Unbundling For-Profit Higher Education: Relaxing the 90/10 Revenue Constraint

In 2008, congress passed the Higher Education Opportunity Act. This act relaxed the 90/10 rule requiring for-profit institutions to earn at least 10 percent of their revenue from non-Title IV funds by revoking eligibility after 2 years of non-compliance instead of 1 year. To comply with the 90/10 rule, for-profit institutions bundle campuses together. Unbundling the campuses doubles the number of 1-year violations though the number of 2-year violations remains the same. For-profit institutions receive almost one billion dollars, or about 4.5 percent, more federal aid under the 2-year violation rule than the 1-year violation rule.