# Presentation: 799778

## Return to Title IV FundsBack to Basics and Beyond

- Brian Kerrigan
- Dan Klock

## Today’s Agenda

- Collection of withdrawal information
- R2T4 Calculation
- Notification
- Compliance self-monitoring
- DCL issues
- Questions & Answers

## Presentation Objectives:

- Understand that R2T4 non-compliance is a top finding
- Today’s session will equip you to prevent R2T4 findings from occurring on your campus

## Collection of Withdrawal Info.

**Institutions required to take attendance**
- Outside entity has a requirement that the institution take attendance - Nov. 1,2002 change (67 FR 67073)

## Collection of Withdrawal Info. - Date of Determination

**Required to Take Attendance**
- When the student begins the official withdrawal process at the school
- When student exceeds the institution’s policy on excused absences, not more than 14 days after the withdrawal date

**Not Required to Take Attendance**
- When the student begins the official withdrawal process at the school
- The date the institution becomes aware that the student has ceased attendance

## Collection of Withdrawal Info. – Withdrawal Date

**Required to Take Attendance**
- The last recorded date of attendance from the institution’s attendance records

**Not Required to Take Attendance**
- Begins the formal withdrawal process
- Date student provided intent to withdraw
- Midpoint – unofficial withdrawal
- The date a LOA began for a student who does not return from an LOA
- Illness, accident, grievous personal loss, events beyond the student’s control

## R2T4 Calculation 

- For a **standard** **term based program**, use
- 	payment period.
- For a **non-term based or non-standard term program**, use
- 	payment period or period of enrollment.
- For a **non-term or non-standard term based program, **an institution must consistently use either a PP or POE for all students (in a category) in a particular program.

## R2T4 Calculation

**Percentage Earned** is a two-step process
**Calc 1 – Determine Clock Hours Completed**
-     _clock hours completed_        equals > 60%, student has earned                                                      total hours in the period**                      **100% of title IV Funds** **
**	****Calc 2 – Percentage Earned**
-       _clock hours completed                    _      equals 70% or more
-  clock hours scheduled to complete      use scheduled hours

## R2T4 Calculation

**Percentage Earned** is equal to –
**	**** **_calendar days completed_
- calendar days in the period
**Note: **Exclude institutionally scheduled breaks of 5 or more consecutive days
- When a student has completed MORE than 60%, 100% of Title IV funds are earned

## R2T4 Calculation

- After you calc the amount the student earned - 3 possibilities:
**A. The amount disbursed = the amount earned**
- Eureka! No further action necessary!
**B. The amount disbursed > the amount earned**
- The unearned portion must be returned to the programs
**C. The amount disbursed < the amount earned**
- Post-withdrawal disbursement

## R2T4 Calculation

**B. The amount disbursed > the amount earned**
- Calculate the unearned portion from the school
- Institution returns the lesser of –
- 1.) amount disbursed	           2.) institutional charges
-   -  _amount earned_        (or)     x _percentage not earned_
- Calculate the unearned portion that the student owes: Total unearned amt. less amt. school paid

**	**

## R2T4 Calculation

**B. The amount disbursed > the amount earned**
- Amount of unearned the student owes =
- Title IV Loans – repay in accordance with the loan repayment provisions
- Title IV Grants – the initial amount of the grant is reduced by 50% (the product is referred to as the original amount of the grant overpayment)

## Notification

**C. The amount disbursed < the amount earned**
- 		Post-withdrawal disbursement (PWD)
- Credit the student’s account for direct costs
- With permission – credit the student’s account for indirect educational costs
- If Title IV loan funds are credited, must notify borrower of right to cancel or reduce loan
- If PWD exceeds costs credited – institution must offer PWD w/in 30 days of the date of determination

## Notification

- Post-withdrawal disbursement (PWD)
- 14-day Rule
- Institutional flexibility beyond 14-day Rule
- 120 days to complete the PWD

