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Stay in compliance with regulatory requirements related to Title IV Aid as realities and regulations change amidst disruption due to COVID-19

During these unprecedented times, Institutions are seeking guidance relative to the impact of COVID-19 on their campus operations. With rippling effects across all aspects of their business, Institutions of Higher Education must continue to look for ways to remain compliant and ensure they are doing what’s best for the health and safety of their students, faculty and staff.

The Department of Education (ED) and Office of Federal Student Aid (FSA) have published guidance on certain aspects that are most impacted by the social distancing in response to COVID-19, including extending spring breaks, implementing distance education and responding to students who may have to withdraw due to illness or crisis response. ED issued an electronic announcement “Guidance for interruptions of study related to Coronavirus (COVID-19)” on March 5, 2020.

Overarching all of the responses from ED and FSA is that neither can waive statutory requirements without Congressional approval (e.g., remove or modify existing requirements related to Return to Title IV funding). Formal legislative action must occur to amend these requirements.

As the situation evolves, authoritative guidance and regulations are subject to change. However, relative to Title IV aid programs, what we know as of March 18, 2020 is as follows:

Length of academic year

If at any point institutions determine the need to reduce the length of a previously defined academic year, institutions must seek approval from the School Participation team to request a temporary reduction.

  • This includes a scenario where institutions extends spring break beyond the previously scheduled duration and do not subsequently modify the term end date.
  • If institutions’ payment period, due to modification, subsequently overlaps a subsequent payment period (e.g., spring overlaps summer), institutions need not contact ED for a waiver and do not need to consider either term to be a “nonstandard term.” Guidance from ED is to document this conclusion should it occur.
  • If institutions decide to end the academic year early, approval from the school participation team must be obtained. In addition, ED may grant a reduction to as little as 26 weeks of instruction without requiring a Return to Title IV (“R2T4”) calculation to be performed.

Distance education

Online education provides many institutions a viable option for continuing to provide education to students through this disruption. ED has provided broad approval to institutions to expand their offerings that would otherwise would have required ED, state or accreditor approval.

  • This currently applies to payment periods that overlap March 5, 2020 and the subsequent payment period.
  • The electronic announcement makes mention of this applying to students who were already in attendance, but whose attendance was interrupted by COVID-19. It was ED’s original intent that this broadly apply to include programs that may have not begun but for which disruption is experienced due to or as a result of COVID-19, even if the student was not currently in attendance at March 5, 2020.

Federal work study (FWS)

Institutions are permitted, under limited circumstances, to continue to pay FWS wages to students, provided the campus must close due to COVID-19, the disruption occurred after the beginning of the term, the institution is continuing to pay its other employees (including faculty and staff), and the institution continues to meet its institutional wage sharing agreement.

  • ED does not intend for a school to make this determination on a student by student basis. It is intended that it is applied broadly across the entire institution or affected department.

Return of Title IV funds

Even in the case of a disruption from COVID-19, an institution must return any Title IV funds for which it is responsible in accordance with the provisions of 34 CFR § 668.22 when a student withdraws.

  • Date of withdrawal: If the institution ceases operations during a payment period or period of enrollment and does not reopen during that same payment period (unless academic year extends 26 weeks or greater), a student is considered to have withdrawn. Additionally, if an institution closes during a payment period and subsequently reopens, but a student fails to return, the student is considered to have withdrawn. Institutions would back date the last date of enrollment depending upon whether or not they are an attendance taking institution in accordance with existing regulations. Under 34 CFR § 668.22(c)(1)(iv), non-attendance taking institutions are permitted to use the date that the institution ceased operations as the last date of attendance.
  • Refund calculation: The institution should use the actual number of scheduled days as the denominator in the refund calculation. This would be adjusted for any extensions of a scheduled break (as a reminder, all breaks in excess of 5 days, including weekends, must be excluded from the numerator, as applicable, and denominator of the calculation). The date of determination follows existing regulations. However, in the instance of an institution wide closure, the date of determination is the date of the closure. There is no exception to the time frames established for completing R2T4 calculations and making the appropriate returns or post-withdrawal disbursement (e.g. 30 days to perform the calculation, 45 days to return the funds, etc.).
  • ED is expected to provide further guidance (see below) related to forgiveness of Pell and Direct Loan disbursements for a payment period disrupted due to COVID-19.
  • In the case of an institution modifying the scheduled period of enrollment, the calculation should be prepared based on the facts and circumstances that exist as of the date the calculation is prepared. Previous calculations that were prepared prior to the change in circumstances should not be revised. 
  • Refunds to students: ED will be releasing guidance related to the myriad of scenarios that affect a student’s Title IV aid when the institution is considering giving a student a refund, credit or other changes to a student’s institutional charges (e.g., change from an on-campus resident to off-campus resident). As a general rule, ED is not requiring these items to affect a student’s present or future aid package so long as it is a result of a COVID-19 disruption. Additionally, institutions are reminded that if a refund or credit creates a Title IV credit balance on the student’s account, existing regulations are not modified with respect to obtaining a credit balance waiver to apply a credit to a future payment period or the time-frame to resolve a credit balance.

Professional judgment

Financial aid administrators still retain the authority to use professional judgment to modify a student’s financial aid award package. It is a reminder from ED that the existing requirements remain unchanged. FAA’s must document each determination and this should be applied on a case-by-case basis.

Satisfactory Academic Progress (SAP)

Presently there is nothing permitting the institution to overlook its existing SAP policy. However, circumstances related to an outbreak of COVID-19 may qualify for a student to file an appeal. Further guidance is expected from ED on this topic. 

Pending Legislation: Supporting Students in Response to Coronavirus Act as of March 18, 2020

In response to the Coronavirus, new legislation has been introduced to Congress to help early care and education programs, school districts and Institutions of Higher Education (IHE). The highlights of this bill for IHE’s include:

Education Preparedness and Support Grants

$1.2 billion in grants for school districts and IHE’s to support the following activities:

  • Assist schools with planning for closures
  • Efforts to clean and sanitize educational facilities
  • Train educators on how to properly ensure their buildings are safe for students return
  • Provide mental health services support

Emergency Financial Aid for Students

$1.2 billion in mandatory funding to provide emergency financial aid to help address basic needs created by unexpected college closures and COVID-19 related disruptions including:

  • Food
  • Housing
  • Healthcare
  • Childcare needs

Students and institutions of higher education

Provide flexibility for students to ensure continued access to federal financial aid due to financial stress incurred from COVID-19. This includes:

  • Exempting students from paying back Pell Grants or repaying student loans that were taken out for a disrupted term by providing a temporary waiver of ‘Return of Title IV’ rules.
  • Relaxation of financial aid rules as it relates to satisfactory academic progress and subsidized loans

Of utmost importance is the health and safety of your campus community. In instances where the institution needs to exercise these exceptions or others, it is important to remember to document any process or procedural changes and decisions made related to the impact of COVID-19. For institutions seeking further guidance, a listing of resources is available below. Additionally, Baker Tilly is here to help you navigate these challenging times.


Department of Education COVID-19 Response

Specific Questions for Department of Education

National Association of Financial Aid Administrators (NASFAA) COVID-19 Web Center

For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

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