Audit & Assurance

The 90/10 rule is a regulation set forth by the Department of Education (DOE) in 34 CFR § 668.28 for proprietary (for-profit) post-secondary institutions. The regulation requires that at least 10 percent of proprietary institutions revenue comes from non-federally funded sources. In simple terms the ratio is calculated by dividing all federal education assistance funds by total allowable revenue for the fiscal year. However, this must be calculated on a cash basis and there are several nuances that make calculating this ratio more complex than it sounds.

The calculation used to be based on just Title IV funds as opposed to all federal funds. This was a change that took effect for fiscal years beginning on or after January 1, 2023. Now that the numerator includes all federal education assistance funds, Title IV is just one of many potential funding sources that must be included in the numerator. The federal agencies impacting this new calculation the most are the Department of Veterans Affairs and the Department of Defense.

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