Q&A Related to ED Relief as a Result of the COVID-19 National Emergency

By Michael T. Wherry, CPA | August 25, 2020

Based upon the electronic announcements issued by the U.S. Department of Education (ED) and the relief provisions in the CARES Act, we have been receiving numerous questions from institutions on implementing and interpreting this guidance. As a result, we have compiled this Questions and Answer for institutions to utilize as we await future guidance from ED. While, ED has not issued any guidance related to provisions in the CARES Act, we anticipate this is forthcoming at some point.

General Notes

1) ED has provided guidance for interruptions of study related to the Coronavirus.

2) To date, ED hasn’t waived any of the Cash Management provisions in the Q&As which it has issued (March 5, 2020 and March 20, 2020) nor the CARES Act. Thus, all aspects of cash management including drawdowns under HCM1 and the requirements surrounding student Title IV credit balances still in place. However, in its 4/3/2020 electronic announcement, ED indicates that exceptions could be made if an institution is unable to comply due to COVID-19 disruptions. Where an institution is unable to comply, it should document the reason(s) for instances where it is unable to comply and retain the documentation in its records.

  • M&A recommends attempting to obtain authorizations and the student’s intent via email or phone calls.
  • Delays which arise due to institutional personnel being available to work or access to the appropriate information should be documented.
  • Ensure you document why a decision made was in the best interest of the student.

New – ED indicated in its May 15, 2020 electronic announcement that credit balances as a result of the R24 calculation refund relief must be paid to the student within 14 days of the refund.

3) New – The Secretary is exercising her authority under Section 2 of the HEROES Act to extend the financial statement and compliance audit deadlines by six months. M&A assumes this extends for year ends through November 30, 2020 and we are awaiting further guidance from ED.

4) ED reminds institutions to document in their records, as contemporaneously as possible, any actions taken as a result of COVD-19. M&A reinforces this position as timely and thorough documentation provides significantly more support for the judgments and basis for decisions made by management. Situations which are well documented provide enhanced support to federal or non-federal auditors.

5) Originally, unless otherwise specifically stated in ED’s guidance, the emergency flexibilities remain in effect from March 5, 2020 through June 30, 2020 unless the crossover period extends over award years and is attached to the 2019-2020 award year and, in that case, is effective through the end of the crossover payment period.

New – The May 15, 2020 electronic announcement extended some items, unless otherwise stated, to include payment periods that overlap March 5, 2020, or that begin on or between March 5, 2020, and December 31, 2020. However, this extension does not apply to the leave of absence and the satisfactory academic progress relief.


Section 3503

1. Question – This section waives the non-federal share matching requirements for both SEOG and FWS for both 2019-20 and 2020-21. In addition, an institution can move up to 100% of unexpended FWS to SEOG, but not the other way around. Does this mean we can pay 100% of 2019-20 FWS with Federal Funds? If so, this could potentially put schools in a position where they overspent their federal allocation. Currently (July 1, 2019-present), the institution had initially planned for a 75/25 split for SEOG.

New – Answer – ED indicated in the May 15, 2020 electronic announcement, “an institution may reimburse itself from the FWS allocation for the nonfederal portion of wages paid to students on or after March 13, 2020. Likewise, an institution may, for all disbursements of FSEOG made on or after March 13, 2020, reimburse itself from the FSEOG allocation for the nonfederal portion of FSEOG awards contributed through a fund-specific match.” Thus, wages paid and SEOG grants disbursed prior to March 13, 2020 are not eligible for the waiver of the nonfederal portion.

Section 3504

2. Question – This section provides the ability to move unexpended FWS to SEOG. Any funds moved into SEOG can be awarded on an ad-hoc basis, and not follow an institution’s normal awarding guidelines for the initial SEOG allocations. These funds can be awarded to a student up to the maximum PELL award. Is this each student’s maximum fulltime Pell award or the maximum fulltime Pell award for the award year?

Answer – M&A concurs that the need calculation is waived for providing the emergency grant. However, we believe the emergency grant can be up to the maximum Federal Pell Grant for the applicable award year not the student’s individual limitation. In addition, the SEOG Emergency Awards can be made from any portion of the school’s SEOG allocation, not just the amount transferred from FWS. ED confirmed this in its May 15, 2020 announcement.

