Does the CARES Act Waive R2T4 Calculations When a Student Withdraws Due To COVID-19?

KA-34744 Helpfulness Rating 2,777 page views

This AskRegs Knowledgebase Q&A was updated on August 26 to include clarification from the August 21, 2020 Electronic Announcement for nonterm and nonstandard term programs that use the period of enrollment (rather than the payment period) in their return of Title IV funds (R2T4) calculations. It also reminds schools of the periods covered by the R2T4 waiver.

No. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) does not provide a blanket waiver of R2T4 requirements. Schools still must complete the R2T4 calculation for all withdrawn students for whom the calculation would normally be required, including those who withdraw as a result of a qualifying emergency.

The CARES Act waives the requirement for schools and students to return unearned Title IV grant and loan assistance as a result of the R2T4 calculation for students who withdraw from a qualifying period because of a COVID-19 emergency--that is, the "R2T4 waiver." This includes all Direct Loans (subsidized unsubsidized, graduate PLUS, and Parent PLUS). As a reminder, students and parents are already not required to return unearned loan funds under R2T4 rules; they repay the loan in accordance with the terms of the promissory note.

When the school later reports that the student was a COVID-related withdrawal, ED will cancel the Direct Loan and TEACH Grant disbursement for the entire payment period or period of enrollment within the covered period (defined below). ED will also exclude any Direct Loan subsidized usage period and Pell Grant payment from their respective lifetime limits.

In exercising the R2T4 waiver, schools will be required to report the following information to ED:

For additional information, please see also AskRegs Q&A "What are the R2T4 Reporting Requirements Under the CARES Act?"

See also AskRegs Q&As, How Do We Implement the R2T4 Waiver If We Are Performing the First R2T4 Calculation For the Student? and How Do We Implement the R2T4 Waiver If We Are Re-Disbursing Aid We Already Returned Under the R2T4 Calculation?

R2T4 waiver refers to the fact that the CARES Act, waives the requirement for the school or the student to return Title IV funds when a student withdraws due to COVID-19 anytime during the entire payment period that falls within the covered period.

Covered period refers to the fact that the May 15, 2020 Electronic Announcement now allows schools to apply the R2T4 waiver to: 1) payment periods or periods of enrollment that include March 13, 2020; or 2) payment periods or periods of enrollment that begin between March 13 and the later of December 31 or the last date that the national emergency is in effect. See AskRegs Q&A, How Do We Determine If a Withdrawal Was the Result Of a Qualifying Emergency Due To Coronavirus?, for important details.

Payment Period Or Period of Enrollment: Remember that standard term programs must use the standard term payment period (semester, trimester, quarter) in the R2T4 calculation; they do not have the option to use the period of enrollment. A nonterm or nonstandard term program has a choice to use either the payment period or the period of enrollment in the R2T4 calculation. Therefore, it is NASFAA's understanding (because the Electronic Announcement language is unclear) that whichever period is used in the R2T4 calculation requires a determination of whether a student withdrew during that payment period or period of enrollment due to COVID-19.

August 21, 2020 Electronic Announcement Update: "Where an institution has opted to use the period of enrollment to calculate its returns for a non-term or non-standard term program, the waiver may apply to a student who begins attendance in a payment period that includes December 31, 2020 or the last date that the national emergency is in effect and withdraws after the conclusion of that payment period but within the applicable period of enrollment."

Note: This AskRegs Knowledgebase Q&A was previously updated on June 17, 2020 to point out that on June 16, 2020, ED made changes to the May 15, 2020 Electronic Announcement, which now expands the terms and nonterm payment periods to which the R2T4 waiver applies, as well as clarifies that the determination of COVID-19 related withdrawals are made on a payment period or period of enrollment basis.

AskRegs Q&As represent NASFAA's understanding of regulatory and compliance issues. They are FOR INTERNAL USE ONLY. While NASFAA believes AskRegs Q&As are accurate and factual, they have not been reviewed or approved by the U.S. Department of Education (ED). If you should need written confirmation of AskRegs information for audit or program review purposes, please contact your ED School Participation Division. NASFAA shall not be liable for technical or editorial errors or omissions contained herein; nor for incidental or consequential damages resulting from the furnishing, performance, or use of this material.