Financial aid is not optional for most beauty schools. The students who apply to your school are primarily cost-conscious. They need to know: Can I afford this? Will you accept financial aid? What will I owe when I graduate? If you don't have clear answers, you lose enrollment to schools that do. But financial aid also comes with significant compliance obligations. The federal government and your accreditor (NACCAS) monitor how you administer aid, how you counsel students, and how your students perform after graduation. Get it wrong, and you face sanctions. This guide covers the three things beauty schools need to know about financial aid: how to offer it, how to stay compliant, and what the 90/10 rule really means.
Federal Pell Grants. A need-based grant that doesn't require repayment. Award amounts for 2025-2026 range from $0 to $7,395 per year depending on the student's financial need and enrollment status. Beauty schools (as institutions) don't directly award Pell Grants; they process student applications and disburse the grants once the student qualifies. The student applies through the FAFSA (Free Application for Federal Student Aid). Federal Direct Loans. Students can borrow up to $12,500 per academic year (or $23,000 total for dependent undergraduates) through the federal Direct Loan program. These loans have fixed interest rates (currently around 8.5%) and standard repayment terms of 10 years. Schools act as the disbursing institution. Private Loans. Students can also use private loans from banks and lenders, though these are less common in beauty education. Private loans don't have the borrower protections of federal loans. State Grants. Some states offer education grants to residents. These vary widely by state. VA Benefits. Schools can serve military veterans and eligible family members using VA education benefits (GI Bill, Vocational Rehabilitation & Employment, etc.). Employer Sponsorships. Some students have employers paying for their education. The employer reimburses the school or the student after completion. Other Funding. Some students pay out-of-pocket, use savings, get family loans, or use combinations of the above.
As a NACCAS-accredited school that accepts Title IV aid (federal Pell Grants and Direct Loans), you are responsible for: Becoming an eligible institution (certified by the Department of Education and your accreditor). Completing a Program Participation Agreement with the Department of Education. Maintaining financial aid administration systems and staff. Verifying student eligibility before disbursing aid. Counseling students before they borrow. Tracking enrollment status and updating aid if students withdraw. Reporting loan default rates to the Department of Education. Maintaining records of financial aid transactions. Publishing cost of attendance and disclosing loan repayment obligations. This is not a small lift. Many beauty schools underestimate the administrative burden and end up scrambling before an audit or accreditation review.
The 90/10 rule is one of the most misunderstood federal requirements. Here's what it actually says: In any fiscal year, at least 10% of your institution's revenues must come from sources other than Title IV federal financial aid. Conversely, no more than 90% of your revenues can come from Title IV aid. Why does this rule exist? It was designed to ensure that schools don't become entirely dependent on federal aid. The idea is that if a school's only funding source is Title IV, they have no incentive to keep students satisfied or to maintain quality—they'll get paid regardless. If 10% of revenue comes from non-federal sources, the school has skin in the game. For beauty schools, non-Title IV revenue includes: Private pay tuition (cash-paying students). State grants. VA benefits (these count as non-Title IV). Private loans (these count as non-Title IV). Employer sponsorships. Any other non-federal funding source. The 90/10 rule is calculated on a fiscal-year basis. If your school's fiscal year is January-December, you calculate the percentage of Title IV revenues for that period. If more than 90% of your revenue came from Title IV, you are out of compliance. The Department of Education can impose sanctions, fines, or loss of eligibility. This is where many schools get into trouble. They rely almost entirely on Pell Grants and Direct Loans. If enrollment drops or if changes in policy reduce the amount of aid students can access, they suddenly discover they're above the 90% threshold.
The calculation is straightforward on paper but requires accurate accounting. Total Revenue (fiscal year) = all institutional revenue collected. Multiply this by 0.90. This is your maximum Title IV revenue threshold. Title IV Revenue (fiscal year) = Pell Grants disbursed + Direct Loans disbursed + any other federally funded aid. If your Title IV revenue exceeds 90% of total revenue, you are out of compliance. The practical challenge: Many beauty schools don't have accurate accounting systems. They don't separate Title IV revenue from non-Title IV revenue. They don't track the breakdown by revenue source. When the Department of Education asks for this calculation, they scramble. To stay compliant, track Title IV and non-Title IV revenue separately from the start. Use your student information system to categorize each student's funding source. Generate monthly reports. Know your 90/10 ratio at all times, not just once a year when a auditor asks for it.
