Skip to content
ADVERTISEMENT
Sign In
  • Sections
    • News
    • Advice
    • The Review
  • Topics
    • Data
    • Diversity, Equity, & Inclusion
    • Finance & Operations
    • International
    • Leadership & Governance
    • Teaching & Learning
    • Scholarship & Research
    • Student Success
    • Technology
    • Transitions
    • The Workplace
  • Magazine
    • Current Issue
    • Special Issues
    • Podcast: College Matters from The Chronicle
  • Newsletters
  • Events
    • Virtual Events
    • Chronicle On-The-Road
    • Professional Development
  • Ask Chron
  • Store
    • Featured Products
    • Reports
    • Data
    • Collections
    • Back Issues
  • Jobs
    • Find a Job
    • Post a Job
    • Professional Development
    • Career Resources
    • Virtual Career Fair
  • More
  • Sections
    • News
    • Advice
    • The Review
  • Topics
    • Data
    • Diversity, Equity, & Inclusion
    • Finance & Operations
    • International
    • Leadership & Governance
    • Teaching & Learning
    • Scholarship & Research
    • Student Success
    • Technology
    • Transitions
    • The Workplace
  • Magazine
    • Current Issue
    • Special Issues
    • Podcast: College Matters from The Chronicle
  • Newsletters
  • Events
    • Virtual Events
    • Chronicle On-The-Road
    • Professional Development
  • Ask Chron
  • Store
    • Featured Products
    • Reports
    • Data
    • Collections
    • Back Issues
  • Jobs
    • Find a Job
    • Post a Job
    • Professional Development
    • Career Resources
    • Virtual Career Fair
    Upcoming Events:
    College Advising
    Serving Higher Ed
    Chronicle Festival 2025
Sign In
News

For-Profit Colleges Show Increasing Dependence on Federal Student Aid

By Goldie Blumenstyk February 15, 2011
Washington

Eight for-profit colleges failed to meet the requirements of a federal law that says they can get no more than 90 percent of their revenues from federal student-aid programs, and an additional 257 of them took in nearly the legal limit, exceeding the 85-percent mark, a report released on Wednesday by the Department of Education shows.

To continue reading for FREE, please sign in.

Sign In

Or subscribe now to read with unlimited access for as low as $10/month.

Don’t have an account? Sign up now.

A free account provides you access to a limited number of free articles each month, plus newsletters, job postings, salary data, and exclusive store discounts.

Sign Up

Eight for-profit colleges failed to meet the requirements of a federal law that says they can get no more than 90 percent of their revenues from federal student-aid programs, and an additional 257 of them took in nearly the legal limit, exceeding the 85-percent mark, a report released on Wednesday by the Department of Education shows.

The report for the most recent accounting period also shows that an increasing number of for-profit colleges are becoming more heavily reliant on federal student-aid—so much so that a number of them are close to the point at which they could lose eligibility to participate in federal student aid programs.

For that reason, many of the colleges have been vigorously lobbying Congress to ease or eliminate the law, known as the “90/10 rule.”

Colleges that fail to comply with the rule for two consecutive years lose their eligibility to participate in the federal government’s Pell Grant and subsidized student-loan programs. Colleges that fail the test for one year remain eligible for the programs, under a “provisional” basis, which means their opportunities for drawing down federal funds is restricted and closely monitored.

The figures in the new report, which the department is required to post on its Web site, were based on the colleges’ financial statements for a fiscal year that ended between July 1, 2008, and June 30, 2009.

The 90/10 rule applies only to for-profit colleges. And only federal student-aid money, commonly referred to as Title IV funds (for the section of the Higher Education Act that authorizes them), is counted toward the 90-percent limit. Other sources of federal aid, such as money from the GI Bill or military tuition reimbursements that many students use to pay for college, are not treated as part of the Title IV side of the calculation.

In the previous year, no colleges failed the test, a report released in 2010 shows.

According to the new report, 550 colleges received more than 80 percent of their revenue from Title IV sources, and more than 1,000 colleges received at least 70 percent of their revenue from those sources. In the previous year, by comparison, only 457 colleges had federal-student aid revenue in excess of 80 percent, and 830 were above 70 percent.

Four of the colleges that failed the test in the most recent year—two campuses of ATI Career Training Center and two campuses of South Texas Vocational Technical Institute, are owned by the same entity; the other four are also primarily technical or beauty colleges.

The 257 institutions with a proportion of federal-student-aid funds in excess of 85 percent include 11 institutions owned by Kaplan Inc. (nine of them under the Kaplan name and two of the TESST College of Technology brand).