These grants should be for students who have unexpected expenses and unmet financial need as a result of a qualifying emergency, and that your determination of need should be documented in the student’s file. Institutions should develop a specific form to document and support the awarding of these emergency grants.

These emergency grants can be for undergraduate and graduate students. Thus, M&A believes the students who receive the emergency grants do not have to be Pell eligible.

Sections 3506 & 3507

3. Question – For students who withdraw due to COVID-19, any loans or PELL received for that semester/term will be eliminated from both SULA and Pell LEU. How will this be calculated by COD and NSLDS as they do not know why students withdraw.

Answer – M&A agrees that these disbursements will not impact the student’s SULA or Pell LEU limitations. However, no guidance has been issued by ED as to how this will be reported in COD & NSLDS. We expect this will be part of future ED guidance.

Section 3508

4. Question – Does a qualifying emergency pertain to all students that withdraw during the period of the National Emergency?

Answer – It depends. ED’s May 15, 2020 electronic announcement indicated that “any institution that moved students from ground-based instruction to distance learning, closed campus housing or other campus facilities, or experienced other interruptions in instruction may consider all withdrawals from students enrolled in ground-based instruction during the covered period to have been the result of circumstances related to the COVID-19 national emergency. For institutions that did not undergo changes in educational delivery or campus operations as a result of the COVID-19 emergency, the institution will be required to obtain a written attestation (including by email or text messages) from the student explaining why the withdrawal was the result of the COVID-19 emergency. Institutions must also obtain written attestations from students who withdrew from distance education programs explaining why the withdrawal was the result of the COVID-19 emergency.”

If a school has clear documentation from a student that the withdrawal was unrelated to the Covid-19 crisis, then we recommend it not provide the R2T4 relief as this would be conflicting information in our opinion. Institutions may want to consider creating a new code in their student information system to track students who withdraw specifically due to this qualifying emergency.

5. We have a question in regard to the updated guidance from May 15, 2020 for the R2T4 relief. We have been following the previous guidance from Section 3508 of the CARES Act of waiving the requirement to return Title IV funds as the result of withdrawals related to a qualifying emergency but prior to this update ED hadn’t provided specific payment period guidance. The payment period that we’ve been following this guidance is for our current Spring quarter that started 4/6/2020 and runs through 6/20/2020. How are you interpreting ED’s guidance which indicates the payment period must start on or include March 13, 2020 (covered period)? Should we continue with treating this Spring quarter with the process that we’ve been doing?

NEW – Answer – Yes. ED’s updated guidance released on June 16th extended the R2T4 waiver relief. The guidance indicates “For any student who begins attendance in a payment period or period of enrollment that includes March 13, 2020, or begins between March 13 and the later of December 31 or the last date that the national emergency is in effect, and subsequently withdraws from the period as a result of COVID-19-related circumstances, an institution is not required to return Title IV funds.”

ED qualified the R2T4 relief to indicate whether the relief is automatic, or a written attestation must be obtained. The guidance indicates “Any institution that moved students from ground-based instruction to distance learning, closed campus housing or other campus facilities, or experienced other interruptions in instruction during a term within the covered period may consider all withdrawals from students enrolled in affected programs during that term to have been the result of circumstances related to the COVID-19 national emergency. For institutions that did not undergo changes in educational delivery or campus operations as a result of the COVID-19 emergency, during a term or payment period within the covered period, the institution will be required to obtain a written attestation (including by email or text messages) from the student explaining why the withdrawal was the result of the COVID-19 emergency. Institutions must also obtain written attestations from students who withdrew from distance education programs, if applicable, explaining why the withdrawal was the result of the COVID-19 emergency.

We highlighted the wording above as we believe this is key terminology. In order for the R2T4 relief to be automatic, a disruption in instruction has to have occurred during a term or payment period in the covered period. Thus, an on-ground institution which is now teaching via distance education in a subsequent payment period or term has not experienced disruption in these subsequent payment period or terms. The disruption occurred this spring when the transition to distance education occurred. Therefore, students who are withdraw in these subsequent payment periods or term are eligible for the R2T4 relief and the institution needs to obtain a written attestation.

