How Do We Implement the R2T4 Waiver If We Are Re-Disbursing Aid We Already Returned Under the R2T4 Calculation?

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This AskRegs Knowledgebase Q&A was updated on August 25, 2020 to include a minor 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.

Scenario: The student withdrew from a payment period or period of enrollment within the covered period (defined below), and the school is implementing the R2T4 waiver (defined below) under the May 15, 2020 Electronic Announcement. The school already performed the R2T4 calculation and returned both the school's share and the student's share of unearned Title IV aid from the R2T4 calculation. The R2T4 calculation had both aid that was already disbursed and aid that could have been disbursed. The school chooses to implement the R2T4 waiver to not return unearned Title IV aid to ED or to restore unearned aid that was already returned to ED.

Answer: According to guidance NASFAA has confirmed with the U.S. Department of Education (ED), the school must (not should):

  1. Re-disburse to the student all Title IV funds for which the student was eligible at the time of withdrawal and that were previously returned as unearned aid for the applicable payment period or period of enrollment, ignoring late disbursement and post-withdrawal disbursement rules in 34 CFR 668.164(j) or 668.22. In other words, you re-disburse the aid as if the R2T4 calculation never happened. Note the ineligible disbursements below.
  2. Disburse all “aid that could have been disbursed” from the original R2T4 calculation for which the student was eligible at the time of withdrawal, ignoring late disbursement and post-withdrawal disbursement rules. This includes disbursing the student's second Direct Loan disbursement that could not have been disbursed previously under late disbursement rules. Note the ineligible disbursements below.
  3. Make required adjustments in the Common Origination and Disbursement (COD) System. Contact COD if you have questions on how to do this.
  4. Credit the student's ledger account with all aid.
  5. Request any necessary funds from G5.

According to ED, the CARES Act allows the student to keep all Title IV aid for which the student was eligible at the time of withdrawal despite the late and post-withdrawal disbursement regulations. Also, it is NASFAA's understanding that you cannot re-disburse some aid without disbursing the aid that could have been disbursed previously.

Ineligible Disbursements: According to later guidance NASFAA received from ED, even if the student qualifies for the R2T4 waiver, Title IV aid cannot be re-disbursed or disbursed in the following circumstances:

Verification is complicated. Generally, if the student does not complete verification, then the student would not have been eligible for need-based aid during the payment period, and the school should not make disbursements of need-based aid for that period even if the student would otherwise qualify for the R2T4 waiver. The institution should treat the student as eligible only for non-need-based aid, and should make any disbursements of that aid for which the student was eligible prior to withdrawal. On the other hand, if the student later successfully completes verification, and following verification, the student is eligible for need-based aid, the institution should make any disbursements for which the student should have been eligible in the payment period.

Do not reverse or re-do the original R2T4 calculation. The school does need to track the amount of unearned aid from the original R2T4 calculation in order to complete the required R2T4 reporting under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). See AskRegs Q&A, What Are the R2T4 Reporting Requirements Under the CARES Act?

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 or period of enrollment that falls within the covered period.

Covered period refers to the fact that the May 15th 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."

Notes:

 

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.