## Notification

- Grant Overpayment Notification
- 45-day period of extended eligibility
- Notify student w/in 30 days of Date of Determination that s/he must take Positive Action
- Fully repay the overpayment
- Make arrangements with school to repay
- Make arrangements with ED to repay
- Institutional monitoring

## Compliance Self-Monitoring

- R2T4 is one of the most common audit findings
- Use our free software
- Ease of use
- Use reports to manage the process and assure compliance

## Compliance Self- Monitoring

## Slide 18

## Slide 19

## Slide 20

## Slide 21

## Compliance Self-Monitoring

*How do I access R2T4OTW?*** **
**It’s Easy!**
**SIGNUP!**
**Signup via SAIG Enrollment website**
- _[https://www.fsawebenroll.ed.gov/PMEnroll](https://www.fsawebenroll.ed.gov/PMEnroll)_
**Note:  The R2T4 Web Application when available will be accessed via FAA Access**
- _[https://fafsa.ed.gov/faa/faa.htm](https://fafsa.ed.gov/faa/faa.htm)_

## Compliance Self-Monitoring

***CUSTOMER SERVICE***** **
**Software Support**
**CPS/WAN Technical Support**
**CPSSAIG@ed.gov**
**(800) 330-5947 **
**Policy **
**ED's Customer Support center**
** ****fsa.customer.support@ed.gov  **
** ****(800) 433-7327**

## Dear Colleague Letter (DCL)(GEN-04-03)

**Title IV Credit Balances**
**Aid That Could Have Been Disbursed**
**Verification not completed before withdrawal**
- No Passing Grades
- Withdrawal – Credit Hr, Non-Term Program
**Date of Determination of Withdrawal for Institution not required to take attendance**
**Treatment of LEAP Funds**

## DCL Issues - Title IV Credit Balances

**Hold all Title IV Credit Balances until R2T4 calculation is completed.**
**Credit Balance is “Aid Disbursed.”**
**Determine if Credit Balance changes because of a Refund Policy or R2T4.**
**Use Credit Balance to repay TIV Grant Overpayment on behalf of student.**
**Release Credit Balance within 14 days.**

## DCL Issues - Aid That Could Have Been Disbursed

**Old Policy -- Aid that could have been disbursed before withdrawal.  Did not include**
**	****  ****- Second loan disbursement, or**
**- Loan within first 30 days.**
**New Policy -- All aid for period, if conditions for late disbursement were met before the student withdrew.  (668.164(g)(2))**
**However, if limitations apply, that aid may not be paid to the student. (668.164(g)(4))**

## DCL Issues - Conditions for a Late Disbursement

**All Student Aid (including Pell) - ED processed SAR/ISIR with official (not necessarily a valid) EFC.  (Not needed for PLUS.)**
**FFEL/Direct Loan - Institution certified or originated the loan.**
**Perkins/FSEOG - Institution made the award**

## DCL Issues - Limitations on Making a Late Disbursement

**No second or subsequent disbursements of FFEL/DL, unless student completes the period.**
**No FFEL/DL unless student completes the 30-day delay period.**
**No Pell Grant without a valid SAR/ISIR by the deadlines in the Federal Register.**
**No 2****nd**** pp Pell  if 1****st**** pp not completed.**
**No 2****nd**** pp FFEL/DL if 1****st**** pp not completed**

## DCL - Importance of Aid That Could Have Been Disbursed

**If total aid (Aid That Could Have Been Disbursed plus Aid Disbursed) is greater,  the amount earned will be greater.**
**Results in a smaller amount to be returned, or in a post-withdrawal disbursement. **
**Remember - Aid must correspond to the period for which you are doing the Return Calculation.  (pp or period of enrollment)**

