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New Guidance on Key Areas Including Extensions of Temporary Distance Education & Submission of Financial Statements and Compliance Audits

The U.S. Department of Education posted new, updated guidance on how institutions of higher education are to continue providing a quality education to students during the novel coronavirus pandemic.

The new guidance, entitled UPDATED Guidance for interruptions of study related to Coronavirus (COVID-19), builds upon the original March 5th and April 3rd updates, and contains information on many of the key topics that the higher education community has been waiting for.  Among other things, the just released guidance addresses the following issues:

Temporary Distance Education Extension

The guidance expands the broad approval for the use of distance education to include payment periods that overlap the original March 5th guidance, or that begin on or between March 5th and December 30th, 2020.  Thus extending the and original April 3rd June 1st guidance till the end of the year.  In addition, the Department is waiving the 50% limitation on the amount of any program that can be provided on-line for payment periods that begin on before Dec. 30, 2020.

Financial Statements and Compliance Audits

The guidance states, “the Secretary is exercising authority granted to her under Section 2 of the HEROES Act to extend the financial statement and compliance audit deadlines for six months.”

Return of Title IV Funds (R2T4)

The guidance states, “for any student who begins attendance in a payment period or period of enrollment that begins on or includes March 13, 2020, and subsequently withdraws from the period as a result of COVID-19-related circumstances, an institution is not required to return Title IV funds.

This includes students who withdrew during the applicable period for whom the institution has already performed an R2T4 calculation and returned funds. Where returns have already been made, the institution should re-disburse Title IV funds to those students, making required adjustments in COD, crediting students’ ledger accounts, and requesting any necessary funds from G5. In the case of withdrawn students for whom no returns have been made, the institution should:

  1. Perform an R2T4 calculation in order to determine the amount of Title IV funds that would otherwise have to be returned;
  2. Make no adjustments to COD as a result of the withdrawal;
  3. Make no adjustments (as the result of the withdrawal) to the amount of Title IV aid credited to the student’s ledger account.

If an affected student withdraws prior to some or all her Title IV aid having been disbursed (a situation that would normally result in a post-withdrawal disbursement), the institution should proceed with making any remaining disbursements for the payment period, and then follow steps one through three above. To determine whether a student has withdrawn from a payment period or period of enrollment, please refer to 34 CFR 668.22.

The CARES Act also directs the Secretary to waive student grant overpayments that result from the R2T4 process for students who withdraw as a result of COVID-19-related circumstances. If a student’s grant overpayment has been waived in accordance with this provision, an institution is not required to notify the student or the National Student Loan Data System (NSLDS) of the overpayment or refer any portion of the overpayment to the Department. In addition, an institution must not apply any Title IV credit balance to pay down the grant overpayment. An institution must document in the student’s file when it applies this waiver as a result of the CARES Act. If an institution has already returned the amount of a student overpayment on behalf of a student, it should re-request those funds in the same manner as described above for Title IV funds that the institution was otherwise required to return under normal R2T4 requirements.

Interaction with Tuition Refund Requirements
The Department’s R2T4 provisions do not affect institutional refund policies. However, some institutions or states may have policies requiring the refund of some or all of a student’s tuition charges if the student withdraws during a certain period of time. If a student who qualifies for CARES Act R2T4 relief withdraws and is granted a tuition refund, the refund may create a Title IV credit balance that must be provided to the student within 14 days.

For example, consider a student who withdraws during the first week of a semester as a result of COVID-19 disruptions. The student was originally charged $10,000 in tuition and received $5,000 in Pell Grant funds and $3,500 in a Subsidized Direct Loan. When the student withdraws, the tuition refund policy will result in a refund of $9,000 in tuition, leaving only $1,000 in charges on the student’s account. Furthermore, because R2T4 requirements will be waived, the student will still have a total of $8,500 in Title IV funds on his or her account, resulting in a Title IV credit balance of $7,500 that must be paid to the student within 14 days of the refund.

Institutions may choose to amend tuition refund policies to all students in a given program if such changes are documented and disclosed to students, although students may have rights under state law to enforce an institution’s refund policy for a payment period that was started under an existing refund policy. An institution may not amend its tuition policy on a student-by-student basis based on the amount of Title IV aid that the student receives as a credit balance as a result of the CARES Act R2T4 waiver.

Qualification for R2T4 Relief
Any institution that moved students from ground-based instruction to distance learning, closed campus housing or other campus facilities, or experienced other interruptions in instruction may consider all withdrawals from students enrolled in ground-based instruction during the covered period to have been the result of circumstances related to the COVID-19 national emergency. For institutions that did not undergo changes in educational delivery or campus operations as a result of the COVID-19 emergency, the institution will be required to obtain a written attestation (including by email or text messages) from the student explaining why the withdrawal was the result of the COVID-19 emergency. Institutions must also obtain written attestations from students who withdrew from distance education programs explaining why the withdrawal was the result of the COVID-19 emergency.

