In March, President Joe Biden signed the American Rescue Plan Act of 2021 into law, which means some big changes for military-connected students. The biggest change was the closure of the “90/10 loophole.” This fixed a legislative mistake that had incentivized for-profit schools to target military-connected students for their Department of Defense (DoD) and Department of Veterans Affairs (VA) education benefits. Congress also made the discharge of federal student loans no longer count as income for tax purposes and cut down on transcript withholding. In addition, before he left office in January, President Donald Trump signed the unanimously passed H.R. 7105, which contained many major changes for military-connected students using the G.I. Bill.
Understanding These Changes
New protections from deceptive college recruiters: Starting in two years, you should begin to see less aggressive and deceptive college enrollment practices by for-profit colleges. Closing the 90/10 loophole was a longtime priority of veterans and military service organizations. The rule originally was intended to make sure that for-profit colleges got at least 10% of their revenue from sources other than federal education funds, but an inadvertent loophole was created when the definitions failed to include student aid from the DoD and VA. This led schools to see military-connected students as nothing more than “dollar signs in uniforms.” The bipartisan agreement that closed the loophole delays implementation of the law until on or after January 2023, meaning no penalties for schools before 2024. This means that by 2023, schools will have to provide a real return on investment, not only for service members, veterans, their families and survivors, but also to the American taxpayer. My organization, Veterans Education Success, hopes that this will result in fewer veterans coming to us with stories of broken dreams, drained GI Bill benefits and massive student loans.
A tax break on your forgiven loans: Making the discharge of federal student loan debt non-taxable is another big win for military-connected students. Many veterans wind up with student loans from dishonest schools. My organization has helped thousands of them, many jaded by the false promises of lucrative jobs that recruiters use to lure them in, only to leave them with drained GI Bill benefits and student loans due to the bloated cost of attendance at many of the worst, most predatory schools. We help them apply for Borrower Defense to Repayment, a program run by the Education Department that discharges federal student loans (although not Federal Family Education Loans) of anyone who attended a school that defrauds them. This tax law improvement will help service members and veterans eligible for this program. Now they won’t be hit by an unexpected tax bill from the IRS if their loans are discharged.
Getting your transcript: Owing a debt to your school can result in the school withholding your academic transcript, which can result in numerous negative consequences such as the inability to transfer credits, complete a degree program or enter a graduate program. It basically can put your life on hold. That’s why the Education Department issued new policy guidance that will allow colleges and universities to use stimulus funds to reimburse themselves for “institutional lost revenue and expenses” incurred as far back as March 13, 2020, the start of the national emergency. This means that if you incurred a debt to your school as a result of the pandemic, the school may be able to use COVID stimulus money to erase it. Talk to your school administrators for more information.
Finding food banks: The new guidance from the Education Department also allows schools to use COVID relief funds to conduct outreach initiatives for expanded student access to federal nutritional assistance programs. Food insecurity is another major issue that military-connected students were facing even before the pandemic, and it only has intensified since.
Stronger VA oversight of schools: Late last year, the 116th Congress unanimously passed the “Protect the GI Bill Act” as part of a veterans omnibus package, H.R. 7105, which:
- Requires risk-based reviews of schools: if a school is under Heightened Cash Monitoring Level 2 or provisional certification status at the Education Department, any punitive action by any federal or state entity, faces the loss or risk of loss of accreditation, or has converted from for-profit status. Schools that fail to comply or to secure affirmation following the review will be disapproved.
- Strengthens the ban on deceptive and misleading advertising: by defining misrepresentations and covering 21st-century advertising methods and lead generator companies, and strengthening VA’s authority under 38 U.S.C. 3696.
- Restores VA education benefits to students whose school closed or was disapproved: so long as they have transferred fewer than 12 credits. It also covers Veteran Readiness & Employment (“Voc Rehab”) eligibility.
- Stops allowing the GI Bill to be used at subpar college programs that are not approved for and participating in Title IV at the Education Department or “at risk of losing accreditation.” It also requires law schools to be properly accredited.
- Protects students from VA debt collection for overpaid tuition: VA will now claw back tuition overpayments from schools, since they are the ones who received the tuition under the Post 9/11 G.I. Bill.
- Requires clear information to prospective students about the true costs and estimated loan debts, graduation and job placement rates, acceptance of transfer credit, cracks down on the ‘hard sell’ recruiting tactics often used on military-connected students and more.
- Sunsets the Montgomery GI Bill in 2030 and gives service members six months before they have to decide whether to pay in to the Montgomery GI Bill, not when they arrive at basic training.
For a full list of what the Protect the GI Bill Act does, go here.
Mike Saunders is Director of Military and Consumer Policy at Veterans Education Success. Contact him at Help@VetsEdSuccess.Org.