In our opinion, ED drafted this guidance for a two-fold reason. If institutions experience future disruptions due to a shutdown as a result of a second wave of the virus, ED has already provided broad relief. In addition, ED has provided relief to individual students that must withdraw due to spike in the virus and individual circumstances as localities reopen, as long as the student provides a written attestation.

Finally, the guidance appears to allow for the R2T4 relief to be eligible for students who withdrew prior to March 13, 2020 as long as the covered period includes this date. If any institution decides not to apply the waiver relief to all students, this should not be done on a student-by-student basis but on another basis (term / payment period mostly completed, program most completed, specific locations, withdraw date prior to March 13, 2020, etc.)

6. Question – If the refund calculation states to refund the portion of the unearned Pell Grant or Direct Loan disbursements, does the College retain those funds and document that the student withdrew as a result of a qualifying emergency?

Answer – Yes. M&A recommends completing all aspects of the refund process until the point of making the actual refund and ED confirmed this in the May 15, 2020 electronic announcement. This would include completion of the student status form, Pell recalculation, R2T4 calculation, and any state or institutional refund policy. We recommend that the student’s account card / ledger card is updated for these transactions. Institutions can then make entries to reverse the refund from the student’s account card / ledger card. If an institution doesn’t post the refund to the student’s account, ensure a tracking system exists to enable all students who don’t have refunds made are captured for the required future ED reporting.

In addition, if students withdraw who owe the institution a balance, institutions may want to consider what collection efforts, if any, will be pursued during this period of time.

This provision raises a question which is not considered in the statute. If an institution applies their institutional refund policy and this creates an additional refund, then to whom are these funds sent? ED clarified in the May 15, 2020 electronic announcement that if the R2T4 calculation relief results in a Title IV credit balance this must be sent to the student within 14 days of the refund.

ED did indicate that an institution could potentially amend its tuition refund policies to all students in a given program if such changes are documented and disclosed to students. We highly recommend that this is discussed with regulatory and legal counsel to understand the impact on state consumer disclosures laws.

7. Question – The refund calculation in our system will not match since no funds will be refunded. Does this present an issue?

Answer – It does not. However, institutions will have to report the number of such recipients, amount of grant or loan assistance associated with each recipient, and the total amount of grant or loan assistance for which each institution has not returned. We suggest creating this listing as each withdrawal occurs to ensure a fully documented “paper trail” exists for reporting and for future federal and non-federal audits. In conjunction with #6, the institution should have appropriate documentation and the records well organized.

8. Question – The institution assumes refunds do not get sent to COD, correct?

Answer – We agree. All refunds (Pell, SEOG, and FDL) are not required to be made. ED indicated in the May 15, 2020 electronic announcement that will take time to develop the processes to fulfill the reporting requirements under the CARES Act and requests institutions to be patient.

9. Question – We know the institution doesn’t have to refund the unearned funds, but if we wanted to send a portion back to the lender to zero out the account balance and reduce the student’s future debt, can we make that decision, or do you think the guidance is telling us not to do that? The guidance that I read stated a school is not required to return the unearned funds, but do you think it is financially responsible on the student’s behalf to reduce their loan debt instead of sending them a check?

Answer – No – Section 3508 of the CARES Act indicates the following. As such, they should not as the FDL disbursement for the payment period in question will be cancelled.

“(c) CANCELING LOAN OBLIGATION. — Notwithstanding any other provision of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), the Secretary shall cancel the borrower’s obligation to repay the entire portion of a loan made under part D of title IV of such Act (20 U.S.C. 1087a et seq.) associated with a payment period for a recipient of such loan who withdraws from the institution of higher education during the payment period as a result of a qualifying emergency.”

10. Question – Due to externships closing down, we may have to withdraw an entire class. Do you see any problem with that?

Answer – An institution may provide an approved leave of absence that does not require the student to return at the same point in academic program that the student began the leave of absence if the student returns with the same semester (or the equivalent). M&A would interpret this to be the same payment period for a nonterm institution.

