PARITY Act
- Sponsor
- Sen. Banks, Jim [R-IN]
- Committees
- Health, Education, Labor, and Pensions Committee (primary)
- Last action
- Apr 20, 2026
Bottom line
The bill eliminates a key financial regulation on for-profit colleges, potentially increasing their reliance on federal student aid and altering accountability mechanisms.
What it actually does
This bill repeals the '90/10 rule' for proprietary (for-profit) schools under Title IV of the Higher Education Act of 1965. The 90/10 rule currently mandates that these institutions derive at least 10% of their revenue from non-federal sources to remain eligible for federal student financial assistance programs.
Proponents argue
Proponents argue that the 90/10 rule unfairly targets proprietary schools, restricting their ability to serve students, particularly veterans who use GI Bill benefits (which were recently included in the 90% calculation). They contend that repealing the rule would promote access to education, ensure fair treatment for all institutions, and reduce burdensome regulations.
Opponents contend
Opponents argue that the 90/10 rule is a crucial safeguard against predatory practices by for-profit colleges, preventing them from becoming overly reliant on taxpayer-funded student aid and potentially leaving students with unmanageable debt and worthless degrees. They contend that its repeal would expose students and taxpayers to greater financial risk and reduce accountability.
The bill text is extremely short, allowing for quick comprehension, but its policy implications are extensive and require significant background knowledge.
Section 2(1) and Section 2(2)
Repeal of the 90/10 Rule
This provision amends Section 487 of the Higher Education Act of 1965 by removing paragraph (24) from subsection (a) and repealing subsection (d). These repealed sections collectively constitute the '90/10 rule,' which requires proprietary institutions to derive at least 10% of their revenue from non-federal sources to maintain eligibility for federal student financial assistance programs under Title IV. Its repeal removes this statutory revenue diversification requirement.
Supporters argue
Supporters argue that the 90/10 rule is discriminatory against proprietary schools and limits their ability to serve students, especially those who rely heavily on federal aid, including veterans. They contend that the rule creates an unnecessary burden and that its repeal would level the playing field with non-profit institutions by removing a unique restriction.
Critics contend
Critics argue that the 90/10 rule is a vital consumer protection, ensuring that for-profit colleges have a financial incentive to provide quality education that attracts non-federal funding. They contend that repealing it would remove a critical safeguard against waste, fraud, and abuse, and could lead to institutions prioritizing federal aid over student outcomes, leaving students with debt and inadequate credentials.
Tradeoffs
The bill navigates the tension between promoting institutional autonomy and market competition in the for-profit education sector and ensuring robust consumer protection and fiscal accountability for federal taxpayer dollars. It balances concerns about access to education for certain student populations against the potential for increased risk of predatory practices.