Examining the 90/10 Rule
The 90/10 rule dictates that no more than 90 percent of institutional revenue at a for-profit college or university (FPCU) can come from Title IV funds. The rule, originally an 85/15 ratio, was introduced in the 1992 amendments to the Higher Education Act and has been debated for 25 years. Proponents argue the rule raises institutional quality by eliminating low-quality institutions from the market, while opponents suggest that the rule creates perverse incentives for FPCUs to exclude high-need students and to raise prices. The author uses propensity score matching to estimate the effects of violating the 90/10 rule and the plausibility of these outcomes. The author provides minimal evidence that FPCUs raise tuition as a result of violating the rule, some evidence that Hispanic students may be excluded, some evidence of an increase in the number of certificates awarded, and strong evidence that violating schools are more likely to close.
Ward, James D.
"Intended and Unintended Consequences of For-Profit College Regulation: Examining the 90/10 Rule,"
Journal of Student Financial Aid: Vol. 48
, Article 4.
Available at: https://ir.library.louisville.edu/jsfa/vol48/iss3/4