The version of the below questions were published on 4/24/23. The questions have been updated since their original publication date. These are maintained for historical purposes only.
IP-Q6: If an institution offers an ineligible program where students can attend either virtually or in-person and meets all other requirements outlined in 34 C.F.R. § 668.28(a)(3)(iii), can the institution count revenue from that program in its 90/10 calculation?
IP-A6: No. The program must be conducted on campus or at a facility under the institution's control. 34 C.F.R. § 668.28(a)(3)(ii)(A). An institution cannot include revenue from a program where students have the option to take any portion of the program through distance education. This limitation includes making up missed course content via distance education. [Guidance issued 4/24/23]
SFY-Q1: If a student pays a deposit for a course that is delivered in a future fiscal year, in which fiscal year should an institution counsfyhe deposit?
SFY-A1: The institution should count the funds in the fiscal year it applies the funds to a student’s account. [Guidance issued 4/24/23]
This version of 90/10 Q&As was published on 12/16/22. This guidance is maintained for historical purposes only.
Questions on this topic are divided into the following categories:
- Ineligible Programs (IP)
- Comingled Federal and State Funds (CFSF)
- Income Share Agreements (ISA)
- Enrollment Limitations (EL)
- Exiting Title IV Programs (ETIVP)
IP-Q1: If an institution has developed a new program that is approved by a State licensing agency and its accrediting agency but not by the Department, can the cash payments from that program be included in the 10 side of the 90/10 calculation? Likewise, in what instances can institutions count revenue generated from programs that provide Continuing Education Units and are approved by the relevant State agency?
IP-A1: The institution can count revenue from an ineligible program if it meets the criteria described in a, b, c, and d below:
- The program does not include any courses offered in a Title IV eligible program. This also means that the courses in the ineligible program cannot transfer or be applied to a Title IV program if the institution wants to include revenue from the ineligible program in its 90/10 calculation. In addition, courses in an ineligible program that require participation in or completion of a Title IV program at the institution as a requisite for taking the ineligible course cannot be included.
- The program is provided by the institution and taught by the institution’s instructors, which means instructors that are employed by the institution, not 1099 contractors or any other contract arrangement for instruction. Further, the program must be taught at the institution’s main campus or one of its approved additional locations, at another school facility approved by the appropriate State agency or accrediting agency, or at an employer facility. This excludes fully distance education programs or programs offered in-part through distance education.
- The program must meet at least one of the below requirements:
- Be approved or licensed by the appropriate State agency;
- Be accredited by an accrediting agency recognized by the Secretary under 34 CFR part 602;
- Provide an industry-recognized credential or certification;
- Provide training needed for students to maintain State licensing requirements; or
- Provide training needed for students to meet additional licensing requirements for specialized training for practitioners who already meet the general licensing requirements in that field.
- Finally, institutions are prohibited from including in their 90/10 calculation revenue from either eligible or ineligible programs where they merely provide facilities for test preparation courses, act as a proctor, or oversee a course of self-study. Revenue from proctoring entrance exams for enrollment in a Title IV program cannot be included.
IP-Q2: Can institutions count revenue from non-Title IV eligible programs that are part of a Title IV eligible program but can also be offered as a stand-alone program?
IP-A2: No. As 34 CFR 668.28(a)(3)(iii) states, institutions can only count revenue from ineligible programs that do not include any courses included in a Title IV program. Likewise, the program cannot include courses that can be transferred or counted in a title IV eligible program. In addition, courses in an ineligible program that require participation in or completion of a Title IV program at the institution as a requisite for taking the ineligible course cannot be included.
IP-Q3: Can the Department provide more clarity on what it means by ineligible programs cannot include any courses from Title IV eligible programs, if the institution wants to count revenue from that ineligible program in its 90/10 calculation?
IP-A3: Ineligible programs should not offer courses that are offered in Title IV eligible programs. For example, if a course titled Course 101 is offered in a Title IV eligible program, an institution cannot count revenue from an ineligible program that offers Course 101 or its equivalent. Simply changing the name or numbering of a course when the course content is the same will result in the revenue from the ineligible program not counting for the 90/10 calculation. Further, if courses in the ineligible program are transferred or applied to a Title IV eligible program, no revenue from the ineligible program may be counted as revenue in the institution’s 90/10 calculation. In addition, courses in an ineligible program that require participation in or completion of a Title IV program at the institution as a requisite for taking the ineligible course cannot be included.
Comingled Federal and State Funds
CFSF-Q1: Can the Department provide an example or examples of funds provided by a non-Federal Agency that would need to be allocated between State and Federal funds? Will the Department provide a non-comprehensive list of funds that schools should expect to allocate?
CFSF-A1: The Department will list all Federal education assistance funds in a list that is published in the Federal Register. States may sub-grant certain funds. The Department will not be including the name of each State sub-grant awarded under the Federal program in the Federal Register notice.
CFSF-Q2: For the examples provided, can the Department provide additional information about the breakdown needed between Federal and State fund sources?