ADVERTISEMENT

It also includes five colleges, operating under the Everest brand, owned by another major higher-education company, Corinthian Colleges Inc. Just a couple of weeks ago, Corinthian announced that it would raise its tuition—putting it above the amounts covered by Pell Grants and student loans—to avoid violating the 90/10 rule, even though that will require students to borrow more money from more-expensive nonfederal sources to attend.

Two of the colleges with Title IV revenues in excess of 85 percent are owned by Remington College, an institution that recently converted from for-profit to nonprofit status.

We welcome your thoughts and questions about this article. Please email the editors or submit a letter for publication.
Share
  • Twitter
  • LinkedIn
  • Facebook
  • Email
Blumenstyk_Goldie.jpg
About the Author
Goldie Blumenstyk
The veteran reporter Goldie Blumenstyk writes a weekly newsletter, The Edge, about the people, ideas, and trends changing higher education. Find her on Twitter @GoldieStandard. She is also the author of the bestselling book American Higher Education in Crisis? What Everyone Needs to Know.
ADVERTISEMENT
ADVERTISEMENT

More News

Vector illustration of large open scissors  with several workers in seats dangling by white lines
Iced Out
Duke Administrators Accused of Bypassing Shared-Governance Process in Offering Buyouts
Illustration showing money being funnelled into the top of a microscope.
'A New Era'
Higher-Ed Associations Pitch an Alternative to Trump’s Cap on Research Funding
Illustration showing classical columns of various heights, each turning into a stack of coins
Endowment funds
The Nation’s Wealthiest Small Colleges Just Won a Big Tax Exemption
WASHINGTON, DISTICT OF COLUMBIA, UNITED STATES - 2025/04/14: A Pro-Palestinian demonstrator holding a sign with Release Mahmud Khalil written on it, stands in front of the ICE building while joining in a protest. Pro-Palestinian demonstrators rally in front of the ICE building, demanding freedom for Mahmoud Khalil and all those targeted for speaking out against genocide in Palestine. Protesters demand an end to U.S. complicity and solidarity with the resistance in Gaza. (Photo by Probal Rashid/LightRocket via Getty Images)
Campus Activism
An Anonymous Group’s List of Purported Critics of Israel Helped Steer a U.S. Crackdown on Student Activists

From The Review

John T. Scopes as he stood before the judges stand and was sentenced, July 2025.
The Review | Essay
100 Years Ago, the Scopes Monkey Trial Discovered Academic Freedom
By John K. Wilson
Vector illustration of a suited man with a pair of scissors for a tie and an American flag button on his lapel.
The Review | Opinion
A Damaging Endowment Tax Crosses the Finish Line
By Phillip Levine
University of Virginia President Jim Ryan keeps his emotions in check during a news conference, Monday, Nov. 14, 2022 in Charlottesville. Va. Authorities say three people have been killed and two others were wounded in a shooting at the University of Virginia and a student is in custody. (AP Photo/Steve Helber)
The Review | Opinion
Jim Ryan’s Resignation Is a Warning
By Robert Zaretsky

Upcoming Events

07-31-Turbulent-Workday_assets v2_Plain.png
Keeping Your Institution Moving Forward in Turbulent Times
Ascendium_Housing_Plain.png
What It Really Takes to Serve Students’ Basic Needs: Housing
Lead With Insight
  • Explore Content
    • Latest News
    • Newsletters
    • Letters
    • Free Reports and Guides
    • Professional Development
    • Events
    • Chronicle Store
    • Chronicle Intelligence
    • Jobs in Higher Education
    • Post a Job
  • Know The Chronicle
    • About Us
    • Vision, Mission, Values
    • DEI at The Chronicle
    • Write for Us
    • Work at The Chronicle
    • Our Reporting Process
    • Advertise With Us
    • Brand Studio
    • Accessibility Statement
  • Account and Access
    • Manage Your Account
    • Manage Newsletters
    • Individual Subscriptions
    • Group and Institutional Access
    • Subscription & Account FAQ
  • Get Support
    • Contact Us
    • Reprints & Permissions
    • User Agreement
    • Terms and Conditions
    • Privacy Policy
    • California Privacy Policy
    • Do Not Sell My Personal Information
1255 23rd Street, N.W. Washington, D.C. 20037
© 2025 The Chronicle of Higher Education
The Chronicle of Higher Education is academe’s most trusted resource for independent journalism, career development, and forward-looking intelligence. Our readers lead, teach, learn, and innovate with insights from The Chronicle.
Follow Us
  • twitter
  • instagram
  • youtube
  • facebook
  • linkedin