The 90/10 rule requires for-profit schools that take federal student aid to get at least 10% of their revenue from other sources. Revenue is counted on a cash basis, in the year the school receives it, so a balance that's never paid doesn't count at all. Institutional loans have extra conditions of their own.
What is 90/10?
90/10 is a rule for for-profit schools that take part in the federal student aid programs. At least 10% of their annual revenue has to come from sources other than federal education funds. A school that misses it two years in a row loses eligibility for at least two fiscal years. (34 CFR 668.28; CRS overview)
Why does a tuition plan matter to it?
The calculation uses the cash basis of accounting: money counts in the fiscal year the school receives it. (34 CFR 668.28)
For a school near the line, cash students pay toward their own tuition helps the non-federal share. A plan that's agreed but not collected adds nothing.
Institutional loans are treated separately. Principal payments on a school's own loans count only when the loan is separate from the enrollment agreement and backed by an enforceable promissory note. Ask your compliance lead whether your plans are set up as loans or as payment terms, because the answer changes how they count.
What should you track each month?
- Payments collected on institutional plans, by campus.
- Plans with a payment that didn't go through, and how many were recovered.
- Balances written off, and when.
- The running 90/10 estimate for the fiscal year, so a problem shows up before year end rather than after it.
What improves the number?
Collecting what's owed, on time. Each of these raises the cash that actually arrives:
- clear plan terms
- payments scheduled to match when students are paid
- prompt follow-up on missed payments
- an easy second payment method
Questions for your compliance lead
- How close to the line are we this year, by month?
- Which revenue sources count, and which don't, under the current guidance?
- Are we disbursing and recording federal funds in the year the rule expects?
Paycove reports what each campus collected, month by month, so the cash side of your 90/10 estimate comes from one report.
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