VES Issue Brief #4: Large For-Profit Schools Remain Dependent on Recruiting GI Bill Students Despite Overall Enrollment Declines

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For several years, the media has reported on the decline in for- profit schools’ student enrollment. Missing in these articles are data on a key subset of students who are specifically targeted by for-profits—GI Bill students.

For-profit schools have a financial incentive to recruit GI Bill students because of their guaranteed educational benefits and because those benefits are excluded from the 90% cap on proprietary school revenue from federal student aid. The Defense Department’s Tuition Assistance benefit for active-duty servicemembers are also excluded. Even though these benefits are federal revenue, they are counted as part of the 10% of revenue from “private” payers—individuals and employers who reach into their own wallets to pay tuition. A school’s ability to attract private payers was adopted as a proxy for quality but has never been tested because of this 90/10 loophole.