The U.S. Department of Education announced on January 16, 2026 that it will no longer enforce the owner-entity signature requirement for Program Participation Agreements (PPAs). This is a drastic policy shift from the prior administration. It removes a larger barrier for prospective ownership groups of proprietary (for-profit) or private not-for-profit higher education institutions.
Background
A PPA is a legal contract between a higher education institution and the Department of Education. It outlines the conditions for participating in Title IV federal student aid programs. Without a signed PPA, institutions can’t participate in most federal aid programs.
Historically, proprietary and private not-for-profit institutions needed signed PPAs from both an authorized representative of the institutions and “an authorized representative of an entity with direct or indirect ownership of the institution if that entity has the power to exercise control over the institution.” In a March 1, 2023 announcement, the Department clarified its requirement that individuals in these ownership roles assume personal liability for federal government losses due to “school closures, approved borrower defense claims, or outstanding liabilities owed to the Department.” This tool was intended for larger institutions or those with troublesome compliance histories to minimize losses to the taxpayers.
What this means
The decision to stop enforcing the owner-entity signature requirement changes what was becoming a roadblock for current and prospective school owners. The obligation of assuming personal liability for all rules and conditions in an institution’s PPA was limiting succession-planning options for many school owners.
Under the new guidance, the Department will generally only impose the personal liability requirement in cases where an owner intentionally withdraws equity from the institution to evade financial liability. The new policy applies prospectively and will govern all PPAs issued on or after the date of the electronic announcement. Existing PPAs will not have the owner-entity signature removed.
Even small regulatory changes can create significant ripple effects on institutions. Sikich’s Title IV audit experts can guide institutions through their questions and concerns about this policy change.
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.
