amendment to legislation in the House Committee on Education and the Workforce to close a loophole that encourages for-profit colleges to target veterans and servicemembers.

“There are a number of incidents of for-profit colleges aggressively recruiting our veterans, our servicemembers, and their families for their Tuition Assistance and G.I. benefits,” said Davis, a senior member of the Committee. “We talk about wanting to protect taxpayers – and we do that with my amendment – but we also need to protect our students, many being veterans.”

A rule known as the “90/10 Rule,” requires a for-profit school to obtain at least 10 percent of its revenue from a source other than Title IV education funds, the primary source of federal student aid. 

Since Tuition Assistance (TA) and the G.I. Bill are not defined as Title IV they count toward the 10 percent requirement, similar to private sources of financing.  Davis’s amendment would close this loophole requiring TA and G.I. assistance to be considered as federal funding under the rule. However, the committee rejected the amendment.

Because of the loophole, service members and veterans can be particularly vulnerable because for-profit schools have a strong incentive to enroll service members and veterans, who then need to take out private loans, as federal assistance doesn’t always cover the full cost of tuition.  This can subject the student to a large debt without the high-quality education they were expecting.

In May, Davis also urged the Department of Education to create a strong “gainful employment” rule to ensure students attending for-profit schools become job-ready and financially secure.
 


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