How Current Legislation Could Affect Proprietary Schools’ 90/10 Revenue Percentage Rule
The rules surrounding Title IV funding are potentially changing, and staying up-to-date is crucial for your school or institution.
In accordance with the Department of Education (ED)’s current policy, proprietary schools participating in Title IV funding must maintain compliance with the “90/10” rule: “A proprietary institution meets the requirement in § 668.14(b)(16) [when] at least 10 percent of its revenue is derived from sources other than Title IV, HEA program funds.”
That means there are two groups of funds:
- Title IV, HEA program funds
- Any other source of funding
However, provisions in the American Rescue Plan Act of 2021 (ARP Act) started the process to change this 90/10 rule. The updates are expected to center around changing “sources other than Title IV, HEA program funds” to potentially include other sources of federal funding (i.e. the GI Bill, the Workforce Innovation and Opportunity Act, etc.). The ARP Act allowed for the typical negotiated rulemaking process for changes to the federal student aid program to begin in October 2021, with the earliest effective date in fiscal years starting on or after Jan. 1, 2023.
Under the standard, negotiated rulemaking, ED must publish regulations (or changes) on or before Nov. 1 for a July 1 effective date in the following year, but the Secretary may designate any or all provisions for early implementation.
Additionally, during the FY2022 Budget Resolution process, a provision to adjust the 90/10 rule to 85/15 has also been proposed. While this provision is still in the early stages of the legislative process, it’s a clear indication that the 90/10 rule is under focus and will likely be modified very soon.
While these changes have not yet been finalized, now is the time to prepare. Help ensure your school’s future success by contacting the experts at SST today.
