Company: LGCY
Filing Date: 2025-09-25
Form Type: 10-K
Source: 0001493152-25-014945
Chunk: 31

Company: Legacy Education Inc.
Filing Date: 2025-09-25
Form: 10-K
Item: Item 1
Chunk 31
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 be permitted by ED to continue to participate in the Title IV Programs by choosing one of two alternatives:
1) the “Zone Alternative” under which an institution is required to make disbursements to students under the HCM1 payment
method (or another payment method that differs from the standard advance payment method) and to notify ED within 10 days after the occurrence
of certain oversight and financial events or 2) submit a letter of credit to ED equal to at least 50 percent of the Title IV Program
funds received by the institution during its most recent fiscal year. ED permits an institution to participate under the “Zone
Alternative” for a period of up to three consecutive fiscal years. Under the HCM1 payment method, the institution is required to
make Title IV Program disbursements to eligible students and parents before it requests or receives funds for the amount of those disbursements
from ED. Unlike the HCM2 and the reimbursement payment methods, the HCM1 payment method typically does not require schools to submit
documentation to ED and wait for ED approval before drawing down Title IV Program funds. Schools under HCM1, HCM2 or reimbursement payment
methods must also pay any credit balances due to a student before drawing down funds for the amount of those disbursements from ED, even
if the student or parent provides written authorization for the schools to hold the credit balance.

21

If
an institution’s composite score is below 1.0, the institution is considered by ED to lack financial responsibility. If ED determines
that an institution does not satisfy ED’s financial responsibility standards, depending on its composite score and other factors,
that institution may establish its eligibility to participate in the Title IV Programs on an alternative basis by, among other things:

    ●
    posting a letter of credit
    in an amount equal to at least 50% of the total Title IV Program funds received by the institution during the institution’s
    most recently completed fiscal year; or

    ●
    posting a letter of credit
    in an amount equal to at least 10% of the Title IV Program funds received by the institution during its most recently completed fiscal
    year accepting provisional certification; complying with additional ED monitoring requirements and agreeing to receive Title IV Program
    funds under an arrangement other than ED’s standard advance funding arrangement.

If,
in the future, we are required to satisfy ED’s standards of financial responsibility on an alternative basis, including potentially
by posting irrevocable letters of credit,