In ED’s March 5, 2020 guidance (updated March 20, 2020 and April 3, 2020), a clock hour institution can put a student on an approved leave of absence if the coursework is interrupted as a result of Covid-19. This guidance applies if there is a reasonable expectation that institution will be able to resume the coursework and find a placement for this student within 180 days. If this criterion can’t be met, then the student must be considered withdrawn and an R2T4 calculation performed. (See above for the CARES Act impact on R2T4 calculation refunds). While not specifically indicated in the CARES Act, M&A believes that this guidance would extend to a credit hour institution based upon the previous paragraph.

11. Question – Does Section 3508 of the CARES Act eliminating the requirement for an institution to return R2T4 funds as a result of the qualifying emergency, also apply if a Pell recalculation was required to be performed due to a student who dropped below less than full time?

Answer – ED made a point to remind schools in the March/April Electronic Announcements that they do not have the statutory authority to waive the requirement that institutions award or disburse T4 funds based on a student’s actual enrollment status. A Pell recalculation due to a change in a student’s enrollment status is not the same as an R2T4 calculation and, as such, we believe this is not covered under Section 3508 of the CARES Act. Therefore, refunds due to a Pell recalculation should be made.

Section 3509

12. Question – Need some clarification on Satisfactory Academic Progress related to COVID. The institution understands that COVID withdrawals are not required to have their withdrawn courses shown in their cumulative grade point average (CGPA) or maximum time to complete (MTC). Also, the institution may extend our existing term from 10 weeks to 20 weeks due to COVID. If a student withdraws due to the COVID emergency during the 10-week extension, we believe their CGPA and MTC would not be affected. Do you agree?

Answer – Section 3509 of the CARES Act expressly says that “an institution of higher education may, as a result of a qualifying emergency, exclude from the quantitative component of the calculation any attempted credits that were not completed by such student without requiring an appeal by such student.” The Department’s subsequent April 3 guidance stated that it would be providing additional guidance regarding how to implement this flexibility in SAP (which per the statutory text is not mandatory, but optional if an institution wishes to be more flexible).

Note that the quantitative component here refers to the pace at which students must progress through their program to ensure that they will graduate within the maximum timeframe. Dropped courses or “W” grades generally do not affect GPA calculations (i.e., the qualitative component).

ED’s May 15, 2020 electronic announcement includes further guidance on the application of Section 3509. ED reminds schools that they may exclude from the quantitative component (pace) attempted credits a student was unable to complete as a result of the Covid-19 emergency and that a student does not have to file an SAP appeal in order to exercise this flexibility. However, blanket relief (as described under the Qualification for R2T4 Relief section) is not available in this situation. The guidance indicated that “an institution must have reasonably determined that the student’s failure to complete those credits was the result of a COVID-19 related circumstance. Allowable circumstances include, but are not limited to, illness of the student or family member, need to become a caregiver or first responder, economic hardship, added work hours, loss of childcare, inability to continue with classes via distance education, inability to access wi-fi due to closed facilities. If an institution temporarily ceases operations during a period of enrollment, attempted credits for all affected students (specific to that enrollment period) may be excluded.” This determination can be made by the institution and the guidance doesn’t indicate a statement must be obtained from the student. We liken this to a professional judgment situation and would advise an institution to document the SAP determinations similarly.

13. Question – How will incomplete (“I”) grades be evaluated during this emergency. We will have a number of students carrying “I” grades for a much longer period of time than normal due to not having a site to finish their externship hours. Does the “I” grade delay the review of satisfactory academic progress (SAP) and / or should the “I” grade delay Title IV funding for the next payment period (non-term) or term? The institution’s typical timeframe for a student to complete the required hours from an “I” grade is 5 days, so we have not encountered this as an issue before.

Answer – Per Volume 1, Chapter 1 of the 19-20 Handbook, an institution’s SAP policy must explain how grade point average and pace of completion are affected by course incompletes, withdrawals, and repetitions, and by transfer credits from other schools. The institution should ensure their current policy covers these disclosures.

An institution must calculate SAP at the end of any payment period and should recalculate once an incomplete grade is replaced with a letter grade. While not expressly prohibited, it would be risky to continue paying Title IV in subsequent payment periods when a student could lose eligibility if an “I” grade were replaced by a low letter grade. An institution may want to consider amending their SAP policy to extend the timeframe for making up the missed work due to the current emergency.

