Navigating the Dynamics of 90/10 Revenue Ratio Regulations in Higher Education – Expert Insights

For-profit higher education institutions must stay updated with regulations to ensure compliance. Recently, the Department of Education made some crucial updates to the 90/10 revenue ratio regulations that all such institutions need to be aware of. If you’re an administrator, owner, or operator of a higher education institution, here’s a concise breakdown of what you should know:

Understanding Federal Funds:

The new regulations expand the definition of Federal funds. Apart from the familiar Title IV funds, other Federal educational assistance funds paid to institutions or directly to students are now included. Federal agencies and funds are listed in the December 21, 2022, notice (87 FR 78096), although the list isn’t exhaustive.

Managing Federal and State Funds:

Institutions now need to dig deeper when it comes to State funds. Specifically, they need to identify if any portion of the State funds comes from Federal sources. The portion of funds from Federal sources must be included as Federal funds in the 90/10 ratio calculation.  If they can’t determine the Federal component of a particular State fund, they’re required to exclude the entire State fund amount.

Evaluating Non-Title IV Program Revenues:

The criteria for considering non-Title IV programs in the 90/10 ratio have been tightened. These programs should be taught by the institution’s own faculty, i.e. employees, and should take place either at the primary institution, approved sites, or employer locations. It’s essential to note that distance education for these programs doesn’t count in the 90/10 ratio. Plus, any non-Title IV programs that have common courses to those in Title IV eligible programs are also excluded.

Ensuring Proper Disbursements and Calculations:

Institutions must disburse all eligible funds within the fiscal year. This means there’s no room for delaying disbursements to manage the Title IV revenue for a given fiscal year. Additionally, when making calculations, only the principal payments on loans or income sharing agreements (ISAs) are considered. Meanwhile, proceeds from sales of receivables, be it recourse or nonrecourse, don’t factor in. There’s also a clear hierarchy: Title IV funds should be applied to tuition, fees, and other institutional charges before other Federal funds.

Prioritizing Transparency:

Clear and accurate reporting is emphasized in the new regulations. Institutions must distinctly report any Title IV credit balances from the previous year that are used to satisfy institutional charges. For clarity, both Title IV and other Federal Funds should be presented separately, allowing the Department of Education to analyze the effect of including other Federal funds in the ratio. Institutions should also provide detailed data through separate line items, covering aspects like 3rd party loans, ISAs, and student cash. For-profit higher education institutions must stay updated with regulations to ensure compliance.

In essence, these updated regulations demand a more in-depth understanding, stricter criteria, and transparent reporting from for-profit higher education institutions. It’s crucial for stakeholders in these institutions to familiarize themselves with these changes to ensure compliance and optimize their operations accordingly.