Today, Rep. Donna Shalala (D-Fl.) introduced a bill that aims to close the "G.I. Bill Loophole" and protect veteran students from the for-profit schools who target them for financial gain.
Currently, the "G.I. Bill Loophole" allows for-profit schools to financially benefit off of veteran students who use the G.I. Bill. Under the 90/10 rule, educational institutions cannot earn more than 90 percent of revenue from federal student aid — at least 10 percent of the institution's revenue must come from other sources.
Currently, G.I. Bill funding falls under the 10 percent of non-federal revenue rather than under the 90 percent of federal funding — i.e. the "G.I. Bill Loophole."
"For some reason, there's a loophole in the law that does not count G.I. Bill funds as federal funds," explained Tom Porter, legislative director at Iraq and Afghanistan Veterans of America. "Back when they made the determination, the G.I. Bill was not nearly as generous as it is today. Now, you've got schools that are predatory — they see the dollar signs on student veterans."
In recent years, veterans have been disproportionately affected by closures and mismanagement at for-profit institutions. ITT Tech, Career Education Corporation, and Education Management Corporation received $2.5 billion from GI benefits before they closed. These closures often leave veteran students with debt, untransferable credits, and no degree.
Shalala's bill wants to end this.
The Defending All Veterans in Education (DAVIE) Act of 2019 would close this loophole by reclassifying GI Benefits as federal student aid that must count towards the 90 percent portion of the 90/10 rule. Additionally, the bill wants to change the 90/10 rule to the 80/20 rule — educational institutions would, therefore, need to earn 20 percent of their revenue from sources other than the federal government.
For-profit institutions would have a year to comply with the DAVIE act — and Shalala believes that they would find a way to do so in order to secure their remaining federal revenue.
“We need to ensure veterans and GI Bill recipients do not fall victim to the predatory recruitment tactics of low-quality institutions that see them as little more than the profits they provide,” said Rep. Shalala. “My bill protects our veterans from these dishonest schemes.”
The bill has also been supported by the Military Officers Association of America.
“When unscrupulous institutions look to make a quick dollar off of servicemembers and other military-connected students, we must seek restoration for those students, and we must ensure accountability to prevent others from being ensnared by false claims and predatory practices,” said Lt. Gen. Dana T. Atkins, President and CEO of the Military Officers Association of America (MOAA).