ED Relief and Other Questions

14. Question – For our fully online programs and students, are they exempt from everything regardless if they are having challenges due to this emergency (stimulus money, refunds for R2T4, SEOG usage, etc.)?

Answer – We feel they qualify for all of the exemptions which have been granted unless specifically noted. The online students are being excluded from the Higher Education Emergency Relief Funding calculations as, in theory, neither the school nor the student incurred any additional costs as a result of the stay-at-home order. Otherwise, online students are being affected just like on-ground students as a result of the pandemic.

The one exception is the blanket relief for the R2T4 refunds are not available for students in fully online programs. See question #4 above.

15. Question – The March 5, 2020 Electronic Announcement indicates that, in response to COVID-19, we can offer courses to students on a schedule that would otherwise be considered a non-standard term while continuing to offer Title IV aid using a standard term academic calendar. Can those courses also overlap courses in our summer term without causing our programs to be treated as nonterm programs?

Answer – Yes, the Department is extending the flexibility described in that electronic announcement to schedules that would otherwise be nonterm as well; for example, an extended spring term that will overlap with a summer term. If an institution extends the length of a term to respond to COVID-19, causing the term to overlap a subsequent term, in this limited circumstance, the institution may continue to consider its terms to be standard terms, allowing both the use of a scheduled academic year (SAY) for Direct Loan funds and Pell Grant Formula 1. Use your professional judgment and document your decisions, citing specific regulatory guidance whenever possible.

16. Question – Are we permitted to extend our current term on a student-by-student basis, or must this be done for all students in a particular cohort/program?

Answer – The flexibility to offer courses on a schedule that would otherwise cause a program to be considered a non-standard term or a nonterm program is available to all institutions that were required to temporarily cease academic instruction or extend scheduled breaks as a result of COVID-19. Initially, this was presented as a solution for students who were recalled from travel abroad programs. In our opinion, this implies that a schedule change can be made for an individual student and not necessarily for an entire cohort/program.

17. Question – How does a student complete the Statement of Educational Purpose if they can’t visit a notary or be on-campus?

Answer – The Department has suspended the in-person submission and notary requirements for V4 and V5 verification (see April 3, 2020 electronic announcement). However, ED indicated documents should be submitted to the institution. If possible, M&A recommends using a video call to assist in documenting these steps. Institutions could develop a form which documents the required student ID information, that the student was viewed over a video cam, and a picture of the student’s ID was emailed to the institution.

ED’s May 15, 2020 electronic announcement indicated “for applicants in verification groups V4 or V5, institutions should use documentation of an applicant’s high school completion status that it may already have obtained for other purposes (e.g., documentation maintained in its admissions office). Where an applicant is unable to obtain such documentation and an institution does not already have such documentation, it may accept a signed and dated statement from the applicant in which he or she truthfully attests to his or her secondary school completion or the equivalent. The statement must indicate whether a high school diploma or the equivalent was obtained and date of completion (or approximate date). This guidance applies until December 31, 2020, for both the 2019-2020 and 2020-2021 award years.”

18. Question – Any changes in professional judgement due to the projected unemployment in 2020 and the resulting loss of income?

Answer – No change in ED’s guidance has occurred and the existing regulations should provide the applicable guidance. ED reminded institutions in its April 3, 2020 announcement that professional judgments must be made on a case-by-case basis.

19. Question – Can a student email verification documents to the institution?

Answer – ED has reminded institutions that FERPA rules are still in place and verification documents can only be emailed if encrypted and secure. If an institution wants to pursue this process, then we recommend that regulatory counsel and the institution’s information technology department discuss the necessary requirements to ensure the system secure. In our opinion, ED is unlikely to provide relief or accommodations to an institution upon an audit for violations of FERPA or GLBA. While institutions are operating 100% remotely, FERPA and GLBA are even more important and, if anything, ED may be more stringent in their oversight.

20. Question – Does the March 5, 2020 guidance from ED allow institution to start new students in distance learning?

Answer – Yes – Because of the COVID-19 national emergency, and as an emergency measure to accommodate students, the Department provides broad approval to institutions to use distance learning modalities without going through the standard Department approval process, even if the institution would normally be required to seek Departmental approval for the use or expansion of distance learning programs. The May 15, 2020 electronic announcement extended this relief to apply to payment periods that begin on or between March 5,2020 and December 31, 2020.