If you accept Title IV aid, these are non-negotiable: Have a financial aid officer or designee who understands Title IV rules. Implement a student information system that tracks enrollment status, aid amounts, and funding sources. Verify students before disbursing aid. If a student says they're enrolled full-time but they're actually part-time, your aid calculation is wrong. Counsel students before they borrow. Federal regulations require that students receive entrance counseling before their first federal loan and exit counseling when they leave. Maintain accurate records. The Department of Education conducts audits. You need to be able to produce documentation of every aid decision. Report loan default rates to the Department of Education annually. Track and monitor your cohort default rate (CDR). If your CDR exceeds certain thresholds, you lose eligibility. Disclose net price to prospective students. Your school website and marketing materials should clearly communicate the actual cost after aid and grants. Monitor your 90/10 ratio continuously. Know where you stand. If you're approaching the threshold, develop a plan to increase non-Title IV revenue (raise cash-pay enrollment, pursue VA benefits, etc.).
Failure to maintain Title IV compliance results in sanctions from the Department of Education and your accreditor: Fine or restitution. The Department of Education can fine your school or require restitution to students if you incorrectly disbursed aid. Loss of Title IV eligibility. If compliance failures are severe or repeated, you can lose the ability to accept Title IV aid altogether. This is a school-closing consequence. Accreditation issues. Your accreditor (NACCAS) monitors your Title IV compliance and can place you on probation or deny accreditation renewal if you fail. Public notification. Your school's compliance status becomes part of the public record. Prospective students and parents can see that you've had compliance violations. Staff time. Correcting compliance violations after the fact burns enormous amounts of administrative time and often requires hiring compliance consultants.
If you're not already doing this: Audit your current financial aid administration. Do you have accurate records? Can you calculate your 90/10 ratio right now? If the answer is no, that's your first action item. Hire or designate a financial aid officer. This should not be the person also managing admissions and scheduling. It's a distinct role. Implement a student information system that captures funding source at enrollment. If you're currently tracking this in spreadsheets or paper, switch to a system. Bella, for example, captures funding source during enrollment and generates Title IV compliance reports automatically. Set up monthly reporting. Know your 90/10 ratio every month, not once a year. Verify enrollment status regularly. If students drop out, withdraw, or change to part-time, update their file and their aid status immediately. Create a financial aid handbook and ensure every staff member and student has it. This reduces miscommunication and protects you.
Financial aid allows more students to afford your programs, but it comes with compliance obligations. The 90/10 rule is not optional, and it's enforced. The best schools know their 90/10 ratio at all times and maintain it consciously by diversifying their revenue sources. If you accept Title IV aid, treat financial aid administration with the same rigor you apply to curriculum and compliance. Get a financial aid officer, implement proper systems, and monitor your metrics continuously. The schools that lose Title IV eligibility are not the ones dealing with complicated regulatory interpretations. They're the ones that ignored the basics.
Frequently asked questions ordered by popularity. Remember that if the visitor has not committed to the call to action, they may still have questions (doubts) that can be answered.
Not at all. We’ll move your data and guide your team. You’ll be ready to go in days, not weeks.
Yes. Bella is built for vocational schools and stays updated with state and federal rules.
Bella is made to be simple. If you can check email, you can use it. And we’re here to help whenever you need.
It helps spot missing info, flags risks early, and reminds you of what’s due—without you having to dig.
Yes. Pricing scales with your size, and most schools save time and money within the first month.
Absolutely. Bella uses encrypted, secure hosting and is fully FERPA compliant.
Tips, checklists, and insights for school owners and admins, written in plain language, not tech speak.
