Proposal from Jillian Klein (Proprietary Institutions of Higher Education) 

on treatment of Title IV funds when a student withdraws (§ 668.22(b)(3)(i))

Submitted February 14, 2024

The Department proposes requiring institutions to take attendance in distance education programs for 

R2T4 purposes to increase the accuracy of R2T4 calculations in such programs. The language proposed 

below (blue text) to the Department’s existing regulatory proposal (red text) would better align with the 

Department’s intent, as clarified during negotiations, and would help prevent miscalculations that would 

disadvantage students in certain programs. 

Proposed Language (Section 668.22(b)):

(b) Withdrawal date for a student who withdraws from an institution or a course that is required to take 

attendance.

(3)

(i) An institution is required to take attendance if—

(A) An outside entity (such as the institution's accrediting agency or a State 

agency) has a requirement that the institution take attendance;

(B) The institution itself has a requirement that its instructors take attendance;

oror

(C) The institution or an outside entity has a requirement that can only be met 

by taking attendance or a comparable process, including, but not limited to, 

requiring that students in a program demonstrate attendance in the classes of 

that program, or a portion of that program.; or

(D) The institution offers a course entirely through distance education as 

defined in 34 CFR 600.2.

(ii) An institution is required to take attendance in a course offered through distance 

education, as defined in 34 CFR 600.2, unless—

(A) The course is part of the dissertation or capstone phase of a terminal degree 

program; 

(B) The course is part of a direct assessment program that has been determined 

to be eligible for title IV, HEA program purposes pursuant to 34 CFR 668.10(a) 

and (b); or

(C) The course is part of a non-term or subscription-based program for which 

the disbursement of title IV, HEA program funds is based on completion.
Rationale:

During negotiations, the Department clarified that it does not intend to require an entire institution to 

take attendance if it offers some programs or courses through distance education. This proposal 

addresses that issue by separating instances when an “institution is required to take attendance” from 

instances when a “course is required to take attendance.”

This proposal also includes three exceptions for (1) courses in the dissertation or capstone phase of a 

terminal degree program; (2) courses that are part of a direct assessment program that has been 

determined to be eligible for Title IV, HEA program funds; and (3) courses that are part of a non-term or

subscription-based program for which the disbursement of Title IV, HEA program funds are based on 

completion rather than seat time. These exceptions align with the Department’s stated intent to 

(1) increase the accuracy of R2T4 calculations, (2) promote good stewardship of Federal dollars, and 

(3) assist students during hardships. 

Proposed Dissertation/Capstone Exception

Students pursuing terminal degrees—such as doctoral students—typically spend a significant amount of 

time outside of the courseroom conducting research, writing, editing, and revising. This is particularly 

true during the dissertation or capstone phase of these degree programs. Taking attendance for this 

population of students would unfairly and inaccurately fail to account for the significant time and effort 

these students devote to their coursework outside of the courseroom, and it would not be a reliable 

measure for the purpose of R2T4 calculations. Moreover, because these circumstances similarly apply 

to doctoral students at physical campuses, failing to exempt this population from the Department’s 

proposal would result in the unequal treatment of doctoral students in distance learning programs as 

compared to their similarly situated on-campus peers. 

Proposed Direct Assessment Exception

Students in direct assessment programs similarly devote a significant amount of time to building 

knowledge, skills, and abilities outside of a courseroom. Such programs rely on a student’s 

demonstration of competency rather than measurements of time, thus providing benefits that include 

flexibility, accelerated learning and completion, and assurances to employers that a program’s 

graduates are well-prepared for workplace demands. As the Department’s guidance explains, “[s]tudent 

progress in a direct assessment program is measured solely by assessing whether the student can 

demonstrate that he or she has a command of a specific subject, content area, or skill, or can 

demonstrate a specific quality associated with the subject matter of the program.”

Indeed, the Department formally recognized these principles when it issued Final Rules on Distance 

Education and Innovation in September 2020, which addressed the unique nature of direct assessment 

and subscription-based programs. In doing so, the Department observed that “[s]tudents, especially 

non-traditional students that find the existing competency-based or distance education programs to be 

appealing for various reasons, can benefit from flexible pacing and different models for assessing 

progress.” To help facilitate this flexibility, direct assessment programs rely on learning and 

engagement with materials outside of the courseroom in addition to the robust learning experiences 

they provide within the courseroom.
Measuring a student’s progress in a direct assessment program based on attendance would be 

inconsistent with these principles and would negatively affect students in several ways. 

• First, requiring an R2T4 calculation that is artificially based on dates of attendance, in a program 

structure that is not designed around seat time, would disincentivize progression and punish 

students who complete program requirements more quickly than anticipated. 