Reminder that ED reinforced in its April 3, 2020 guidance that the distance education flexibility is not available for clock-hour programs that lead to licensure if the licensing body will not accept the distance education courses.

21. Question – We have many students going on a leave of absence (LOA) during this time period. We normally return federal direct loan funds (FDL) received after the last date of attendance (LDA) once the business office is notified that a student has taken a LOA. Due to the emergency are we able to retain the FDL funds received prior to the student’s LDA but prior to the LOA notification?

Yes – Based upon the CARES Act section 3508 which allows an institution to not return R2T4 refunds and which has provided relief on the LOA treatment, we believe that FDL funds received after the LDA and prior to the Covid-19 LOA, that an institution may retain these funds.

22. Question – Due to the closure of secondary schools, we are unable to obtain high school proof of graduation which is required by our accreditor? Our current policy is that a student may not stay in school more than 21 days which aligns with our policy to provide a 100% tuition refund. Has any relief been provided on this issue?

Answer – Yes and No – ED has not provided any relief specific to proof of graduation (POG). The federal regulations only require a student self-certify on the FAFSA that a high school diploma or high school equivalency certificate or that secondary school was completed through homeschooling as defined by state law. An institution does need to obtain the POG if the institution doubts the validity of the completion. For an institution which requires the diploma or POG for admission purposes, the institution has to obtain and must rely on that copy of the diploma or high school equivalency certificate and not on the student’s certification alone.

As noted in question #18, ED has provided relief in the May 15, 2020 electronic announcements for students in the verification groups V4 or V5.

We offer the following suggestions in regard to obtaining POG during the Covid-19 crisis:

  • Attempt to obtain the POG electronically if the student has the records available.
  • Determine whether student can provide an alternative form of POG (e.g., copy of DD214)
  • Check with your accreditor to determine if any relief is being provided for their admission policies during this emergency period.
  • Consider conditional acceptance which is allowed by the federal regulation. ED has provided guidance in Dear Colleague Letter GEN-11-12.
  • An institution may need to update their catalog for these changes.

23. Question – Our policy is if a student attends the course, we pay financial aid on all courses attempted. In this situation, the institution has already disbursed Pell but hasn’t disbursed any federal direct loans (FDL). Due to the Covid-19 emergency, a student who wants to drop a course they attended during week 1 which will lower the enrollment status to on 3 credits. The FDL will not be disbursed until week 5 of the term. Thus, is the student eligible or not since at time of disbursement the enrollment status will be less than half time?

Answer – Yes – In ED’s April 3, 2020 announcement, the following was included concerning enrollment status changes.

“We do not have the statutory authority to waive the requirement that institutions award or disburse Title IV funds based on a student’s actual enrollment status. For example, assuming an institution defines full-time enrollment as 12 credit hours, when a full-time student enrolled for 12 credit hours drops or withdraws from three credits, that student is now enrolled at three- quarter time status; however, for Direct Loans, the institution must only confirm at least half- time enrollment status as of the time of disbursement. It is not necessary to recalculate a student’s Direct Loan eligibility based on changes in enrollment status that occur after the institution originates a Direct Loan.”

In this situation, the student began attendance in the course they are looking to drop. Thus, we assume these credits will be included as attempted credits. Therefore, we believe the student should be eligible for the FDL, because they attempted enough credits in the term to be considered halftime. (The student was at least halftime when the FDL was originated). Had the student failed to begin attendance in the course, we would conclude that the student would not be eligible for the FDL disbursement.

24. Question – ED’s May 15, 2020 electronic announcement indicated in the case of withdrawn students for whom no returns have been made, if an affected student withdraws prior to some or all her Title IV aid having been disbursed, a situation that would normally result in a post-withdrawal disbursement (PWD), the institution should proceed with making any remaining disbursements for the payment period.

  • For the PWD amount, would we pay the full award for the payment period, not just the pro-rated amount on the R2T4?

