New Law Finally Closes GI Bill Loophole Allegedly Used to Scam Veterans

The U.S. Capitol building in Washington, D.C., sits empty in the early morning a few hours prior to the 59th presidential inauguration.
The U.S. Capitol building in Washington, D.C., sits empty in the early morning a few hours prior to the 59th presidential inauguration, Jan. 20, 2021. (Senior Airman Amanda Bodony/U.S. Air National Guard photo)

The House on Wednesday passed a $1.9 trillion stimulus bill that includes a long-sought provision to disincentivize for-profit schools from targeting GI Bill recipients with deceptive marketing or outright scams.

The provision closes the so-called 90/10 loophole. Currently, for-profit schools must collect at least 10% of their revenue from non-federal sources. The 90/10 rule doesn't count the GI Bill as federal revenue, despite it being earned on duty and paid out by the Department of Veterans Affairs. This gives for-profit colleges an incentive to recruit veterans to stay in business, veterans advocates have argued.

"After nearly a decade of requests from veterans and military organizations, we are grateful Congress is moving to finally remove the target from the backs of veterans and service members by closing the 90/10 loophole," said Carrie Wofford, president of Veterans Education Success. "For too long, bad actor colleges have treated veterans and service members 'as nothing more than dollar signs in uniform.'"

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After more than a decade of lawmakers and advocates pushing to gut the loophole out of law, Democrats attached the provision to the massive COVID-relief package. As with a lot of bills passed through Congress, unrelated measures are often attached for easier passing into law.

In 2018, the VA inspector general warned that the agency could waste $2.3 billion in payments to "ineligible colleges" over the next five years. In the majority of cases, the wasted payments would go to for-profit universities.

To make the 90/10 provision easier to pass, a deal was brokered between Democrats and Republicans to delay implementation of any new rules that would impact beneficiaries and schools until at least 2023.

The for-profit education sector rejects the characterization that 90/10 was bad for students. The sector warns that prices at some schools could rise and that it could be more difficult to accept new GI Bill recipients.

"Antiquated and blunt inputs tests like 90/10 will never take the time, nor are they meant, to get a boots-on-the-ground perspective of institutional and student outcomes," said Stephen Patterson, director of communication for the Veterans Education Project.

The American Rescue Plan was passed down party lines in both chambers; no Republican voted in favor. The bill is the first major legislative achievement of the Biden administration and now heads to the president's desk to be signed into law.

-- Steve Beynon can be reached at Follow him on Twitter @StevenBeynon.

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