A recent Brookings Institution report looked at the potential effects of dropping the 90-10 rule on for-profit, private, and public colleges, reports Inside Higher Ed.
The rule requires 10 percent of the revenue from for-profit institutions that are eligible for federal aid to come from non-federal sources. The cap does not apply to revenue from U.S. military and veteran student benefits. The rule was enacted by Congress in the 1990s to be a form of quality control because it requires for-profits to attract some students who pay out of pocket and to prevent for-profits from relying only on federal aid revenue.
Congressional Republicans and the Trump administration have challenged the fairness of the rule because it only affects for-profit institutions, Inside Higher Ed reported.
The Brookings report found that eliminating the rule would have a negative impact.
"The rule seems to be a real limitation on the ability of certain for-profit schools to expand, especially the large chains," said Adam Looney, a co-author of the report. "If the 90-10 rule is eliminated … more students would be going to these large for-profit chains, and more of them would have relatively worse outcomes when it comes to student loans."
More than 97 percent of public and nonprofit institutions would comply with the 90-10 rule if it applied to those sectors, the report found.
If the threshold were lowered, the Brookings analysis found that many for-profits would fail, reported Inside Higher Ed.
Inside Higher Ed