Even half a year after new rules for Return to Title IV (R2T4) exemptions went into effect — and as we consider specific scenarios stemming from the changes — we continue to learn more and fill in the gaps in knowledge to assist institutions.
Recently, we contacted the Department of Education (ED) concerning a situation that can frequently arise involving Title IV credit balances and R2T4 exemptions. Read on for a hypothetical scenario we introduced and ED’s response.
According to the Federal Student Aid (FSA) Handbook, when a student withdraws with an outstanding Title IV credit balance, the existing 14-day payment requirement is placed on hold to determine the final amount of the balance. Then, the 14-day deadline to resolve the credit balance begins on the date the institution performs the R2T4 calculation.
Our query to ED was regarding what timeframe a school would use to resolve the credit balance if a student qualifies for an R2T4 exemption (i.e., half-time or 49% exemption), which means a R2T4 calculation will not be performed. In this situation, would the 14 days begin from the date the school determines the student meets the exemption or, because the student has “completed the period” by meeting an exemption, does it begin from the end of the period? Might there be a different payment requirement altogether?
In its reply to our question, ED confirmed a student who meets a withdrawal exemption generally is not considered a withdrawn student (under 34 CFR 668.22) and, therefore, the rules and timeframes associated with the rule may not apply in this scenario. Instead, it comes down to whether the student provided an authorization to hold a Title IV credit balance.
- If the student authorized a Title IV credit balance: The credit balance would be provided no later than the end of the payment period, because the student is considered to still be enrolled and to have completed the period. ED emphasized that although the institution can wait until the payment period, the department prefers that the institution provide the disbursement as soon as possible to help the student cover any existing financial issues.
- If the student did not authorize a Title IV credit balance: The credit balance would be provided, as normal, within 14 days from the date the credit balance occurred.
As this scenario shows, even after months of guidance, there remain nuances and circumstances that can lead to questions for financial aid professionals and their departments. That’s why we continue to expand our own understanding and are a resource for institutions in need of assistance. We encourage institutions in need of a helping hand to schedule a time to chat with our team.