Company: LGCY
Filing Date: 2025-09-25
Form Type: 10-K
Source: 0001493152-25-014945
Chunk: 98

Company: Legacy Education Inc.
Filing Date: 2025-09-25
Form: 10-K
Item: Item 1
Chunk 98
---
 that a parent
may borrow on behalf of a student, as long as the limit is applied consistently to all students in a program of study. In addition, there
is a lack of clarity regarding some of the technical aspects of the calculation methodology under the 90/10 Rule, which may lead to regulatory
action or investigations by ED. Changes in, or new interpretations of, the calculation methodology or other industry practices under
the 90/10 Rule could further significantly impact our compliance with the 90/10 Rule, and responding to any review or investigation by
ED involving us could require a significant amount of resources. Efforts to reduce the 90/10 Rule percentage for our institutions have
and may in the future involve taking measures that involve interpretations of the 90/10 Rule that are without clear precedent, reduce
our revenue or increase our operating expenses (or all of the foregoing, in each case perhaps significantly). Because of the changes
to the 90/10 Rule made by ARPA and ED, we may be required to make structural changes to our business to remain in compliance, which changes
may materially alter the manner in which we conduct our business and materially and adversely impact our business, financial condition,
results of operations and cash flows. Furthermore, these required changes could be unsuccessful and could make more difficult our ability
to comply with other important regulatory requirements, such as the cohort default rate regulations.

However,
we cannot predict the need or timing of any such changes, whether these changes would be successful in maintaining compliance with the
90/10 Rule or whether such changes will have other adverse effects on our business.

Our
institutions could lose their eligibility to participate in the Title IV Programs or have other limitations placed upon them if their
federal student loan cohort default rates are greater than the standards set by ED.

The
HEA limits participation in the Title IV Programs by institutions whose percentage of former students who defaulted on the repayment
of certain federally guaranteed or funded student loans (the “cohort default rate”) exceeds prescribed thresholds. ED calculates
these rates based on the number of students who have defaulted, not the dollar amount of such defaults. The cohort default rate is calculated
on a federal fiscal year basis and measures the percentage of students who enter repayment of a loan during the federal fiscal year and
default on the loan on or before the end of the federal fiscal year or the subsequent two federal fiscal years.

Under
the HEA, an institution whose cohort default rate is 30% or greater for three