First, let’s break down the main thrust of the bill. The POST Act of 2024 proposes amendments to the Higher Education Act of 1965, specifically focusing on proprietary, or for-profit, colleges and universities. At its core, the bill seeks to enhance protections for both students and taxpayers by tightening the financial practices of these institutions.
The centerpiece of this legislation is the revision of the so-called 85/15 rule, which will now require these proprietary schools to generate at least 15% of their revenues from non-federal sources. What exactly does that mean? Simply put, for-profit colleges must obtain more of their income from sources like tuition payments by students (or their families), as opposed to relying predominantly on federal aid such as Pell Grants and student loans.
To break it down even further, the bill stipulates several key rules on how these colleges should calculate their revenues: – Only funds from tuition, fees, and related educational activities that are essential to training and conducted under specific conditions can be counted. – Any income from non-federally funded job training programs or students paying for non-eligible educational programs must adhere to strict criteria. – Federal education assistance funds should be assumed to be used for paying tuition and fees, with limited exceptions. – Institutions are prohibited from counting revenue from their own loans to students, unless these loans follow meticulous guidelines.
Moreover, if a school fails to meet the 85/15 rule for a fiscal year, it faces a substantial penalty: a minimum two-year ban on eligibility for federal aid programs. To regain eligibility, the institution must prove compliance with all federal requirements for at least two subsequent fiscal years.
An important feature of the bill is transparency. By July 2026, and annually thereafter, the Secretary of Education is required to report to Congress on the proportion of revenue these institutions derive from federal versus non-federal sources. This level of accountability not only pressures schools to diversify their revenue streams but also provides lawmakers and the public with valuable insights into the financial health and practices of for-profit colleges.
So why is this legislation momentous? Consider the potential implications for students and taxpayers. For students, particularly those enrolled in for-profit colleges, ensuring that these institutions have a vested interest in their success—beyond tapping into federal funds—can lead to better educational outcomes and reduced loan defaults. For taxpayers, this law seeks to safeguard the substantial amount of federal dollars being funneled into higher education by promoting fiscal responsibility among institutions receiving these funds.
In essence, the POST Act of 2024 is a bid to reform the landscape of for-profit higher education. By imposing a more stringent revenue mix requirement and demanding greater transparency, it aims to strike a balance between educational opportunities and financial integrity. As this bill progresses through the legislative process, it will be closely monitored by students, educational institutions, and policymakers alike.
The POST Act stands as a crucial step toward rectifying long-standing concerns about the financial reliance of for-profit colleges on federal aid. Whether it will pass or face hurdles in Congress remains to be seen, but its introduction certainly marks a significant moment in the ongoing efforts to protect educational funding and ensure the sustainability and credibility of American higher education institutions.
