WASHINGTON — For-profit colleges are urging Congress to change a law that threatens their access to billions of dollars in federal student aid, the companies’ biggest source of revenue.
Education companies that get more than 90 percent of their revenue from the Education Department’s student grants and loans for two years in a row may lose eligibility for the money under the law.
Apollo Group Inc., operator of the University of Phoenix and the biggest U.S. for-profit college, and Santa Ana, Calif.-based Corinthian Colleges Inc. have said they may violate the limit next year.
For-profit college revenue already is being threatened by slowing new-student enrollment amid government investigations of sales practices and the use of federal funds. The companies are lobbying Congress to strike down the revenue cap, called the 9 0/10 rule, or extend an exemption that would help them comply for the next fiscal year.
The 9 0/10 rule, enacted in 1998, requires for-profit colleges to get at least 10 percent of their revenue from sources outside the Education Department.
The law is meant to ensure quality and discourage fraud at for-profit colleges by requiring students to invest some of their own money in tuition, just as homebuyers make down payments on their mortgages.
