90/10% Rule and Credit Balances
Could someone explain these two aspects to me? I did not fully understand them
1. Does the 90/10% Rule mean that students must pay for 10% of their degree out of their own pocket?
2. How is a credit balance created? Why would a student agree to let the school create a credit balance? Wouldn't every student want a full refund of his or her money?
Thank you!
Chana,
Great questions! To be eligible for FSA participation, a proprietary institution may derive no more than 90% of its revenues from the FSA programs. Other funding sources currently fall into the 10% category including private loans, employer paid benefits, cash and certain military funding (although there are proposals to re-classify military funding). The percentage is reported overall for the institution although they may be asked to provide detailed breakdowns of funding, including by student. As for credit balances, some students may incur varying charges term-to-term. By allowing a school to apply the credit balance to the following term (within the same academic year), it may assist the student in managing finances. Typically, funding is disbursed is the same amount per payment period but, variable costs could create higher costs in some than others.
Traci Lee
