Can a Foreign School Provide Online Classes When a Study Abroad Program Is Disrupted By Cororavirus?

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This AskRegs Knowledgebase Q&A was updated on September 2, 2020 to reflect extended timeframes in the August 21, 2020 Electronic Announcement.

Yes. There are two categories of foreign schools for purposes of this Q&A, and both types can now provide online classes when a study abroad program is disrupted by COVID-19.

Category 1In the case that a U.S. institution has entered into a written agreement for the foreign school to provide the study abroad program to students who are enrolled as regular students at the U.S. institution: If the U.S. institution has entered into a written agreement with the foreign school to provide the study abroad program to students who are enrolled a regular students at the U.S. institution, and the foreign school converts students from residential classes to online/distance education classes for the payment period, the student remains eligible for Title IV funds. The student is not a withdrawal and a return of Title IV funds (R2T4) calculation is not required. This applies even when the foreign institution is a Title IV-eligible foreign school that is providing online classes under a written agreement to regular students enrolled at a U.S. institution.

For example, John is enrolled as a regular student and receiving Title IV aid from Tiger University, a Title IV-eligible U.S. institution. Tiger University has a written agreement with Pisa College in Italy, allowing John to complete a study abroad program through Pisa College. When John is recalled to the U.S because of COVID-19, Pisa College can switch John from residential classes to online classes provided by Pisa College and allow him to finish his courses via distance education from his U.S. location. In this scenario, John retains his Title IV aid for the payment period and is not a withdrawal. In this scenario, it does not matter whether Pisa College is a Title IV-eligible foreign school.

The March 5, 2020 Electronic Announcement allows the above exceptions for students whose study abroad experiences are disrupted by COVID-19. The August 21, 2020 Electronic Announcement extends the above guidance through the end of the payment period that includes December 31, 2020 or the end of the payment period that includes the end date for the federally declared qualifying emergency related to COVID-19, whichever occurs later.

"Category 2In the case that a foreign school is a Title IV-eligible institution providing the online instruction to U.S. students who are enrolled directly in the foreign school (not as study abroad students from a U.S. school that has a written agreement with the foreign school): Under Section 481(b) of the Higher Education Act of 1965 (HEA; US Code 1088(b)), as amended. a Title IV-eligible foreign school is prohibited from offering distance education to its own U.S. students who are enrolled as regular students at the foreign school. However, Section 3510 of the CARES Act allows the U.S. Department of Education (ED) to suspend this prohibition, which ED does in the April 3, 2020 Electronic Announcement, stating:

"Pursuant to section 3510 of the CARES Act, the Secretary permits any part of an otherwise eligible program at a foreign institution to be offered via distance education, if the applicable government authorities in the country in which the foreign institution is located have declared a public health emergency, major disaster or emergency, or national emergency related to COVID-19. ... The term “foreign schools” are those institutions located outside of the United States that participate in the Title IV Direct Loan program and award their credentials to U.S. students. This term excludes study-abroad programs in which a foreign institution provides instruction to a student who remains a degree-seeking student from the student’s domestic U.S. institution. Students in this category have always been permitted to engage in distance learning.

The Secretary also permits foreign institutions to enter into written arrangements with institutions located in the United States that participate in the Federal Direct Loan Program for the purpose of allowing a student of the foreign institution who is a Federal Direct Loan borrower to take courses from the American institution. For the purpose of this provision, foreign public or nonprofit institutions may only enter into written arrangements with public or nonprofit institutions in the United States. Foreign medical, nursing, and veterinary institutions that are for-profit may enter into written arrangements with U.S. public, nonprofit, or for-profit institutions."

In this example, Tonya is a U.S. citizen and regular student at Pasta University in Italy. Pasta University is a Title IV-eligible foreign school administering Direct Loans to Tonya. When Pasta University suspends residential classes because of COVID-19, Pasta University can switch Tonya from residential classes to online classes provided by Pasta University and allow her to finish her courses via distance education from her U.S. location. Pasta University could also enter into a written arrangement with a school located in the U.S., as indicated above. In either scenario, Tonya retains her Direct Loans for the payment period and is not a withdrawal.

The August 21 announcement extends the section 3510 provision "for the duration of a national emergency declared by the applicable government authorities in the country in which the foreign institution is located, through the payment period following the payment period or the break between payment periods during which the emergency declaration is lifted."

Please Note: The above guidance does not apply when the student never began attendance in the study abroad program. The R2T4 regulations in 668.22 do not apply if the study abroad experience was disrupted before the student began classes for the payment period or period of enrollment. When the student fails to begin any classes for the payment period or period of enrollment, 668.21 applies. In this scenario, all Title IV grant funds must be returned to the Title IV program by the school and the student (as applicable). All Direct Loan funds that were credited to the student's ledger account at the school and that were retained by the school also must be returned by the school. Any Direct Loan funds that were delivered to the student as a Title IV credit balance do not have to be returned by anyone. See the section for "Students Who Did Not Begin Attendance" in the March 5, 2020 Electronic Announcement for more information.

Note: This AskRegs Q&A was previously updated to reflect the change made by the CARES Act, related to a foreign school that is a Title IV-eligible institution providing online instruction to U.S. students who are enrolled directly in the foreign school, as well as the change in effective dates that were made by the April 3, 2020 Electronic Announcement (which are superseded by the August 21 announcement).

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