About 67 percent of proprietary school students receive federal student aid under Title IV. Fewer proprietary schools participate in Title IV programs now than 5 years ago, a trend reflected in decreased numbers of schools accredited by the six primary accrediting agencies. And, while the default rates for proprietary school students are still far above those associated with nonprofit institutions, the rates have declined over the past few years. 1). The proportion receiving aid fell from nearly 80 percent in 1986-87 to about 67 percent in 1992-93, while the proportion of students receiving aid at the public and private nonprofit schools remained steady. The 85-15 Rule

One new measure adopted in the 1992 HEA amendments to help tighten eligibility for Title IV student financial aid programs was the so-called 85-15 rule. This provision prohibits proprietary schools from participating in Title IV programs if more than 85 percent of their revenues come from these programs. Thus far, however, only four proprietary schools have notified the Department of their failure to meet the 85-15 standard. For example, it may be that very few schools actually had more than 85 percent of their revenues coming from Title IV when the rule became law or that most such schools adjusted their operations to meet the standard when it took effect. Students who enroll in occupational education programs, obtain grants, and incur significant debt often risk being unable to find work because they have been trained for fields in which no job demand exists.
Why GAO Did This Study

Pursuant to a congressional request, GAO examined whether proprietary schools receiving Title IV funding are providing students with quality educational programs.

What GAO Found

GAO found that: (1) fewer proprietary schools have been accredited since 1992 because of increases in school closures and oversight by accrediting agencies; (2) the proportion of proprietary school students receiving Title IV aid fell from 80 percent in the 1986-87 school year to 67 percent in the 1992-93 school year; (3) loan default rates fell, but remained substantially higher than those for students attending nonprofit institutions; (4) the 1992 Higher Education Act Amendments adopted a rule prohibiting schools from participating in Title IV programs if they receive more than 85 percent of their revenue from Title IV programs; (5) since the so-called 85-15 rule went into effect, only four proprietary schools have notified the Department of Education of their failure to meet the 85-percent standard; (6) schools not meeting the standard had more than 85 percent of their revenue coming from Title IV funding, improperly documented their eligibility, misunderstood the reporting rules, or intentionally misrepresented their findings; and (7) proprietary school students incur significant debt and are often unable to find jobs in their fields.