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.
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.
