Scenario: Our school is considering issuing an "E-W" grade for emergency withdrawals due to the COVID-19 outbreak. This is issued if a student indicates they need to drop due to impacts of the Coronavirus, including not having the technology to continue their classes online, being affected personally by the virus, etc. The district is considering giving them a full refund of enrollment fees for the term and erasing their spring term academic transcript/enrollment record so it is as if they had never enrolled.
Answer: It is permissible to refund all or a portion of institutional charges (that's the school's decision), but it is not permissible to erase enrollment records for Title IV purposes. The rules have not changed as a result of Coronavirus.
As long as a student begins attendance in a payment period or period of enrollment, the student begins earning Title IV funds and return of Title IV funds (R2T4) rules in 34 CFR 668.22 apply. The school must perform the R2T4 calculation if the student completely withdraws at any point prior to the 60 percent point of the payment period/period of enrollment. An R2T4 calculation is required even if the student only attends classes for one day or receives a full refund of institutional charges under institutional refund policies. A student who begins attendance starts earning Title IV funds to pay, not only for institutional charges, but for noninstitutional charges, like off-campus room and board, books and supplies, transportation, and miscellaneous personal expenses. Therefore, you must perform an R2T4 calculation and make any post-withdrawal disbursement of Title IV funds, as well as deliver any Title IV credit balance for which the student is eligible as a result of that calculation. Your institution’s recordkeeping system and/or financial aid management system (FAMS) must have an audit trail in place to show the actions it has taken in this situation, e.g. system entries showing the registration, enrollment status, institutional charges, removal of registration and charges, etc.
The following is from Volume 5, Chapter 2 of the FSA Handbook:
"Effects of a post-withdrawal reduction in charges
If a student withdraws and, as a result of applying an institutional refund policy, the school reverses, reduces, or cancels a student’s charges, the R2T4 requirements still apply. The statute mandates that an otherwise eligible student who begins attendance at a school and is disbursed or could have been disbursed Title IV grant or loan funds prior to a withdrawal earns a portion of those Title IV funds. If, as a result of the withdrawal, an institution adjusts or eliminates a student’s institutional charges, or changes a student’s enrollment status, the changes made by the institution have no bearing on the applicability of the requirements in 34 CFR 668.22. Moreover, the charges used in the R2T4 calculation are always the charges on the student’s account prior to withdrawal. However, if a student’s enrollment status changed prior to and unrelated to the withdrawal, the effect of that change on institutional charges should be reflected in any R2T4 calculation."
See also Q1/A1 and Q2/A2 in GEN-00-24.
You must always use the original institutional charges when completing the R2T4 calculation regardless of any institutional refund policy where some or all charges may be eliminated. See page 5-106 of the 2019-20 FSA Handbook: “The institutional charges used in the calculation are always those that were assessed the student for the entire payment period or period of enrollment, as applicable, prior to his withdrawal. Initial charges may only be adjusted by those changes the school made before he withdrew (e.g., for dropping or adding a class or changing enrollment status). If after he withdraws the school changes the amount of institutional charges it assessed him or decides to eliminate all institutional charges, those changes affect neither the charges used nor the aid earned in the R2T4 calculation.”
CARES Act Exception: The Coronavirus Aid, Relief, and Economic Security (CARES) Act waives the R2T4 requirements for schools or students to return unearned grant or loan assistance for students who withdrew because of a qualifying emergency. See AskRegs Knowledgebase Q&A, Does the CARES Act Waive R2T4 Requirements When a Student Withdraws Due To COVID-19?
Note: The Title IV regulations do not address the nature of any grades that would appear on such students' records; this is a matter of institutional academic policy.
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