CFSF-A2: The Department understands that governing statutes may require that States or other non-Federal entities contribute a minimum funding level, but States may choose to contribute more. Further, the amount the State or non-Federal entity is required to contribute may vary by State or territory. Institutions are best positioned to work with the relevant agencies to determine the precise Federal and non-Federal breakdown of funds, and therefore the Department will not be providing this breakdown.
CFSF-Q3: Can you please share with us the Department’s interpretation of how an institution should account for comingled Federal and State funds, how and what an institution must do in order to comply with requirements, and what case-by-case issues can be raised?
CFSF-A3: If an institution receives funds from non-Federal entities that are comingled with Federal education assistance funds, the institution should reach out to the non-Federal entity to determine the Federal portion of the grant funds. In limited situations where the institution is unable to obtain the breakdown, institutions must exclude the entirety of those funds from their calculation. If an institution cannot determine the breakdown of funds, the Department may evaluate whether the institution sufficiently made an effort to obtain the breakdown on a case-by-case basis. The ARP clearly states that all Federal education assistance funds should be included in the 90/10 calculation, and therefore the Department would scrutinize instances where the institution did not make an effort to obtain the breakdown of funds.
Income Share AgreementsISA-Q1: Can the Department provide more information about what criteria -Income Share Agreements (ISAs) issued by an institution or related party must meet for an institution to include payments made on these agreements in its 90/10 calculation? ISA-A1: Institutions can count payments made on ISAs or other alternative financing agreements that are between a student and the institution or party related to the institution, as defined in 34 CFR 668.28(a)(5)(ii), in their 90/10 calculation if:
a. The institution clearly identifies the student's institutional charges, and those charges are the same or less than the stated rate for institutional charges;
b. The agreement clearly identifies the maximum time and maximum amount a student would be required to pay, including the implied or imputed interest rate and any fees and revenue generated for a related third-party, the institution, or any entity described in paragraph 34 CFR 668.28(a)(5)(ii) for the maximum time period; and
c. The institution applies a portion of the payment to return of capital and a portion to profit to the institution as a result of the ISA. Revenue, interest, and fees associated with the ISA are not included in the calculation. This means that institutions should not include the full amount of payments in their 90/10 calculation because a portion of payments must be allocated to profit, which are not included in the 90/10 calculation. Institutions should have a consistent policy on how they apply return of capital to tuition, fees, and other institutional charges that are eligible for 90/10 and to those that are not eligible.
Further, as institutions are reminded in the preamble to the Final Rule, institutions must apply payments as directed in 34 CFR 668.28(a)(4). Therefore, depending on how a student funds their program, institutions may not be able to count the full amount of payments allocated to return of capital.
To provide an example: Student A’s tuition, fees, and other institutional charges are $1500. Student A receives $900 in Federal education assistance. An institution issues a $1000 ISA to Student A. As outlined in 34 CFR 668.28(a)(4), institutions must presume that Federal education assistance funds are applied to tuition, fees, and other institutional charges prior to other sources of funds. Therefore, the institution can only count $600 of payments allocated as return of capital in its 90/10 calculation because that is what can be applied to tuition, fees, and other institutional charges. As stated above, institutions must count a portion of each payment from the student as a return of capital and a portion as profit.
EL-Q1: Can an institution set enrollment limits for the number of students it will admit for that class start based on funding source, such as Title IV, HEA funds or other sources of Federal education funds?
EL-A1: No, institutions cannot set enrollment limits based on funding source as this is discrimination against Title IV students. Given that the ARP modified the HEA to state that other sources of Federal education assistance funds should be treated like Title IV funds in the 90/10 calculation, the Department extends the prohibition against discrimination against Title IV students to also include other sources of Federal funds.
Exiting Title IV Programs
ETIVP-Q1: Can an institution choose to withdraw its participation from the Direct Loan Programs but continue its participation in Pell and SEOG and FWS? If an institution withdraws from the loan programs during the middle of its fiscal year, must it file any special report relating to its Direct Loan Programs participation or can it simply wait until its compliance audit and FISAP are due?
ETIVP-A1: Yes, institutions choose which HEA programs they participate in. In order to leave the Direct Loan program, institutions would have to provide a close out accounting in their annual audit submission (see 34 CFR 668.23). Additionally, institutions would have to disburse the funds which students are eligible for under 34 CFR 668.25.
ETIVP-Q2: If an institution has withdrawn from the loan programs for a period of one or more years and later seeks to re-enter that loan programs, what criteria must it meet to be re-admitted?
ETIVP-A2: Institutions can apply to be re-admitted into the Direct Loan program during the recertification process, and the Department would review an institution's application at that time. Additionally, institutions would need to submit their close out audit, and we must have reviewed and approved it, before institutions can re-apply to participate in the Direct Loan program. In instances where an institution leaves the program and then seeks to be re-admitted, as part of the Department’s review during the re-certification process, we would examine if an institution is leaving and re-entering the program to avoid noncompliance with 90/10 requirements.