The U.S. Department of Education (DOE) issued a revised interpretation of the 90/10 Rule on July 7, 2025, following a review of its rulemaking process. It changed its prior guidance on how schools should treat funds received for online education programs that are not eligible for Title IV funding. Under the new guidance, for-profit postsecondary education institutions can now include funds from these additional programs in their 90/10 Rule calculations. These additional funds could significantly impact schools close to the 90% threshold and may influence how the school calculates its percentage.
Background
The current 90/10 Rule (34 C.F.R. 668.28) requires for-profit postsecondary educational institutions to receive no more than 90% of their revenues from Federal sources. It was enacted in March 2021 under the American Rescue Plan Act and was made effective for fiscal years beginning on or after January 1, 2023. The new regulations added specific requirements for the inclusion of funds received from students enrolled in programs that are not Title IV eligible.
On October 28, 2022, the DOE published a final rule on the changes that made several amendments to the 90/10 Rule. As part of the preamble to those changes, the DOE added language requiring funds received from non-Title IV eligible programs be taught at an approved location. This effectively prohibited schools from including funds received from students enrolled in non-Title IV eligible distance education programs.
Announced at the tail end of the COVID-19 pandemic, this change impacted schools that had utilized distance education to maintain their program offerings. Many of these institutions continued offering online options even after reopening, to remain competitive in an increasingly digital education landscape.
Regulatory Changes
After a review of the DOE’s initial interpretation of the 90/10 Rule, the DOE removed language from the original guidance that had prohibited schools from including funds received for non-Title IV eligible distance education programs. This was due to the DOE not following certain administrative procedures.
Under the new guidance, schools can now include funds received for these online programs in the 10% of funds required to come from non-Federal sources. This change will give some relief to schools with significant non-Title IV eligible online programs.
Key Considerations
90/10 Rule compliance, with its many caveats and requirements, remains complex in the ever-evolving environment of new laws and interpretive guidance. Consulting with Title IV experts is key to ensuring regulatory alignment and audit readiness. Sikich’s audit professionals have the expertise to guide your approach.
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