The Protecting Our Students and Taxpayers Act of 2025 adds a new revenue test to the Higher Education Act. To qualify as a proprietary institution of higher education, an institution must derive at least 15% of its revenues from sources other than Federal education assistance funds, using cash-basis accounting and a defined set of revenue types.
The bill also redefines what counts as revenue, imposes limits on certain financing arrangements, repeals existing requirements, and sets reporting and transitional rules. These changes are intended to curb over-reliance on federal funds and improve transparency in institutional finances.
At a Glance
What It Does
Establishes an 85/15 revenue rule: proprietary schools must obtain at least 15% of revenues from non-Federal sources and defines acceptable revenue types and accounting rules.
Who It Affects
Proprietary institutions of higher education, their students, and federal program administrators; accrediting and state oversight bodies.
Why It Matters
If schools rely heavily on federal aid, taxpayers bear more risk. The rule aims to diversify revenue, improve financial stability, and increase visibility into how funds are used.
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What This Bill Actually Does
The bill amends the Higher Education Act to introduce a hard revenue threshold for proprietary institutions. It requires that not less than 15% of a school’s revenues come from sources other than Federal education assistance funds, calculated on a cash-basis.
The definition of revenue expands to include tuition-derived funds, on-campus activities related to student education, certain contractual arrangements with Federal programs for job training, and payments from nonrelated sources for education that meet specific limits. It also allows outside scholarships and certain noneligible programs to be treated in particular ways, while excluding several forms of federal funding and direct book/equipment charges from revenue calculations.
The Act also requires these schools to report annually to Congress on the makeup of their revenues and imposes an eligibility safeguard: if a school fails the rule for one fiscal year, it becomes ineligible for at least two institutional fiscal years, with a pathway to regain eligibility by meeting core 498 requirements for two consecutive fiscal years. The measure also repeals or reshapes several preexisting requirements under prior law and establishes an effective date that begins two full award years after enactment.
The Five Things You Need to Know
The bill enforces an 85/15 revenue rule for proprietary colleges: at least 15% of revenue must come from non-Federal sources.
It defines and regulates numerous revenue sources, including alternative financing arrangements and outside scholarships.
Calculations use cash-basis accounting and exclude certain Federal funds and direct book/gear charges.
A school that fails the rule becomes ineligible for at least two fiscal years, with a path to regain eligibility.
The Secretary must annually report to Congress on revenue sources and shares for Title IV–receiving proprietary institutions.
Section-by-Section Breakdown
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Short title
This act may be cited as the Protecting Our Students and Taxpayers Act of 2025 (the POST Act). Section 1 simply names the statute.
85/15 Rule and Revenue Sources
Section 2 adds a new 85/15 rule to the Higher Education Act. To qualify as a proprietary institution, not less than 15% of the school’s revenues must come from non-Federal education-related sources, calculated using cash-basis accounting. The bill defines ‘alternative financing arrangements’ and enumerates revenue streams that count toward non-Federal revenue, including tuition and institutional charges, on-campus activities necessary for education, certain Federal job-training contractual arrangements, outside funds from unrelated sources with explicit conditions, and in some cases outside scholarships. It also specifies funds that must be excluded from revenue calculations, such as certain Federal funds, matching funds, and billed book/equipment charges. These provisions are intended to constrain reliance on Federal funds and promote financial transparency.”},{
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Explore Education in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- CFOs and financial officers at proprietary institutions who already maintain diverse, non-Federal revenue streams—this rule clarifies what counts as revenue and demonstrates compliance readiness.
- Accrediting agencies and state higher-education authorities that oversee program integrity will gain clearer financial signals to assess institutions.
- The Education Department and Congress gain better visibility into where proprietary schools’ money comes from, supporting oversight and accountability.
- Students in proprietary programs with stable, diversified funding may benefit from stronger financial health of their institutions.
- Taxpayers benefit from reduced exposure to institutions that rely heavily on Federal funds.
Who Bears the Cost
- Proprietary institutions that fail to meet the 15% threshold face at least two fiscal years of ineligibility and must incur costs to restructure financing and reporting.
- Institutions relying heavily on Federal funds will face heightened governance and disclosure requirements, potentially increasing compliance and audit costs.
- Auditors and consultants assisting schools to implement cash-basis accounting and new revenue-tracking systems will incur additional workload and fees.
Key Issues
The Core Tension
The central tension is between protecting students and taxpayers from overreliance on federal funds and the potential burden on proprietary schools to restructure financing, reporting, and governance to meet a new 85/15 threshold.
The bill creates meaningful policy tensions: it relies on a precise, cash-basis definition of revenues to distinguish non-Federal funding, but the line between revenue types can be blurry in practice (for example, complex financing arrangements and scholarships with restricted terms). The exclusions and inclusions around funds from outside sources, Title IV funds, and payments for noneligible programs could be contested or exploited, requiring careful administration and enforcement.
Transitional rules and the two-year ineligibility period heighten transition costs for schools retooling their financing models, and the independence of revenue reporting could interact with existing audit requirements under section 487 and related provisions, warranting clear regulatory guidance. Finally, the shift away from reliance on Federal funds could influence program offerings, student access, and school finances during the transition, raising questions about unintended consequences during the move to a new standard.
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