Last month the Common Origination and Disbursement (COD) System was updated to support reporting requirements for withdrawn students who qualify for a Title IV waiver under the Cares Act. COD now allows schools to select the Coronavirus Indicator on eligible disbursements for any program with an award year beginning in 2017-2018 or later. The R2T4 calculator on the COD website has also been updated with the Coronavirus Indicator checkbox for the 2017-2018 award year. Valid Payment Period Start Dates for the Coronavirus Indicator can now go back as far as January 1, 2018. Good news for schools with unusually long academic years, or situations that would have extended the academic year like Leaves of Absence or Withdrawals and subsequent Re-entry into a program.
ED’s Office of Postsecondary ED released an update to the COVID-19 TITLE IV Frequently Asked Questions last month, clarifying the rules for COVID related R2T4s.
Q: Is the R2T4 waiver under the CARES Act mandatory, or may an institution opt to continue returning funds to the Title IV programs even for those students whose withdrawals are the result of circumstances related to the COVID-19 emergency?
A: Section 3508 of the CARES Act provides that the Secretary shall waive the requirement to return funds under the Return of Title IV Funds requirements for students who withdraw from a payment period or period of enrollment as a result of a qualifying emergency. This effectively means that no statutory basis exists for returning Title IV funds for these students for the duration of the period covered by the waiver.
The May 15, 2020 Electronic Announcement (EA) outlines how institutions can comply with the CARES Act requirements relative to situations where a student’s withdrawal is determined to be COVID-19 related, i.e., maintain all Title IV funds on the student’s ledger account, disburse any funds the student was eligible to receive that were not disbursed prior to the withdrawal, and make no adjustments to disbursement amounts reported in COD.
The Department is aware of concerns over the possibility that students who withdraw as the result of circumstances related to the COVID-19 emergency will seek payment of the credit balances that may be left on their accounts since their institutions are not required to return any Title IV funds. As a result of CARES Act relief, these students would also not be required to repay Direct Loan funds disbursed for the payment period or period of enrollment in which they withdrew, nor would their Pell lifetime eligibility or Subsidized Loan usage be affected by their receipt of Title IV aid for the period. This would occur in situations where the student receives a substantial or total reduction of institutional charges due to the withdrawal, in effect creating what may have been an unintended student credit balance from the unreturned Title IV funds.
Accordingly, in these situations we will permit institutions who have written authorization from the student, to apply the remaining amount of a student’s credit balance from these Title IV disbursements (after all charges on the student’s account are paid) to reduce Direct Loan disbursements received for attendance at the institution for periods prior to the payment period in which the student withdrew. The institution must obtain this authorization (which may be electronic) from the student prior to applying his or her credit balance for this purpose. The institution must also notify any affected student of the action and the amount that was repaid, and the institution must return the Direct Loan funds in the COD and G5 systems. An institution may only exercise this authority for Direct Loan award years that are currently open. If the amount of the student’s credit balance resulting from CARES Act R2T4 relief exceeds the amount of Direct Loan disbursements received for prior periods, the institution may, with written authorization, use the credit balance to pay down the prior Direct Loan disbursements, but must provide the remaining credit balance amount directly to the student.
Regarding the concern that a student may falsely report circumstances related to the COVID-19 emergency, the Department is unaware of widespread abuse occurring in this area. However, if an institution has cause to doubt that a student’s written attestation that his or her withdrawal is COVID-19 related, it may request any additional documentation reasonably necessary to determine the accuracy of the attestation. This conforms with the requirement to identify and resolve conflicting information under 34 CFR 668.16(f). (Published October 5, 2020)
Autumn and Winter holiday breaks present unique challenges for institutions when students withdraw from school. Once a student’s withdrawal date is determined, a school needs to calculate the percentage of the payment period or period of enrollment the student completed to determine the percentage of Title IV Federal Student Aid funds the student earned. It’s common for schools to schedule holiday breaks lasting five or more days during Thanksgiving under most academic calendars and Winter Breaks in non-term and nonstandard term calendars. Institutionally scheduled breaks of five or more consecutive days are excluded from the Return to Title IV (R2T4) calculation as periods of nonattendance. Errors made when determining the length of a scheduled break lead to errors in the amount of aid students are eligible for.
Determining the length of a scheduled break
Step 1 – First determine the last day that class is held before the scheduled break. The scheduled break begins on the next day.
Step 2 – Next determine the last day of the scheduled break. The scheduled break ends on the day before classes resume.
Step 3 – Count the days.
REMEMBER – If your institution’s academic calendar schedules classes that end on a Friday, but don’t resume until the Monday after the break your break may be up to nine days long. Once you’ve properly determined the length of your scheduled break, you can subtract it from the numerator and denominator of the R2T4 calculation, ensuring that your calculations yield the proper amount of aid for withdrawn students.
Knowing what to watch out for can help you avoid compliance problems.
R2T4 errors are one of the top three audit and program review findings at institutions each year. R2T4 errors related to academic calendars and scheduled breaks are often systemic because the schedule itself affects all students.
Institutions with questions about Title IV and compliance with Federal Regulations related to Federal Student AId Programs are welcome to contact our office for assistance.