Issue Primers

Proprietary (for-profit) institutions of higher education were originally prohibited from participating in the federal financial aid system under the Higher Education Act (HEA) of 1965. However, the 1972 HEA reauthorization changed course, extending federal financial aid eligibility to these institutions under the condition that they “prepare students for gainful employment in a recognized occupation.” Non-degree programs at public and private, non-profit institutions were subject to the same requirement. A House report noted that lawmakers were concerned about opening eligibility to proprietary schools because “most of the institutions have no experience administering public student grant programs.”