Classification of Revenue Under Title IV (90/10 Rule)
Description
The Department of Education has updated its guidance on how for-profit institutions calculate revenue under the “90/10 Rule” for Title IV Federal Financial Aid eligibility. This new guidance interprets Congress’ changes in the American Rescue Plan Act of 2021, which now requires for-profit schools to earn at least 10% of their revenue from non-federal sources to participate in federal student aid programs. Unlike previous policy, all forms of federal education aid must now be counted as federal funds in this calculation.
A key revision allows proprietary institutions to include income from online courses that are not eligible for federal aid when determining their compliance with the 90/10 Rule. This change is intended to support Title IV eligibility and provides flexibility for institutions earning revenue from non-eligible online programs.
Action to be taken
Based upon the new interpretive rule, it is recommended that institutions take the following actions:
- Identify programs – Confirm which non–Title IV eligible programs (including distance ed) meet statutory criteria.
- Recalculate – Revisit prior 90/10 calculations to include eligible revenues.
- Update policies – Adjust accounting/reporting procedures to consistently capture these revenues.
- Document compliance – Keep clear records and justification for calculations.
- Monitor changes – Track Department updates, litigation, or new guidance.
Publication Date
- July 7, 2025