Answer – We recommended to pay the full disbursement and send any resulting credit balance to the student. You should identify the amount that would otherwise be refunded (or in this case would not have been awarded) for the future reporting requirements to ED.

  • What disbursements are eligible as a PWD?

NEW – Answer – From our research and through discussion with NASFAA, a school should consider all aid for which the student was eligible for at the time of withdrawal. Page 5-47 in the 19-20 Handbook lists several situations where, although aid can be included as “could have been disbursed” in the R2T4 calc, a school is prohibited from making a PWD from these funds.  From that list, only the following late disbursements are eligible to be disbursed (when processing the R2T4 waiver):

  1. A second or subsequent disbursement can be made assuming the student was otherwise eligible at the time of withdrawal.
  2. A disbursement of a Direct Loan to a student enrolled in a modular program who has withdrawn before beginning attendance in enough courses to establish a half-time enrollment status can be made assuming the student was enrolled at least half-time at the time of withdrawal.
  • Should the institution treat the disbursement as aid that could have been disbursed or aid disbursed in the R2T4 calculation? Doesn’t really impact anything since no funds are returned.

Answer – We have been advising clients to list all aid as disbursed rather than could have been disbursed.  We believe this will be a clearer way to document the file, and may have even been implied in the 5/15/20 EA –  “an institution must determine the total amount of grant and loan assistance that otherwise would have been returned, identified in Step 5 of the R2T4 calculation, had the calculation been performed.”  (if end result of an R2T4 is a PWD, you wouldn’t even get to Step 5).

  • Does the institution need an authorization from the student to make a late disbursement?

Answer – M&A doesn’t believe so based upon ED’s guidance which indicates “the institution should process with making any remaining disbursements…”. And loans will be forgiven anyway so no need to first offer to the student like you normally would.

  • Since the institution is on HCM1, we assume the credit balance must be made first before the PWD is made. Agree?

Answer – M&A agrees.

25. Question – We have been refunding Title IV credit balance per a student’s Withdraw/Grad Authorization form and should we re-request these funds from ED also? Do we have any issues since this authorization was obtained upon a student’s enrollment? The ED guidance seems to strongly favor sending it to the students, I am wondering if we should suspend this during this COVID period.

Answer – We believe it would be a best practice to verify with students how they would like their credit balance to be handled, even if you have an existing authorization to return it to their lender. Under no circumstances should you return the loans from the withdrawal payment period, because these loans will be forgiven anyway (see question #10). But if a student has loans from a prior payment period and has given you authorization to return the credit balance to their lender rather than directly to the student, this seems to be acceptable.

26. The institution has decided to refund one week of housing and utilities for those who live in housing. Since we were forced to send our students home, it only ended up being one week till the term ended. Do I need to worry about my Cost of Attendance (COA) as we have some students who are at maximum budgets for housing? In addition, meal plans that were charged are also be refunded and these amounts will vary per student. Similarly, do I have worry about the COA or can these students just get refunds without any adjustment of financial aid?

Answer – ED addressed this in their March 20, 2020 guidance which is noted below and, as such, the COA does not need to be adjusted.

“If, as a result of the COVID-19 outbreak, you provide a refund or waiver of expenses for all or part of a student’s tuition, fees, room and board charges, or other institutional charges, or if you become aware that a student has moved off campus for the remainder of the term, the Department will not require a re-evaluation of the student’s cost of attendance. Therefore, you are not required to make changes to a student’s Title IV awards on the basis of such changes.”

27. NEW- Question – We are attempting to begin our process of recalculating R2T4 files due to COVID-19 related withdraws / LOA’s. Per our reading of ED’s guidance, “allowable circumstances for the attestation include, but are not limited to: illness of the student or family member; need to become a caregiver or first responder; loss of childcare; economic hardship; inability to access wi-fi due to closed facilities; or an increase in work hours as a result of the COVID-19 emergency. Are these the only reasons eligible for the R2T4 relief or if a student responded that they cannot adapt to the online classes is this a valid reason?

Answer – ED’s guidance indicates “allowable circumstances for the attestation include, but are not limited to…” and, as such, we believe a student who is unable to adapt to the online classes at a school or program that was an taught on-ground prior to the national emergency, is an eligible Covid-19 withdrawal.


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