The 90/10 rule, in 34 CFR 668.28, requires a proprietary (for-profit) school that takes part in the Title IV federal student aid programs to get at least 10% of its revenue from sources other than federal funds. The test runs each fiscal year on a cash basis, so revenue counts in the year the school receives it. Since 2023, federal funds include other federal education assistance, not only Title IV. A school that fails two fiscal years in a row loses Title IV eligibility for at least two fiscal years.
What is the 90/10 rule?
It is a revenue test for proprietary schools, set out in 34 CFR 668.28. To meet it, at least 10% of the school's revenue must come from sources other than federal funds. The school calculates its revenue percentage for its latest complete fiscal year using the formula in appendix C to that subpart.
Which money counts as federal?
For fiscal years beginning on or after 1 January 2023, federal funds include:
- Title IV aid, and
- other federal education assistance paid to the school or the student, as identified by the Secretary in a Federal Register notice.
For earlier fiscal years, only Title IV funds counted (668.28(a)(1)).
Which revenue counts at all?
Only revenue from the school's programs and activities. Mainly that means tuition, fees and other institutional charges for students in eligible programs (668.28(a)(3)). Some revenue from approved non-eligible training programs counts too, under conditions in the rule.
Why does cash timing matter?
The rule uses the cash basis of accounting (668.28(a)(2)). Money counts in the fiscal year the school receives it. A balance a student agreed to pay but never paid adds nothing.
The rule also presumes that federal funds pay a student's tuition, fees and institutional charges first, up to the amount of those funds (668.28(a)(4)). Certain outside grants, job-training contracts, qualified savings plans and qualifying institutional scholarships are the exceptions. So a student's own payments help the non-federal share mainly when they cover charges that federal aid doesn't.
How do tuition plans and school loans count?
A tuition payment plan brings in cash when students pay it. For a loan the school makes to students, only principal payments received during the fiscal year count. And only if the loans are (668.28(a)(5)(i)):
- bona fide, with standalone repayment agreements that are enforceable promissory notes
- issued at intervals tied to the school's enrollment periods
- subject to regular repayments and collections by the school
- separate from the enrollment contracts students sign
Some money never counts. That includes the proceeds from factoring or selling accounts receivable or institutional loans, and funds from a third party related to the school (668.28(a)(6)).
A simplified example
This ignores the appendix C formula's adjustments and is only an illustration.
| Amount | |
|---|---|
| Revenue counted for the fiscal year | $2,000,000 |
| From federal funds | $1,850,000 |
| From students' own payments and other non-federal sources | $150,000 |
| Non-federal share | 7.5% (fails) |
In this example, $50,000 more in non-federal cash collected in the year would bring the share to about 9.8% of $2,050,000. That still fails. Reaching 10% would take about $56,000 more.
What happens if a school fails?
Under 668.28(c):
- One year: the school becomes provisionally certified for the next two fiscal years, must tell students about the possible loss of Title IV eligibility, and must report the failure within 45 days after the fiscal year ends.
- Two years in a row: the school loses eligibility for Title IV programs for at least two fiscal years.
For what to track month by month, see Your collection rate and 90/10.
General information, not legal or compliance advice.
Every figure on this page was checked against these sources on Oct 6, 2026. General information, not legal or tax advice.