UNITED STATES DEPARTMENT OF EDUCATION

OFFICE OF POSTSECONDARY EDUCATION

Issue Paper 4: Withdrawals and Return of Title IV Funds 

Session 2: February 5-8, 2024

Issue: Withdrawals and return of title IV funds

Statutory cites: § 484B of the Higher Education Act of 1965, as amended (HEA) 

 

Regulatory cites: 34 CFR 668.21 and 668.22

Proposed Regulations Redline:

§ 668.21(a)(2)(ii)

(a) If a student does not begin attendance in a payment period or period of enrollment—

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(2) For FFEL and Direct Loan funds—

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(ii) For remaining amounts of FFEL or Direct Loan funds disbursed directly to the student for that 

payment period or period of enrollment, including funds that are disbursed directly to the student by 

the lender for a study-abroad program in accordance with § 682.207(b)(1)(v)(C)(1) or for a student 

enrolled in a foreign school in accordance with § 682.207(b)(1)(v)(D), the institution is not responsible 

for returning the funds, but must immediately notify the lender or the Secretary, as appropriate, when it 

becomes aware that the student will not or has not begun attendance so that the lender or Secretary 

will issue a final demand letter to the borrower in accordance with 34 CFR 682.412 or 34 CFR 685.211, as 

appropriate initiate borrower repayment under the terms of their promissory note; and

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§ 668.22(a)(2)(ii)(A)(2)

(a) ***

(2) ***

(ii) (A)

(1) A student who completes all the requirements for graduation from his or her program before 

completing the days or hours in the period that he or she was scheduled to complete is not considered 

to have withdrawn;

Commented [GV1]: Note: Changes made from session 1 

are indicated with yellow highlighting.
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(2) In a program offered in modules, a student is not considered to have withdrawn if the student 

successfully completes - coursework equal to or greater than the coursework required for the 

institution's definition of a “half-time student” under § 668.2 for the payment period;

(i) One module that includes 49 percent 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; 

(ii) A combination of modules that when combined contain 49 percent 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 

(iii) Coursework equal to or greater than the coursework required for the institution's definition of a 

half-time student under § 668.2 for the payment period;

(i) One module that includes 49 percent 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; 

(ii) A combination of modules that when combined contain 49 percent 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 

(iii) Coursework equal to or greater than the coursework required for the institution's definition of a 

half-time student under § 668.2 for the payment period;

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§ 668.22(a)(2)(ii)(A)(6) and (7)

(a) ***

(2) ***

(ii) (A) 

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(6) A student is not considered to have withdrawn if –

(i) The institution’s records treat a student as having never attended courses for that payment period or 

period of enrollment;

(ii) The institution returns all the title IV aid disbursed to the student for that payment period or period 

of enrollment;

(iii) The institution refunds all institutional charges to the student for the payment period or period of 

enrollment; and 
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(iv) The institution writes off or cancels any current year balance owed by the student to the institution 

due to the institution’s returning of title IV funds to the Department. 

(7) A confined or incarcerated individual as defined in 34 CFR 600.2 is not considered to have withdrawn 

anytime the requirements of an approved leave of absence are not met if any of the following events 

occur:

(i) A complete correctional facility wide lockdown.

(ii) Involuntary transfer to a different correctional facility.

(iii) Other events as determined by the Secretary.

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Directed Question:

The Department reevaluated the proposal under § 668.22(a)(2)(ii)(A)(7) and we do not believe we have 

the authority to waive R2T4 requirements for a targeted group of students. Also, we heard concerns

from several negotiators that confined or incarcerated individuals would reach their Pell lifetime 

eligibility used (LEU) faster. Finally, we heard that some postsecondary institutions may have already 

established policies that account for involuntary breaks in prison education programs (PEP), such as 

waiving all charges related to the affected payment period. This rule, while well intentioned, may take

away, remove, or harm existing policies that are beneficial to confined or incarcerated individuals. 

Instead, we would propose a new condition under leave of absence (§ 668.22(d)) targeted at confined or 

incarcerated individuals that take a break from their PEP due to events at their correctional facility. In 

term-based settings, the proposal would allow a confined or incarcerated individual to not have to come 

back from the leave of absence where the student left off, and instead, the individual could come back 

at a different point in their PEP (similar to nonterm treatment). The postsecondary institution would still 

have to adhere to all other requirements of a leave of absence as we propose they remain unchanged. 

The new proposed text is:

§ 668.22(d)

(d) Approved leave of absence.

(1) For purposes of this section (and, for a title IV, HEA program loan borrower, for purposes of 

terminating the student's in-school status), an institution does not have to treat a leave of absence as a 

withdrawal if it is an approved leave of absence. A leave of absence is an approved leave of absence if—

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(vii) Except for a clock hour or non-term credit hour program, or a subscription-based program, or an 

eligible prison education program, upon the student's return from the leave of absence, the student is 

permitted to complete the coursework he or she began prior to the leave of absence; and

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§ 668.22(b)(2)

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

(1) For purposes of this section, for a student who ceases attendance at an institution that is required to 

take attendance, including a student who does not return from an approved leave of absence, as 

defined in paragraph (d) of this section, or a student who takes a leave of absence that does not meet 

the requirements of paragraph (d) of this section, the student's withdrawal date is the last date of 

academic attendance as determined by the institution from its attendance records.

(2) An institution must, within 14 days of a student’s last date of attendance, document a student's 

withdrawal date determined in accordance with paragraph (b)(1) of this section and maintain the 

documentation as of the date of the institution's determination that the student withdrew, as defined in 

paragraph (l)(3) of this section.

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§ 668.22(b)(3)(i)(D)

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(b) Withdrawal date for a student who withdraws from an institution 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; or

(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 program course entirely through distance education as defined in 34 CFR 

600.2.

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§ 668.22(f)(1)(ii)(A)

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(f) Percentage of payment period or period of enrollment completed. 

(1) For purposes of paragraph (e)(2)(i) of this section, the percentage of the payment period or period of 

enrollment completed is determined—
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(ii) (A) In the case of a program that is measured in clock hours, by dividing the total number of clock 

hours in the payment period or period of enrollment into the number of clock hours scheduled to be 

completed since the student began attendance in the payment period or period of enrollment as of the 

student's withdrawal date. 

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§ 668.22(l)(9)

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(l) Definitions. For purposes of this section—

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(9) A student in a program offered in modules is scheduled to complete the days in a module if the 

student's coursework in that module was used to determine the amount of the student's eligibility for 

title IV, HEA funds for the payment period or period of enrollment. only when a student begins 

attendance in the module. 

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