• Second, requiring attendance in direct assessment programs would not increase the accuracy of 

R2T4 calculations because the amount of funds earned by these students is not correlated to 

time and an attendance-based calculation does not accurately reflect the actual amount of 

coursework completion for students who take advantage of self-paced instruction.

• Third, to offset these negative effects, institutions may feel compelled to add pedagogically 

unnecessary content or participation requirements to courses in order to increase the frequency 

of attendance-taking opportunities. Doing so would undermine the advantages of self-paced 

direct assessment programs and could unnecessarily increase program length and cost.

Institutions must, of course, provide regular and substantive interaction. However, when defining those 

requirements in 2020, the Department acknowledged that it sought to offer “sufficient flexibility 

regarding the number and frequency of scheduled interactions based upon the length and intensity of 

the student’s coursework.”1

 As the Department observed in the preamble to the 2020 Final Rule:

[A]n institution cannot be expected to ensure perfect attendance by 

students at each opportunity for interaction with an instructor, which is

why the Department, the subcommittee, and the negotiating committee 

agreed to frame the requirement as an “opportunity” for interaction 

rather than a required interaction. This approach has the added benefit 

of allowing institutions to demonstrate compliance with the 

requirements at the program design level without documenting each and 

every interaction between students and instructors.2

Thus, the Department modified the definition of “distance education” to clarify that “the requirements 

for regular interaction are met if the institution provides opportunities for interaction, even if each 

student does not take advantage of each opportunity.”3

 In doing so, the Department identified 

numerous benefits to doing so, such as reducing costs and reducing the need for institutions to require 

less substantive work for the purpose of documenting that regular and substantive interaction occurred. 

Importantly, direct assessment programs undergo a rigorous review and approval process by the 

Department that thoroughly addresses, among other things, issues related to distance education 

requirements. This approval process includes descriptions of how the direct assessment program is 

structured, how learning is assessed, how the institution assists students in gaining the necessary 

knowledge, and the methodology the institution uses to determine the equivalent number of credit or 

clock hours. Such programs also must be consistent with the requirements of the institution’s 

1 85 Fed. Reg. 54,759. 2 85 Fed. Reg. 54,757. 3 85 Fed. Reg. 54,789. 
accreditation agency or State approval agency. Moreover, many direct assessment programs use 

subscription-based financing models that, as addressed below, follow a completion-based approach to 

the disbursement of Title IV, HEA program funds that is not tied to calendar days or seat time.

Proposed Non-Term/Subscription-Based Exception

In non-term and subscription-based programs, the disbursement of Title IV, HEA program funds is based 

on completion rather than calendar days or seat time. When the Department issued Final Rules on 

Distance Education and Innovation in September 2020, it included a definition subscription-based 

programs that “includes safeguards for both students and taxpayers . . . by requiring students to 

complete courses or competencies before receiving subsequent disbursements of title IV, HEA program 

funds.”4

 As the Department observed at that time, “[w]e believe that evaluating a students pace is 

unnecessary if the program requires a particular rate of completion in order for the student to continue 

receiving title IV, HEA program assistance over time.”5

 In its regulatory impact analysis, the Department 

observed that these regulatory updates would, among other things, “allow students to progress by 

demonstrating competencies rather than seat time.”6

Requiring attendance for courses in non-term and subscription-based programs would be inconsistent 

with these principles and would negatively affect students. As noted above, students would be 

penalized for completing program requirements more quickly than anticipated, attendance data would 

not accurately reflect a student’s coursework completion, and institutions would be incentivized to add 

unnecessary participation requirements. An example illustrates these concerns:

• Consider two students in a self-paced subscription-based program that takes attendance. Based 

on attendance records, Student A stopped attending in the third week of the quarter and 

Student B stopped attending in the tenth week of the quarter. But Student A completed more 

of their program by working faster and devoting more time to their coursework in the first part 

of the quarter, whereas Student B worked at a slower pace and completed less of their program

despite their attendance through week ten. An R2T4 calculation for these students based on 

attendance would inaccurately and unfairly indicate that Student A “earned” less aid than 

Student B.

For these reasons, the Department’s stated goals—including both fairness and accuracy—are best 

accomplished if the requirement to take attendance in courses offered through distance education 

exclude (1) courses in the dissertation or capstone phase of a terminal degree program; (2) courses that 

are part of a direct assessment program that has been determined to be eligible for Title IV, HEA 

program funds; and (3) courses that are part of a non-term or subscription-based program for which the 

disbursement of Title IV, HEA program funds are based on completion rather than seat time. 

4 85 Fed. Reg. 54,769. 5 85 Fed. Reg. 54,770. 6 85 Fed. Reg. 54,783.