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U.S. Department of Education Releases Final Rules Regarding Distance Education Reporting and Revises Rules Regarding Student Withdrawal Under Title IV
On January 3, 2025, the U.S. Department of Education (DOE) finalized regulations that amend Title IV of the Higher Education Act (HEA), addressing two substantive areas for institutions of higher education: distance education and return of Title IV funds (R2T4). The regulations are effective July 1, 2026.
Distance Education Regulations:
By July 1, 2027, institutions of higher education must report data to the National Student Loan Data System (NSLDS) on students receiving Federal financial aid who are enrolled in distance education or correspondence courses. The DOE added the statutory definition of a “Distance Education Course” to include in-person, non-instructional course components such as orientation, testing, and academic support services.
Streamlining Financial Aid Withdrawal Calculations
The regulations also amended section 668.22 of the HEA, which governs how institutions of higher education treat Title IV funds after a student withdraws.
When a recipient of title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution is required to calculate the return of such funds using a statutory formula (R2T4). Under the final regulations, institutions do not have to perform an R2T4 calculation for a student if: (1) the student is treated as if they never attended the institution; (2) the institution returns all Title IV aid disbursed to the student; (3) refunds all institutional charges for that payment period or term; and (4) cancels or forgives any outstanding balance that the student owes for that period or term as a resulting from the return of Title IV aid to the DOE
Institutions may choose to update their withdrawal policies by implementing this withdrawal exemption as early as February 3, 2025.
In addition, the regulations removed the option for institutions to use the “cumulative method,” which uses the number of hours a student would have completed cumulatively across multiple payment periods in calculating the percentage to Title IV aid earned in clock-hour programs for the purposes of R2T4 calculations. Institutions instead must only consider the scheduled hours that have elapsed during a payment period since the student began attendance in that payment period.
The regulations also clarify that a module is only included as part of the R2T4 calculation when a student begins attendance in the module.