UNITED STATES DEPARTMENT OF EDUCATION 

OFFICE OF POSTSECONDARY EDUCATION

Issue Paper 7: Title IV Revenue and Non-Federal Education Assistance Funds (90/10)

Session 2: February 14-18, 2022

Issue: Title IV Revenue and Non-Federal Education Assistance Funds (90/10)

Statutory cites: §487(a)(24) of the Higher Education Act, as amended

Regulatory cites: 34 CFR 668.28

Proposed Regulations Redline

§ 668.28 Non-title IVFederal revenue (90/10).

(a) General –

(1) Calculating the revenue percentage. A proprietary institution meets the requirement in § 

668.14(b)(16) that at least 10 percent of its revenue is derived from sources other than Title IV, HEA 

program Federal funds by using the formula in appendix C of this subpart to calculate its revenue 

percentage for its latest complete fiscal year. For purposes of this section--

(i) For any annual audit submission for a proprietary institutional fiscal year beginning on or after 

January 1, 2023, Federal funds used to calculate the revenue percentage include title IV, HEA 

program funds and any other educational assistance funds provided by a Federal agency directly to 

an institution or a student including the Federal portion of any grant funds provided by or 

administered by a non-Federal agency, except for non-Title IV Federal funds provided directly to a 

student to cover expenses other than tuition, fees, books and supplies. The Secretary identifies the 

Federal agency and the other educational assistance funds provided by that agency in a notice 

published in the Federal Register, with updates to that list published as needed.

(ii) For any fiscal year beginning prior to January 1, 2023, Federal funds are limited to title IV, HEA 

program funds. 

(2) Cash basis accounting. Except for institutional loans made to students under paragraph (a)(5)(i) of 

this section, the institution must use the cash basis of accounting in calculating its revenue percentage. 

Disbursement rule. An institution must use the cash-basis of accounting in calculating its revenue 

percentage by —

(i) For each eligible student, counting the amount of non-title IV Federal funds that were used to 

pay tuition fees and other institutional charges the institution received during its fiscal year—

(A) Directly from an agency identified under paragraph (a)(1)(i) of this section; and 

(B) Tuition and fees and other institutional charges pPaid by a student to whom thewho 

received Federal funds. Federal agency provided funds.
90/10 2

(ii) For each eligible student, counting the amount of title IV, HEA program funds the institution

received to pay tuition, fees and other institutional charges during its fiscal year. However, 

before the end of its fiscal year, the institution must—

(A) Request funds under the advanced payment method in §668.162(b)(2) or the 

heighted cash monitoring method in §668.162(d)(1) that the students are eligible to 

receive and make any disbursements to those students by the end of the fiscal year; or

(B) For institutions under the reimbursement or heightened cash monitoring methods in 

§668.162(c) or (d)(2), Mmake disbursements to those students by the end of the fiscal 

year and report as Federal funds in the revenue calculations the funds that the students

are eligible to receive before requesting funds under the reimbursement or heighted 

cash monitoring methods in §668.162(c) or (d)(2).

(3) Revenue generated from programs and activities. The institution must consider as revenue only 

those funds it generates from -

(i) Tuition, fees, and other institutional charges for students enrolled in eligible programs as 

defined in § 668.8; 

(ii) Activities conducted by the institution that are necessary for the education and training of its 

students provided those activities are -

(A) Conducted on campus or at a facility under the institution's control; 

(B) Performed under the supervision of a member of the institution's faculty; and 

(C) Required to be performed by all students in a specific educational program at the 

institution; and

(D) Related directly to services performed by students; and.

(iii) Funds paid by a student, or on behalf of a student by a party unrelated toother than the 

institution, its owners, or affiliates, for an education or training program that is not eligible under 

§ 668.8 and that does not include any courses or coursework offered in an eligible program. The 

non-eligible education or training if the program must—

(A) Be provided by the institution at one of its approved locations. The institution may 

not count revenue from a non-eligible education or training program where it merely 

provides facilities for test preparation courses, acts as a proctor, or oversees a course of 

self-study;

(BA) IsBe approved or licensed by the appropriate State agency; 

(CB) Be Is accredited by an accrediting agency recognized by the Secretary under 34 CFR 

part 602; or
90/10 3

(DC) Provides an industry-recognized credential or certification., or prepares students to 

take an examination for an industry-recognized credential or certification issued by an 

independent third party;

(D) Provides training needed for students to maintain State licensing requirements; or 

(E) Provides training needed for students to meet additional licensing requirements for 

specialized training for practitioners that already meet the general licensing 

requirements in that field.

(4) Application of funds. The institution must presume that any Title IV, HEA program Federal funds it 

disburses, or delivers, to or on behalf of a student, or determines was provided to a student by another 

Federal source, will be used to pay the student's tuition, fees, or institutional charges up to the amount 

of those Federal funds if a student makes a payment to the institution, regardless of whether the 

institution credits the funds to the student's account or pays the funds directly to the student, except to 

the extent that the student's tuition, fees, or other charges are satisfied by -

(i) Grant funds provided by—

(A) Nnon-Federal public agencies, provided that those grant funds do not include 

Federal or institutional funds unless the Federal portion of those grant funds can be 

determined and that portion of Federal funds must be included as Federal funds under 

this section. If the Federal funds cannot be determined no amount of the grant funds 

may be included under this section; or 

(B) Pprivate sources unrelated toindependent of the institution, its owners, or affiliates; 

(ii) Funds provided under a contractual arrangement with the institution and a Federal, State, or 

local government agency for the purpose of providing job training to low-income individuals who 

need that training; 

(iii) Funds used by a student from a savings plan for educational expenses established by or on 

behalf of the student if the saving plan qualifies for special tax treatment under the Internal 

Revenue Code of 1986; or 

(iv) Institutional scholarships that meet the requirements in paragraph (a)(5)(iv) of this section. 

