POST Act of 2025
The POST Act of 2025 (H.R. 4026) would reform how proprietary (for-profit) institutions of higher education are financed and judged for eligibility under federal programs. Central to the bill is an 85/15 rule: a proprietary school must derive at least 15 percent of its revenues from non-Federal sources to maintain eligibility under Title IV programs. The bill defines what counts as non-Federal revenue, including tuition and related charges, on-campus activities tied to education, certain contracts with the Federal government, outside scholarships, certain forms of alternative financing (like income share agreements) if specific conditions are met, and other specified sources. It places stringent rules on how revenue is counted (cash basis, specific exclusions, and detailed eligibility criteria) and sets consequences for failure to meet the rule (the institution would be ineligible for at least two fiscal years) along with a path to regain eligibility. It also requires the Secretary of Education to report to Congress on each eligible proprietary institution’s revenue mix (Federal vs non-Federal) and makes conforming amendments to existing Higher Education Act provisions. The effective date is set to begin in the second full award year after enactment.
Key Points
- 185/15 revenue rule for proprietary institutions: To qualify under the relevant provisions, a for-profit college must obtain at least 15% of its revenues from non-Federal education sources, calculated using cash-basis accounting and a defined set of revenue categories and exclusions.
- 2What counts as non-Federal revenue: Includes tuition/fees from eligible programs, educational activities conducted to educate students, certain Federal job-training contracts, outside funds for non-eligible programs under specified conditions, and in some cases outside scholarships or alternative financing arrangements that meet strict disclosure and structure requirements.
- 3Limitations and accounting rules: The calculation excludes certain Federal funds (unless used for tuition/charges as specified), treats loans by the institution in narrowly defined ways, and imposes detailed rules on counting income from scholarships, income-share agreements, and related financing.
- 4Consequences for noncompliance: If a proprietary institution fails the 85/15 test in a fiscal year, it becomes ineligible for that eligibility purpose for at least two institutional fiscal years, and must regain eligibility by meeting all section 498 requirements for at least two years thereafter.
- 5Reporting and transparency: The Secretary must report to Congress, by the third full award year after enactment and then annually, the amount and share of revenues from Federal education assistance funds versus other sources for each proprietary institution receiving Title IV assistance.