Allowable circumstances include, but are not limited to, illness of the student or family member, need to become a caregiver or first responder, loss of childcare, economic hardship, inability to access wi-fi due to closed facilities, or an increase in work hours as a result of the COVID-19 emergency. Information (which in the judgment of the institution is reliable) provided by the family member of a withdrawn student whom the institution is unable to contact is acceptable for documentation purposes.

Reporting Requirements
The CARES Act requires an institution to report to the Department information specific to each student for whom it was not required to return Title IV funds under the waiver exception (and for each student for which Title IV funds were previously returned and are now being redrawn). The Department has determined that reporting requirements under the CARES Act include:

  • Identifying information for each student for whom R2T4 was waived under the CARES Act;
  • The payment period “begin” and “end” dates for the period that the student did not complete as a result of the COVID-19 emergency;
  • The amount of Title IV grant or loan assistance (other than Federal Work Study funds) that each such student received for the payment period in which he or she withdrew; and
  • The total amount of Title IV grant or loan assistance that each institution has not returned to the Secretary as a result of the CARES Act provisions.

Institutions should retain this information for each student who withdraws and qualifies for an R2T4 waiver under the CARES Act, and should plan to provide, for each student, identifying information, payment period begin and end dates, and information regarding the Title IV grant and loan disbursements (except for Federal Work Study) that the student received for the payment period.

In order to fulfill the third reporting requirement, an institution must determine the total amount of grant and loan assistance that otherwise would have been returned, identified in Step 5 of the R2T4 calculation, had the calculation been performed. Therefore, it will continue to be necessary for institutions to perform an R2T4 calculation for each student covered by the CARES Act R2T4 waiver.

Upon receipt of information from an institution indicating that a covered student has withdrawn, the Department will cancel the entire amount of any disbursement of a Direct Loan borrowed by the student or his or her parent for the payment period or period of enrollment. Additionally, under Sections 3506 and 3507 of the CARES Act, the Department will exclude from a student’s Subsidized Loan usage and Pell Grant lifetime eligibility used (LEU) any payment period that the student does not complete due to a qualifying emergency. Additionally, the Department will cancel disbursements of TEACH Grants received by a covered student for the payment period or period of enrollment from which the student withdrew and restore grant eligibility for that amount.

The Department is developing the process by which institutions will fulfill the reporting requirements described above and will provide additional guidance about these requirements in the future. Note that because it will take time to develop a reporting process and provide relief from Pell lifetime eligibility requirements, subsidized usage requirements, and loan obligations in these circumstances, we ask institutions and students to be patient while we develop a process to provide this relief.”

Satisfactory Academic Progress

The guidance states, “to exclude attempted credits from SAP, an institution must have reasonably determined that the student’s failure to complete those credits was the result of a COVID-19 related circumstance. Allowable circumstances include, but are not limited to, illness of the student or family member, need to become a caregiver or first responder, economic hardship, added work hours, loss of childcare, inability to continue with classes via distance education, inability to access wi-fi due to closed facilities. If an institution temporarily ceases operations during a period of enrollment, attempted credits for all affected students (specific to that enrollment period) may be excluded.

Regarding the effect of excluding attempted credits on maximum timeframe, SAP regulations require that the pace at which students progresses through the program ensures completion of that program within the maximum timeframe.”

Leaves of Absence

The guidance states, “the tuition and fees component of the cost of attendance (COA) for any subsequent term or award year in which a student returns from the approved LOA may not include the tuition costs for coursework he or she was taking when the LOA began. However, the COA for a subsequent term or academic year may include living expenses even if the student is enrolled in no additional credits. Additionally, credits associated with the coursework a student is completing upon return from an approved LOA may count toward that student’s enrollment status.

The guidance further states that institutions that do not have a formal written LOA policy may adopt one, even on a temporary basis.  Such policies must require all requests for LOAs to be submitted in writing and include the reason for the student’s request.  However, for all leaves of absence granted as the result of COVID-19 related circumstances, an institution may approve, and students may begin, a leave of absence prior to submitting a written request for an LOA (LOA requests must be obtained subsequently).”

Changes of Ownership

The guidance states, “the Secretary is exercising her authority under Section 2 of the HEROES Act to provide an additional six months for the institution to provide the information required to extend the participation of an institution while its change of ownership application is pending.”

Accrediting Agency Oversight

The guidance extends accrediting agencies ability to conduct virtual accreditation visits through the end of the year (December 30, 2020).  The guidance notes that on-site visits must follow the virtual visits in a timeframe that is reasonably practicable.

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