Blumenthal Statement on DeVry's Voluntary Action to Limit Revenue From Federal Student Aid

[WASHINGTON, D.C.] – U.S. Senator Richard Blumenthal (D-CT) released the following statement today after DeVry Education Group announced that it would voluntarily take action to limit the amount of revenue it receives from federal student aid:

“Athough DeVry may deserve some small commendation for voluntarily taking action to reduce its reliance on taxpayer dollars, the fact remains that the for-profit college industry as a whole still receives 20 percent of all federal student aid and accounts for 40 percent of defaults, while only enrolling 10 percent of students. This is not an industry that can or should self-police. The 90/10 loophole allows for-profit schools to prey upon veterans and taxpayers to the tune of billions of dollars in VA education benefits each year. We must swiftly pass the POST Act to extend the 85/15 ratio to the entire for-profit sector, cutting off bad actors in the industry and protecting taxpayers, servicemembers, and veterans.”

Under the so-called 90/10 rule, for-profit education companies can receive no more than 90 percent of their operating revenue from federal student aid. However, U.S. Department of Defense and U.S. Department of Veterans Affairs educational benefits are exempt from this rule, which has led to predatory marketing and recruitment efforts targeted at servicemembers and veterans. Today, DeVry announced that it will voluntarily limit the amount of federal revenue it receives by counting VA and DOD dollars as federal student aid, and lowering the federal 90/10 ratio to an 85/15 ratio at each of its institutions.

Blumenthal introduced legislation with U.S. Senators Dick Durbin (D-IL), Jack Reed (D-RI), and Elizabeth Warren (D-MA) to re-instate the original ratio of 85/15 – it was loosened to 90/10 in 1998 – and change the definition of what counts as federal revenue so that it includes all federal funds. This new definition would eliminate the powerful incentive for for-profit schools to aggressively recruit service members and veterans and ensure that all schools are complying with the law as it was intended.

Blumenthal, Ranking Member of the Senate Committee on Veterans’ Affairs, has also authored bipartisan legislation that would provide relief for veterans whose education benefits through the Post-9/11 GI Bill are affected by the permanent closure of certain educational institutions. The legislation was originally introduced after the abrupt closing of for-profit institution Corinthian Colleges, Inc. left more than 400 veterans who were attending a Corinthian school stranded without a degree or any benefits for school, housing, and other basic necessities. A provision based on this legislation is included in the Veterans First Act, which was passed out of the Senate Committee on Veterans’ Affairs earlier this year.

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