CCA Issue Brief on HR 3039

The Career College Association (CCA), on behalf of its 1,100 members who educate more than a million students each year for employment in more than 200 occupational fields, is pleased to support HR 3039, the "Expanding Opportunities in Higher Education Act of 2003." Three key provisions of the Act that we are especially supportive of are those aimed at treating all institutions fairly: creating a single definition of higher education, repealing the 90-10 rule, and repealing the 50% rule.

Single Definition of Higher Education

Combining the current bifurcated definitions of higher education institutions will ensure that all institutions are treated fairly and equitably under the law, and will allow qualifying for-profit institutions to participate in all titles of the HEA. No student should have access to the benefits of these HEA titles denied based on his or her choice to attend an authorized, accredited, and eligible institution of higher education. The current separation of the definitions in the statute creates confusion and unintentional omissions as laws are written. Congress began the process of fully integrating for-profit higher education institutions by moving the definition of for-profit institutions to Section 102 during the 1998 reauthorization; now it is time to put for-profit colleges on equal footing with non-profit institutions. For-profit education has achieved a level of maturity and credibility that supports this change. In addition, creating a single definition of a higher education institution would remove the limitation on for-profit colleges that prevents them from offering liberal arts degrees to their students wishing to obtain them.

The 90-10 Rule

The 90-10 rule requires for-profit institutions to derive at least 10% of their tuition revenues from non-Title IV sources. This rule was established as a way of measuring the "quality" of an institution on the theory that if a college is deriving no more than 90% of its revenue from Title IV, it is a quality institution that is able to attract students willing to invest some portion of their own funds in the institution and the education it provides. This theory is flawed. In reality it discourages institutions from educating large numbers of the most economically disadvantaged students who would not be able to attend college without the full benefits afforded under the Title IV aid programs.

The Department of Education disregarded the clear intent of Congress in defining, through regulation, the process of calculating an institution's compliance with this rule by presuming that all Title IV funds are credited towards a student's institutional charges, even if some portion of those funds have been disbursed to the student to assist in paying living expenses. The Department has also narrowly defined what may be counted as "good" revenue, excluding such sources as the popular tax-deferred §529 savings plans. Finally, the 90-10 rule can be a death sentence for those institutions serving the neediest populations, since institutions out of compliance with the 90-10 rule lose eligibility to participate in Title IV programs. Institutions are concerned when they are close to the 90% ceiling, and incur additional administrative costs to ensure they remain in compliance with the rule. Using the less expensive method of calculating 90-10 compliance on an aggregate basis, more than 19% of all for-profit institutions would be above 85% in their ratio, opening them up to additional scrutiny by the Department of Education. These institutions sometimes switch to a student-by-student basis of calculating their 90-10 compliance which, while providing a more accurate calculation of the 90-10 ratio, increases administrative costs and creates additional burdens on the institution.

50% Rule

The current 50% rule limits the number of students and courses a Title IV eligible institution may offer via distance education. By removing unnecessary barriers to distance education, institutions will have the flexibility to increase the use of technology in delivering education and to provide an increasing number of students with new postsecondary education options. As the Web-based Education Commission's report to Congress showed, the high-tech realities of today will allow institutions to reach students who would otherwise be barred from postsecondary education due to time or geographic constraints. Additionally, students would be able to fill course requirements through distance education when the all-too-familiar scenario of "full" ground courses occur in the brick-and-mortar classroom; distance education will allow institutions to offer additional sections of courses that would be limited in a pure brick-and-mortar setting. Students enrolling in both on-ground and distance courses will incur lower costs in the long term, and be able to complete their degrees in a more timely manner. Expanding the reach of educational programs through distance education will, in the long term, help to create a more highly trained and educated work force.

CCA applauds Representative Cole for introducing HR 3039 and is proud to offer its support to this important piece of higher education legislation. We urge you to co-sponsor this legislation by contacting Kathleen Smith or Elisabeth Wheel at the House Education and the Workforce Committee by phone at 202-225-6558 or by e-mail at Elisabeth.Wheel@mail.house.gov.

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