APSCU Blog: The 90/10 Rule Hurts Access to Postsecondary Education for Traditional Students

06 Apr 2015 /By APSCU Communications 
Students who borrow to earn a postsecondary credential do so because the lifetime benefits of an education far outweigh the costs. Often the students who rely the most on federal student aid are the ones who need postsecondary education the most. Rules that limit institutions’ ability to provide education to students who borrow to fund their education result in denying access to opportunity.
The 90/10 rule is one such rule. It specifically targets private sector institutions, which serve more new traditional students than other sectors. The rule requires that 10 percent of private sector revenues come from sources other than federal student aid. This means that private sector institutions need to ensure that they enroll enough students who do not need to borrow to pay for their credentials. In other words, since supply is limited, these institutions need to limit the number of people they educate who are low income.
Demographics by sector 90 10
This has the clear effect of limiting access to education for the students who need it most. Mark Kantrowitz studied the effects of the 90/10 rule and found that institutions that enroll more students from low income families (adjusted gross income less than $50,000), are more likely to be in violation of the rule. Additionally, institutions that charge less than $8,000 in tuition are more likely to be in violation of the rule.
The inverse relationship between tuition and difficulty complying with the 90/10 rule causes a conflict with a component of the Department’s gainful employment regulation. Institutions that lower their tuition to attempt to stay compliant with the gainful employment regulation, will run the risk of violating the 90/10 rule as more low income students enroll.
It is a common attack that institutions in violation of the 90/10 rule must be offering a worse education, because not enough students are willing to pay out of pocket to attend. This critique entirely misses the point. Federal student aid is designed to allow students who do not have the means to pay for postsecondary education have access to its benefits. Institutions that serve lower income students are more likely to have more students borrowing.
This critique would also be an indictment of other types of institutions. President Obama’s free community college proposal would mean that students will not have to apply their money toward the cost of an education. Using the logic behind the 90/10 rule, that means community colleges offer a lesser product, because students are not paying to attend.
As Mark Kantrowitz notes, “For most colleges, the percentage of revenue from federal student aid measures the extent to which the college serves low-income students, not the students’ willingness to pay for their education.”
The access-slashing effects of the 90/10 rule are exacerbated by the fact that they only apply to private sector institutions. These institutions have a track record of serving students that are often not afforded access to postsecondary education by institutions in other sectors. Targeting these institutions means targeting their students, who may not have anywhere else to go for a postsecondary credential.
In his report, Mark Kantrowitz found that the majority of public colleges, including 80 percent of community colleges, would fail the 90/10 rule. Additionally, the true costs of public institutions are higher than the true costs of private sector institutions once direct appropriations are accounted for. All of these facts, when taken together, demonstrate that the 90/10 rule is yet another example of a regulatory attempt to arbitrarily limit the important role that private sector institutions have in providing access to postsecondary education.
Degrees by sector

Direct link to article: http://www.highereducationforall.com/9010-rule-hurts-access-postsecondary-education-new-traditional-students/

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