https://www.sikich.com

Department of Education Revised 90/10 Rule for Distance Education

Jessica Mohnke

Aug 14 2025

2 min read

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.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

About the Author

Jessica Mohnke

Jessica Mohnke is a Manager of Title IV audit services, supporting post-secondary schools with their financial obligations. Jessica performs financial audits to provide the resources that organizations with Title IV requirements need to maintain compliance. Before entering the field of accounting, they began their career in data science.