Rep. Lee Pushes to Close Loophole Used by For-Profit Colleges to Exploit Veterans’ Education Benefits

July 20, 2020
Press Release

Washington, D.C. – U.S. Rep. Susie Lee (Nev.-03) delivered remarks on the floor of the House of Representatives yesterday evening in support of her and Rep. Mark Takano’s (Calif.-41) amendment to the 2020-21 National Defense Authorization Act (NDAA), which would close a loophole used by bad-actor, for-profit colleges to take advantage of Department of Defense (DoD) servicemember and veteran education assistance programs. This amendment is one of many of Rep. Lee’s priorities in the 2020-21 NDAA. 

The following are Rep. Lee’s floor remarks, as prepared for delivery, urging her colleagues to support her and Rep. Takano’s NDAA amendment:  

“I stand with Congressman Takano in support of this amendment to close the 90/10 loophole for Department of Defense military education benefits.

“Educational institutions are required to derive at least 10 percent of their revenues from non-federal sources. Our intent is to ensure that schools offer an education that is of high enough quality that people would actually want to use their own money to pay for it.   

“It’s a market viability metric — which is supposed to guarantee that taxpayers will not support low-quality schools — if they can’t compete in the open market, they should not be supported ENTIRELY by the government.   

“This loophole — which effectively treats Defense Department money the same as money that is supposed to come out of people’s pockets, violates the safeguards we intended to have in place.  That’s why it’s called a loophole.  And it explains why certain untrustworthy colleges, many of which are for-profit, target service members and veterans.   

“You see, for every servicemember or veteran enrolled at a for-profit college and paying with military education funds, that college can enroll nine others who are using nothing but federal money.  

“It gives for-profit schools the incentive to see servicemembers as nothing more than ‘free money’ and explains why these schools target veterans. 

“Sometimes, even persuading them to take out additional private loans to cover the cost of tuition. 

“This explains the following numbers:   

“In 2015, expenditures on the DoD’s Tuition Assistance program totaled $518 million, 46 percent of which went to for-profit institutions.  

“And a whopping 60 percent of a DoD scholarship program for military spouses went to for-profit colleges. 

“Given what we know about bad-actor, for-profit colleges—their predatory practices, and their history of defrauding students—we have an obligation to protect student borrowers, especially our service members and veterans. 

“Closing this loophole is a concrete step toward assuring that we protect and serve our servicemembers who so selflessly protect and serve us.”

BACKGROUND: The 90/10 rule requires educational institutions to derive at least 10 percent of their revenues from non-federal sources. However, despite originating from taxpayer dollars, DoD tuition assistance programs do not count as federal dollars under this rule.

This amendment will close this harmful loophole by including DoD education benefits, such as tuition assistance support, in the definition of federal educational assistance funds under the 90/10 rule.