## Aid That Could Have Been Disbursed(aid that could have been disbursed from the 2nd pp)(clock hour school)

** **
**	****Length of Period is 1000 hours**
**    ****Student withdrew after 400 hours**
**    ****Period of enrollment basis**
**                                                                                ****Old       New**
**	****Aid for Period ($2000 Pell; $2000 FFEL)     = **_**$4000    $4000     **_
**	****Aid Disbursed ($1000 Pell; $1000 FFEL)     = **_**$2000    $2000**_
**	****Aid That Could Have Been Disbursed         = **_**$      0    $2000**_
**	****Amount Earned (40% x $2000 or $4000)     = **_**$  800    $1600      **_
**	****Amount to be Returned                                = **_**$1200    $  400**_
**	**** **

## Aid That Could Have Been Disbursed(aid that could have been disbursed from the 2nd pp)(credit hour school)

** **
**    ****Length of Period is 24 semester hours, 224 days (no terms)**
**    ****Student withdrew after 56 days**
**    ****Period of enrollment basis**** **
**	****	****	****	****	****	****	****	****Old       New     **
**	****Aid for Period ($2000 Pell; $2000 FFEL)   = **_**$4000**__**	**__** $4000**__**	**_
**	****Aid Disbursed ($1000 Pell; $1000 FFEL)   = **_**$2000   $2000**_
**	****Aid That Could Have Been Disbursed       = **_**$      0   $2000**_
**	****Amount Earned (1/4 x $2000 or $4000)      = **_**$  500    $1000**_
**	****Amount to be Returned                               = **_**$1500    $1000**_
**	**** **

## Aid That Could Have Been Disbursed(aid that could have been disbursed from the 1st & 2nd pp)   (clock hour school)

**    ****Length of Period is 1000 hours**
**    ****Student withdrew after 400 hours**
**    ****Period of enrollment basis**
**                                                                                ****Old       New**
**	****Aid for Period ($2000 Pell; $2000 FFEL)     = **_**$4000     $4000     **_
**	****Aid Disbursed ($1000 Pell; $0 FFEL)           = **_**$1000     $1000**_
**	****Aid That Could Have Been Disbursed         = **_**$1000     $3000**_
**	****Amount Earned (40% x $2000 or $4000)      = **_**$  800     $1600      **_
**	****Amount to be Returned /  PWD (FFEL)        =(**_**$ 200)    $  600**_** ****	**** **

## Aid That Could Have Been Disbursed(aid that could have been disbursed from the 1st & 2nd pp)(credit hour school)

** ****Length of Period is 24 semester hours, 225 days (no terms)**
** ****Student withdrew after 75 days**
** ****Period of enrollment basis**** **
**	****	****	****	****	****	****	****	****Old       New     **
**	****Aid for Period ($2000 Pell; $2000 FFEL)  = **_**$4000**__**	**__** $4000**_
**	****Aid Disbursed ($1000 Pell; $0 FFEL) ****	****      = **_**$1000    $1000**_
**	****Aid That Could Have Been Disbursed      = **_**$1000    $3000**_
**	****Amount Earned (1/3 x $2000 or $4000)     = **_**$  667    $1333**_
**	****Amount to be Returned / PWD (FFEL)      = **_**($ 333)   $  333**_**  **
**	**** **

## Aid That Could Have Been Disbursed(limitation on disbursement – no 2nd FFEL disbursement)(clock hour school)

**    ****Length of Period is 1000 hours**
**    ****Student withdrew after 601 hours**
**    ****Period of enrollment basis**
**                                                                                ****Old       New**
**	****Aid for Period ($2000 Pell; $2000 FFEL)     = **_**$4000     $4000     **_
**	****Aid Disbursed ($2000 Pell; $1000 FFEL)     = **_**$3000     $3000**_
**	****Aid That Could Have Been Disbursed         = **_**$1000     $1000**_
**	****Amount Earned (100% of $4000)                  = **_**$4000     $4000      **_
**	****Amount of FFEL PWD (instead of $1000)    = **_**$      0     $      0     **_** ****	**** **

