90–10 rule

The 90–10 rule refers to a U.S. regulation that governs for-profit higher education. It caps the percentage of revenue that a proprietary school can receive from federal financial aid sources at 90%; the other 10% of revenue must come from alternative sources.

Not all federal sources of financial aid fall under this cap. In particular, funds supporting the education of troops and veterans, such as the G.I. Bill and Department of Defense Tuition Assistance program, were not subject to this cap until enactment of the American Rescue Plan in 2021. The current 90/10 regulations now include GI benefits and are effective July 1, 2023 and apply to institutional fiscal years beginning on or after January 1, 2023, consistent with the effective date of the statutory changes to the 90/10 calculation.

The rule is intended to use a market mechanism to weed out the worst performing proprietary schools. The requirement's intent was to ensure that no school could rely solely on federal funding.

Since 2010, growing scrutiny of the for-profit industry has spurred new efforts to strengthen the 90–10 rule. Some veteran and military groups have pushed for the G.I. Bill and Tuition Assistance Program to be included in the funds that are capped. Democratic lawmakers have sought new regulations to improve reporting and transparency in the rule.