(5) Revenue generated from institutional aid. The institution mustmay include the following 

institutional aid as revenue: 

(i) For loans made to students and credited in full to the students' accounts at the institution, on 

or after July 1, 2008 and prior to July 1, 2012, include as revenue the net present value of the 

loans made to students during the fiscal year, as calculated under paragraph (b) of this section, 

if the loans -– include as revenue only the amount of payments made on those loans by current 

or former students that the institution received during the fiscal year, if the loans—
90/10 4

(A) Are bona fide as evidenced by standalone repayment agreements between the 

students and the institution that are enforceable promissory notes; 

(B) Are issued at intervals related to the institution's enrollment periods; 

(C) Are subject to regular loan repayments and collections by the institution; and 

(D) Are separate from the enrollment contracts signed by the students. 

(ii) For loans made to students before July 1, 2008, include as revenue only the amount of 

payments made on those loans that the institution received during the fiscal year.

(iii) For loans made to students on or after July 1, 2012, include as revenue only the amount of 

payments made on those loans that the institution received during the fiscal year.

(iiv) For scholarships provided by the institution in the form of monetary aid or tuition discount 

and based on the academic achievement or financial need of its students, include as revenue 

the amount disbursed to students during the fiscal year. The scholarships must be disbursed 

from an established restricted account and may be included as revenue only to the extent that 

the funds in that account represent—

(A) Ddesignated funds from an outside source that is unrelated to the institution, its 

owners, or affiliates; or 

(B) Iincome earned on those funds. 

(6) Revenue generated from loan funds in excess of loan limits prior to the Ensuring Continued Access to 

Student Loans Act of 2008 (ECASLA). For each student who receives an unsubsidized loan under the FFEL 

or Direct Loan programs on or after July 1, 2008 and prior to July 1, 2011, the amount of the loan 

disbursement for a payment period that exceeds the disbursement for which the student would have 

been eligible for that payment period under the loan limit in effect on the day prior to enactment of the 

ECASLA is included and deemed to be revenue from a source other than Title IV, HEA program funds but 

only to the extent that the excess amount pays for tuition, fees, or institutional charges remaining on 

the student's account after other Title IV, HEA program funds are applied. 

(67) Funds excluded from revenues. For the fiscal year, the institution does not include -

(i) The amount of Federal Work Study (FWS) wages paid directly to the student. However, if the 

institution credits the student's account with FWS funds, those funds are included as revenue; 

(ii) The amount of funds received by the institution from a State under the LEAP, SLEAP, or GAP 

programs; 

(iii) The amount of institutional funds used to match tTitle IV, HEA program funds; 

(iv) The amount of tTitle IV, HEA program funds refunded to students or returned to the 

Secretary under § 668.22. If any funds from the loan disbursement used in the return calculation 
90/10 5

under § 668.22 were counted as non-title IV revenue under paragraph (a)(6) of this section, the 

amount of Title IV, HEA program funds refunded or returned under § 668.22 is considered to 

consist of pre-ECASLA loan amounts and loan amounts in excess of the loan limits prior to 

ECASLA in the same proportion to the loan disbursement; or 

(v) The amount the student is charged for books, supplies, and equipment unless the institution 

includes that amount as tuition, fees, or other institutional charges; or

(vi) Any amount from the proceeds of the factoring or sale of accounts receivable or 

institutional loans, regardless of whether the loans were sold with or without recourse. 

(vii) Any funds, including loans, provided by a third party related to the institution owners or 

affiliates to a student in any form.

(b) [Reserved] 

(c) Sanctions. If an institution does not derive at least 10 percent of its revenue from sources other 

thanTitle IV, HEA program Federal funds -

(1) For two consecutive fiscal years, it loses its eligibility to participate in the Title IV, HEA programs for 

at least two fiscal years. To regain eligibility, the institution must demonstrate that it complied with the 

State licensure and accreditation requirements under 34 CFR 600.5(a)(4) and (a)(6), and the financial 

responsibility requirements under subpart L of this part, for a minimum of two fiscal years after the 

fiscal year it became ineligible; or

(2) For any fiscal year, it becomes provisionally certified under § 668.13(c)(1)(ii) for the two fiscal years 

after the fiscal year it failed to satisfy the revenue requirement. However, the institution's provisional 

certification terminates on -

(i) The expiration date of the institution's program participation agreement that was in effect on 

the date the Secretary determined the institution failed this requirement; or 

(ii) The date the institution loses its eligibility to participate under paragraph (c)(1) of this 

section;.; and 

(3) For any fiscal year that it fails to meet the requirements of this section, it must notify students of the 

possibility of loss of title IV eligibility;

(4) It must determine whether it passed the revenue requirement and report a failure no later than 45 

days after the end of its fiscal year, or immediately thereafter if subsequent information is obtained that 

shows an institution incorrectly determined that it passed the revenue requirement for the prior fiscal 

year; and It must notify the Secretary no later than 45 days after the end of its fiscal year that it failed to 

meet this requirement; and

(54) It is liable for any title IV, HEA program funds it disburses after the fiscal year it becomes ineligible 

to participate in the title IV, HEA program under paragraph (c)(1) of this section, excluding any funds the 

institution was entitled to disburse under §668.26
90/10 

6

Last updated 2/4/2022