## Aid That Could Have Been Disbursed(limitation on disbursement – no 2nd FFEL disbursement)(credit hour school)

** ****Length of Period is 24 semester hours, 224 days (no terms)**
** ****Student withdrew after 135 days**
** ****Period of enrollment basis**** **
**	****	****	****	****	****	****	****	****Old       New     **
**	****Aid for Period ($2000 Pell; $2000 FFEL)  = **_**$4000**__**	**__** $4000**_
**	****Aid Disbursed ($2000 Pell; $1000 FFEL)  = **_**$3000    $3000**_
**	****Aid That Could Have Been Disbursed      = **_**$1000    $1000**_
**	****Amount Earned (100% of $4000)               = **_**$4000    $4000**_
**	****Amount of FFEL PWD (instead of $1000) = **_**$      0    $      0 **__**	**_** **

## Aid That Could Have Been Disbursed(limitation on disbursement – completion of < 30 days)(clock hour school)

**Length of Period is 1000 hours**
**    ****1****st****  year, 1****st**** time student withdrew on 28****th**** day of program, after completing 125 hours**
**	****Period of enrollment basis**
**                                                                                   ****Old       New**
**	****Aid for Period ($2000 FFEL)                         = **_**$2000     $2000     **_
**	****Aid Disbursed ($0 FFEL)                               = **_**$      0     $      0                          **_
**	****Aid That Could Have Been Disbursed         = **_**$      0     $2000**_
**	****Amount Earned (12.5% of $0 or $2000)       = **_**$      0     $  250      **_
**	****Amount of FFEL PWD (instead of $250)      = **_**$      0     $     0**_

## Aid That Could Have Been Disbursed(limitation on disbursement – completion of < 30 days)(credit hour school)

**Length of Period is 24 semester hours, 224 days (no terms)**
** ****1****st****  year, 1****st**** time student withdrew on 28****th**** day of program**
** ****Period of enrollment basis**
**	****	****	****	****	****	****	****   ****Old       New     **
**	****Aid for Period ($2000 FFEL)                      = **_**$2000    $2000**_
**	****Aid Disbursed ($0 FFEL)                            = **_**$      0    $      0**_
**	****Aid That Could Have Been Disbursed      = **_**$      0    $2000**_
**	****Amount Earned (12.5% of  $0 or $2000)   = **_**$      0    $  250**_
**	****Amount of FFEL PWD (instead of $250)   = **_**$      0    $      0**_

## Aid That Could Have Been Disbursed(completion of < 30 days: Pell disbursement; no FFEL) (clock hour school)

** ****	****Length of Period is 1000 hours**
**    ****1****st****  year, 1****st**** time student withdrew on 28****th**** day of program, after completing 125 hours**
**	****Period of enrollment basis**
**                                                                                ****Old       New**
**	****Aid for Period ($1000 FFEL; $1000 Pell)     = **_**$2000     $2000     **_
**	****Aid Disbursed ($0 FFEL; $0 FFEL)              = **_**$      0     $      0                          **_
**	****Aid That Could Have Been Disbursed         = **_**$      0     $2000**_
**	****Amount Earned (12.5% of $0 or $2000) ****	****   = **_**$      0     $  250      **_
**	****Amount of PWD - Pell****	****                            = **_**$      0     $  250**_

## Aid That Could Have Been Disbursed(completion of < 30 days: Pell disbursement; no FELL) (credit hour school)

** ****Length of Period is 24 semester hours, 224 days (no terms)**
** ****1****st****  year, 1****st**** time student withdrew on 28****th**** day of program**
** ****Period of enrollment basis**
**	****	****	****	****	****	****	****          ****Old    New     **
**	****Aid for Period ($1000 FFEL; $1000 Pell)   = **_**$2000    $2000**_
**	****Aid Disbursed ($0 FFEL; $0 Pell)              = **_**$      0    $      0**_
**	****Aid That Could Have Been Disbursed      = **_**$      0    $2000**_
**	****Amount Earned (12.5% of  $0 or $2000)   = **_**$      0    $  250**_
**	****Amount of PWD - Pell                                 = **_**$      0    $  250  **_

