HR4026-119

What This Bill Does

The POST Act tightens the revenue rule for proprietary institutions of higher education. A for-profit college would qualify only if it receives at least 15 percent of its revenue from sources other than federal education assistance funds. The bill defines federal education assistance funds broadly as federal funds disbursed or delivered to or on behalf of a student to attend the institution, not only title IV aid. It also defines alternative financing agreements involving students and the institution, ownership-tree entities, commonly owned entities, related entities, or affiliates, so institutions cannot easily count related financing as independent non-federal revenue. Revenue calculations must use cash-basis accounting and include only specified categories such as tuition, fees, required institutional charges, certain supervised educational activities, federal job-training contracts for low-income individuals, and funds paid by students or unrelated parties for qualifying non-title-IV programs that do not overlap with eligible programs. The Education Department must publish, for each proprietary institution receiving title IV aid, the amount and percentage of revenue from federal education assistance funds and from other sources based on audited financial statements. The amendments take effect in the second full award year after enactment.

Who Benefits and How

Students at proprietary colleges benefit from stronger limits on schools that rely overwhelmingly on federal education assistance. Federal taxpayers benefit if for-profit colleges must show more non-federal market support before receiving federal aid. Education Department oversight staff benefit from public federal and non-federal revenue disclosures based on audited statements. Competing nonprofit colleges benefit if for-profit schools face stricter federal-aid eligibility rules.

Who Bears the Burden and How

Proprietary colleges must derive at least 15 percent of revenue from sources other than federal education assistance funds. College ownership affiliates cannot easily use related alternative financing to inflate non-federal revenue. Alternative financing providers tied to institutions face stricter treatment in revenue calculations. For-profit college compliance staff must calculate cash-basis revenue under the new definitions and audited disclosure rules. Schools failing the 85/15 rule risk losing proprietary institution eligibility.

Key Provisions

• Requires proprietary colleges to receive at least 15 percent of revenue from non-federal education assistance sources.
• Defines federal education assistance funds broadly beyond title IV funds.
• Defines alternative financing agreements involving institutional owners, affiliates, common ownership, or related entities.
• Limits revenue calculations to specified cash-basis categories.
• Requires public Education Department data on federal and non-federal revenue amounts and percentages.
• Applies beginning in the second full award year after enactment.