Bill would let for-profit colleges run entirely on federal student aid
S. 4348 — PARITY Act · Filed by Jim Banks (R-IN) · 1 cosponsor · Introduced Apr 20, 2026 · Referred to committee
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What it does
This bill repeals the 90/10 rule for proprietary (for-profit) schools under federal student aid law. The 90/10 rule requires that for-profit schools derive at least 10% of their revenue from non-federal sources; this bill removes that requirement entirely, allowing for-profit schools to operate on 100% federal student aid funding with no private revenue threshold.
Why we flagged it
The bill's operative mechanism is the removal of a financial-stability rule that constrained for-profit schools' reliance on federal aid. This is regulatory relief narrowly benefiting the for-profit education sector.
What the text implies
- Removes a structural incentive for for-profit schools to maintain financial stability and diversify revenue; schools can now operate entirely on federal student aid without private investment or tuition revenue.
- Increases moral hazard: for-profit schools have no financial penalty for poor outcomes, since they do not risk their own capital if federal aid dries up or students default.
The full analysis lists 4 implications of this text.
Who stands to gain
for-profit education companies and chains; proprietary school operators