## DCL Issues -Verification 

**Must complete R2T4 within 30 days.**
**If Verification not completed**
**Return Interim Disbursements of aid subject to verification.**
**Include Unsubsidized and PLUS loans in R2T4.**
**If Verification completed later, but within Verification timelines**
**School must perform new R2T4 calculation using additional eligible aid.**

## DCL Issues - No Passing Grades

**School must have a process for determining if student completed.**
**No passing grade, institution must document completion of period.**
**Grading Policy that differentiates between Failing, Completed; and Failing, Did Not Complete.**

## DCL Issues – Withdrawal from a Non-Term, Credit Hour Program

**Percentage Earned is equal to calendar days completed divided by calendar days in the period.**
**Project calendar days in period if student is in a Self-Paced Program.**

## DCL Issues - Date of Determination that Student Withdrew for Schools Required to Take Attendance

**Usually no later than two weeks after last date of attendance.**
**Based on Attendance Records.**
**Date of Official Notification if prior to that.**
**After end of school’s Absence Policy.**

## DCL Issues - Treatment of LEAP Funds

**Law excludes FWS but not LEAP.**
**The State Grant (LEAP) is included in calculation if the State Grant Agency has told the school, in writing...**

## DCL Issues - Treatment of LEAP Funds

**The dollar or percent of student’s State Grant that is LEAP. ($ or % up to $5000)**
**That the specific student’s State Grant includes an unknown amount of LEAP. (Entire amount of Grant, up to $5000)**
**The percent of LEAP in the school’s State Grant amount. (% up to $5000)**
**That all State Grants include LEAP funds. (Entire amount of Grant, up to $5000)**

## Thank You !!Brian.Kerrigan@ed.gov(202) 219 -7058Dan.Klock@ed.gov(202) 377- 4026

## Appendix

- Reminders that you can read on your own

## Appendix

***The Law & Regulations***
- Section 484B of the HEA
- Enacted October 7, 1998, as part of the Higher Education Amendments of 1998
- NPRM published  August 6, 1999
- Final Reg published November 1, 1999
- Effective Date of Reg - July 1, 2000
- Dear Colleague Letter GEN-00-24
- NPRM published  August 8, 2002
- Final Reg published November 1, 2002
- Dear Colleague Letter GEN-04-03

## Appendix

**Old approach – (refunds and repayments)**
- Dictated use of specific refund policies.
- Determined amount of institutional charges that a  school had earned and not earned.
**New approach – (Return to Title IV Funds)**
- Determines amount of title IV aid a student has earned, the unearned portion is returned
- “Paycheck theory” – if you aren’t there for the entire period you owe some of the money back

## Appendix

- Schools prohibited from allowing Title IV funds to escheat (paid to a third party)
**Credit balances and post-withdrawal disbursements**
**School must ensure that Title IV funds are used only for educational purposes intended**
**Funds cannot escheat to a third party (state or institutional coffers)**
**Must have a process to identify non-negotiated checks and return the funds to the Title IV programs before the checks are stale and escheat to an unintended third party**

## Appendix – Leave of Absence

**The previous limit to only one LOA in 12 months was eliminated in the November 1, 2002 final regulations.**
**Total leave days cannot exceed 180 in any 12-month period.**
**The institution must have a formal policy that the student and institution follow.**

## Appendix – Academically Related Activity

**An institution not required to take attendance MAY ALWAYS use the last date of an academically-related activity as the withdrawal date.**
**The school, not the student, must DOCUMENT**
**That the activity is academically-related, and **
**The student’s attendance at the activity.**

## Appendix – Academically Related Activity

**Examples of academically-related activities are**
**Examinations or quizzes,**
**Tutorials,**
**Computer-assisted instruction,**
**Completing an academic assignment, paper or project,**
**Attending a school assigned study group.**