Are Overpayments Waived If the Student Withdraws From Some But Not All Classes Due To COVID-19?

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This guidance is not award-year-specific and applies across award years.

This AskRegs Knowledgebase Q&A was updated on August 24, 2020 to reflect extended deadlines in the August 21, 2020 Electronic Announcement. Per the announcement, the following Electronic Announcement guidance now applies 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.

No. Title IV grant overpayments are only waived if the student is a complete withdrawal from the payment period or period of enrollment under 34 CFR 668.22, and that withdrawal was due to a disruption in instruction or campus operations due to the COVID-19 national emergency.

See the May 15, 2020 Electronic Announcement, which reads, "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."

The March 5, 2020 Electronic Announcement indicates that the U.S. Department of Education (ED) has no authority to waive the requirement to award or disburse Title IV funds based on a student’s actual enrollment status. Therefore, normal recalculation rules apply. Refer to the announcement, as well as the program-specific and general recalculation rules in Chapter 7 of Volume 3 in the FSA Handbook. See also the following AskRegs Q&As:

That having been said, one might argue that some course drops/withdrawals were COVID-19 related due to a disruption of instruction or campus operations, and therefore award Higher Education Emergency Relief Fund (HEERF) grants to offset the financial impact to such students. Whether these drops/withdrawals were COVID-related is a school decision. Consult with your legal counsel if you need assistance making this determination.

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.