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Implementing the Changes in Module R2T4 Regulations

The return of Title IV (R2T4) funds has always been complex, and the U.S. Department of Education has implemented changes for modular withdrawals of R2T4 funds. These rules, which were adopted on September 2, 2020, became effective on July 1, 2021, and early implementation was allowed. These are being tested during this audit cycle.

Under these rules, which were designed to simplify the return process, withdrawal exemptions are for programs that are offered in modules. For more on these exemptions and modules, see the Withdrawals and the Return of Title IV Funds section of the 2021-2022 Federal Student Aid Handbook from the Federal Student Aid office.

The key is that if a student meets one of the following exemptions, the student is not a withdrawal and no R2T4 should be completed:

  • The student successfully completed (defined as earning a passing grade) one module that includes 49% or more of the number of days in the payment period, excluding scheduled breaks of five or more consecutive days and all days between modules, or a combination of modules that together contain 49% or more of the number of days in the payment period, excluding scheduled breaks of five or more consecutive days and all days between modules.
  • The student successfully completed coursework (defined as earning a passing grade) for the payment period equal to or greater than the coursework required for the institution’s definition of a half-time student under § 668.2.
  • The student successfully completed all requirements for graduation.
  • The student confirmed, in writing, attendance for a course applicable to the student’s Title IV-eligible program in a later module in the payment period. This payment period must occur during a period of enrollment that begins no later than 45 calendar days after the end of the module the student ceased attending.

For example, if a student successfully completed the first eight weeks of the academic period in an eight-week/eight-week modular scenario before ceasing enrollment, it isn’t considered a withdrawal for Title IV purposes and no R2T4 is required because the student met the 49% exemption.

Another key point to remember is that for both standard and nonstandard terms, the student must begin attendance in the module to be eligible for a Pell Grant for that module.

To audit R2T4s this cycle, an analysis of whether the student met at least one of the exemptions is required. Each institution will have its own system of performing and documenting that analysis. We recommend that you discuss the format with your auditor to determine how that analysis has been kept and the most effective way to audit R2T4s under these regulations. If your institution adopted the freeze-date option, your auditors will need documentation of that date as well.

Please note that while the Department of Education uses the word “modules,” any session that is within a term but not the full length of the term falls into that definition. This means most institutions offer some modules.

The National Association of Student Financial Aid Administrators (NASFAA) produced a decision tree document titled “Determining Whether a Student has Withdrawn from a Standard- or Nonstandard-Term Program Offered in Modules” that is available to NASFAA members. We recommend that NASFAA member institutions use this document to complete module withdrawal processes.

Please contact us with any questions or if you would like to discuss how these changes may affect your institution.

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