The Protecting Our Students and Taxpayers Act of 2025 amends the Higher Education Act of 1965 to implement an explicit 85/15 rule for proprietary institutions of higher education. Under the bill, a proprietary institution must derive not less than 15% of its revenues from sources other than Federal education assistance funds (Title IV).
It also defines what counts as revenue, how to measure it (cash basis), and which funding streams are excluded, including specific categories tied to Federal programs and loans. The bill further provides a detailed framework for counting alternative financing arrangements, such as income-share agreements, and sets rules for regaining eligibility if the threshold is not met.
It also repeals or reforms certain existing compliance provisions and requires annual reporting to Congress on revenue mixes for Title IV–receiving institutions. These changes are designed to reduce overreliance on federal funds and increase transparency for students and taxpayers.
At a Glance
What It Does
Adds an 85/15 revenue rule: proprietary institutions must derive at least 15% of revenue from non-Federal sources and sets out how to count and exclude certain funding streams, including ISAs and other alternative financing arrangements.
Who It Affects
Title IV–eligible proprietary institutions, their finance and compliance teams, accrediting and State regulators, and federal student aid administrators.
Why It Matters
Creates a clearer revenue mix standard that reduces dependence on federal funds, improves accountability, and provides taxpayers with visibility into how for-profit colleges fund operations.
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What This Bill Actually Does
The POST Act of 2025 fundamentally reshapes how for-profit or proprietary institutions are funded by altering their eligibility criteria under the Higher Education Act. The centerpiece is an 85/15 rule: to be considered a proprietary institution, at least 15% of its revenues must come from non-Federal sources.
The bill details what counts as revenue, how to measure it, and which funds are excluded from the calculation. It also clarifies how to treat alternative financing arrangements, including income-sharing agreements, and sets conditions for when such arrangements may be counted toward revenue.
The calculation relies on cash-basis accounting and includes specific categories of revenue, while excluding federal funds provided under various Title IV programs, as well as funds tied to separate government or outside contracts in some cases.
If an institution falls below the 15% threshold for a fiscal year, it becomes ineligible for the purposes of the 85/15 rule for at least two subsequent institutional fiscal years, and it must regain eligibility by meeting all existing eligibility and certification requirements under section 498 for two additional fiscal years. The Act also repeals and reorganizes certain preexisting requirements in HEA section 487 and introduces conforming amendments to other sections to align the statute with the new rule.
Finally, the Secretary must report annually to Congress on the revenue composition of each Title IV–receiving proprietary institution, providing transparency on the mix of federal versus non-federal funding sources.
The Five Things You Need to Know
The bill creates a 15% non-Federal revenue threshold for proprietary institutions (the 85/15 rule).
Definition and counting rules for alternative financing arrangements (e.g.
ISAs) are established and must be treated as revenue under specific conditions.
Calculations use cash-basis accounting and specify which funds count toward revenue and which are excluded.
Institutions that miss the revenue threshold for a fiscal year become ineligible for at least two fiscal years and must regain eligibility.
The Secretary must annually report to Congress on each institution’s revenue mix (federal vs non-federal) for transparency and oversight.
Section-by-Section Breakdown
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85/15 Rule and definitions
This subsection adds the core 85/15 rule to the Higher Education Act, requiring proprietary institutions to derive at least 15% of their revenues from sources other than Federal education assistance funds. It defines what constitutes an alternative financing arrangement and explains how revenue should be counted, including specific allowances for certain contracts and funding streams. The subsection also introduces the general framework for calculating revenues on a cash-basis basis and sets structural rules for including or excluding various financial sources in the calculation.
Repeal of existing requirements
This subsection repeals or restructures specific existing requirements in section 487 of the Higher Education Act to align with the new 85/15 framework. It renumbers and substitutes former provisions, removing obsolete references and ensuring internal consistency across the statute as it relates to proprietary institution oversight and eligibility.
Conforming amendments
This subsection makes cross-reference and structural amendments to related provisions (e.g., sections 152, 153, 496, and 498) so that the statute remains coherent under the new revenue framework. It updates statutory language to reflect the altered eligibility criteria and ensures that the overall regulatory scheme remains operable with the 85/15 rule in place.
Effective date
The amendments take effect two full award years after the date of enactment. This provides institutions with a transition period to adjust their revenue models and reporting practices while aligning with the new eligibility standards.
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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
- Proprietary institutions that diversify revenue and maintain Title IV eligibility may benefit from continued access to federal student aid programs.
- Compliance, finance, and audit teams at for-profit institutions will gain clearer counting and reporting rules, simplifying governance.
- Accrediting bodies and state regulators gain a standardized metric for evaluating institutional revenue models.
- Taxpayers benefit from reduced reliance on federal funds at proprietary schools and enhanced transparency.
Who Bears the Cost
- Institutions that fail the 15% threshold risk losing Title IV eligibility for at least two fiscal years, affecting revenue and enrollment.
- Institutions may need to restructure financing agreements or alter programs to meet the revenue mix, incurring transition costs.
- Federal student aid offices may incur additional workload related to expanded reporting and oversight requirements.
- Smaller institutions with predominantly federal-backed revenue streams may face greater pressure to diversify funding sources.
Key Issues
The Core Tension
The central tension is between strengthening safeguards against excessive reliance on federal funds and preserving access to education by proprietary institutions. Requiring a 15% non-Federal revenue floor may push schools to diversify funding through nontraditional means, which could increase costs for students or reduce program availability if revenues cannot be recombined without altering academic offerings. The mechanism also risks incentivizing complex financing structures or gaming of revenue reporting, raising questions about accuracy, enforcement, and the practical implications for small or niche programs.
The bill introduces a concrete policy lever to curb over-reliance on federal funds by proprietary institutions, but it also raises practical questions about measurement, enforcement, and unintended consequences. Counting non-Federal revenue under a cash-basis framework requires precise tracking of tuition, fees, and on-campus activities that are essential to educational delivery, while excluding funds that merely support administration or non-educational activities.
The treatment of alternative financing arrangements—such as income-sharing agreements—depends on explicit disclosures of charges, maximum payment timelines, and the allocation of payments between principal, interest, and related fees. There is a risk that institutions could reclassify or restructure funding without changing underlying business models, which could complicate enforcement or create incentives to shift programs in ways that affect access and cost for students.
The transition provisions and the two-year ineligibility window for noncompliant institutions add a layer of timing risk, potentially affecting liquidity and program viability for some schools during the adjustment period. The annual reporting requirement enhances transparency but also reveals revenue dependence patterns that could influence market perceptions and competitiveness.
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