Negotiated Rulemaking Program Integrity and Institutional Quality – 1/10/24

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 DEPARTMENT OF EDUCATION

OFFICE OF POSTSECONDARY EDUCATION

NEGOTIATED RULEMAKING PROGRAM INTEGRITY AND

INSTITUTIONAL QUALITY

SESSION 1, DAY 3, MORNING

JANUARY 10, 2024

On the 10th day of January, 2024, the

following meeting was held virtually, from 10:00 a.m.

to 12:00 p.m.
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P R O C E E D I N G S

MS. K. SMITH: Good morning everyone. 

Welcome and welcome back to session one, day three. My 

name is Krystil Smith. I'm with the FMCS and I will be 

the facilitator for this session, the morning session. We 

will start, as we always do, with a roll call of our 

committee members. We will begin with the non-Federal 

negotiators, beginning with the business officers, from 

institutions of higher education, we have our primary, 

Joe Weglarz. Are you here?

MR. WEGLARZ: Good morning.

MS. K. SMITH: Good morning, Joe. The 

alternate is Dom Chase. Are you here?

MS. JEFFRIES: Yeah, he's coming in 

right now.

MS. K. SMITH: He is here so he's 

coming in. Next we have the civil rights organizations 

and consumer advocates the primary is Carolyn Fast. 

Carolyn?

MS. FAST: Good morning.

MS. K. SMITH: Good morning. And Magin 

Sanchez.

MR. SANCHEZ: Good morning.

MS. K. SMITH: Good morning, Magin. 

Next we have our financial aid administrators. JoEllen 
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Price is the primary. JoEllen?

MS. PRICE: Good morning.

MS. K. SMITH: Good morning. Zach 

Goodwin from the University of Nevada is the alternate.

MR. GOODWIN: Good morning, everyone.

MS. K. SMITH: Good morning. Our next 

constituency group is the Historically Black Colleges and 

Universities, Tribal Colleges and Universities and 

Minority Serving Institutions. Institutions of higher 

education eligible to receive Federal assistance under 

Title III, parts A and F and Title V of the HEA. Our 

primary is Dr. Charles Prince. DC?

DR. PRINCE: Yes. I'm here. Good 

morning.

MS. K. SMITH: Good morning. And 

D'Angelo Sands is the alternate.

MR. SANDS: Good morning, everybody.

MS. K. SMITH: Good morning. Next we 

have the institutional accrediting agencies recognized by 

the Secretary. Our primary is Jamie Studley. Jamie?

MS. STUDLEY: Nice to have coffee with

you again.

MS. K. SMITH: Yes. Good morning. The 

first of many. And, Michael McComis. Michael?

MR. MCCOMIS: Good morning.
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MS. K. SMITH: Good morning, Michael. 

Next we have our legal assistance organizations. Our 

primary there is Robyn Smith.

MS. R. SMITH: Hey, everyone.

MS. K. SMITH: Good morning. And 

Sophie Laing is the alternate. Sophie?

MS. LAING: Good morning.

MS. K. SMITH: Good morning. Next we 

have our private, non-private institutions of higher 

education. Our primary there is Erika Linden. Erika?

MS. LINDEN: Good morning.

MS. K. SMITH: Good morning. And Scott 

Dolan.

MR. DOLAN: Good morning.

MS. K. SMITH: Good morning, Scott. 

Alright. Next we have our programmatic accrediting 

agencies recognized by the Secretary to include state 

agencies recognized for the approval of nurse education. 

Our primary there is Laura Rasar King. Laura?

DR. KING: Good morning.

MS. K. SMITH: Good morning, Laura. 

And the alternate is Amy Ackerson. Amy?

MS. ACKERSON: Good morning.

MS. K. SMITH: Good morning, Amy. 

Proprietary institutions of higher education is next. Our 
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primary there is Jillian Klein. Jillian?

MS. KLEIN: Good morning.

MS. K. SMITH: Good morning. And the 

alternate is David Cohen. David?

MR. COHEN: Good morning.

MS. K. SMITH: Good morning. David. 

Next we have our public four-year institutions of higher 

education. Our primary there is Jason Lorgan. Jason?

MR. LORGAN: Good morning.

MS. K. SMITH: Good morning, Jason. 

And Alyssa Dobson is our alternate. Alyssa?

MR. ROBERTS: She noted that she's 

feeling a little under the weather today, but she's here. 

She just doesn't have a voice.

MS. K. SMITH: Okay. Alright. Glad to 

have you, Alyssa. And hope you're feeling a little 

better. Next, we have our public two-year institutions of 

higher education. Our primary there is Jo Alice Blondin.

MS. BLONDIN: Yes.

MS. K. SMITH: Jo, good morning. And 

Michael Cioce is the alternate. Michael? Michael, is he 

here? Okay. He is not here at the moment. Okay. Next, we 

have our state attorneys general. Our primary there is 

Diana Hooley. Diana?

MS. HOOLEY: Good morning.
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MS. K. SMITH: Good morning, Diana. 

And next we have our state officials, including state 

higher education executive officers, state authorizing 

agencies, and state regulators of institutions of higher 

education. The primary there is John Ware. John?

MR. WARE: Good morning.

MS. K. SMITH: Good morning, John. And 

our alternate is Robert Anderson.

MR. ANDERSON: Good morning, everyone.

MS. K. SMITH: Good morning, Rob. Next 

we have our students or borrowers, including currently 

enrolled borrowers or groups representing them. Our 

primary there is Jessica Morales. Jesse? Is Jesse here 

yet? Okay.

MR. ROBERTS: She noted that she's 

traveling today, so she might be in the air.

MS. K. SMITH: Okay. In that case, we 

do have, the alternate Emmett Blaney. Emmett?

MR. BLANEY: Hello. Jesse, I believe, 

won't be available at all today.

MS. K. SMITH: Okay, so you'll be 

serving in her stead, correct?

MR. BLANEY: Yes.

MS. K. SMITH: Alright. Welcome back, 

Emmett. And our final constituency group is U.S. military 
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service members, veterans or groups representing them. 

Our primary there is Barmak Nassirian. Barmak?

MR. NASSIRIAN: Good morning.

MS. K. SMITH: Good morning. And, the 

alternate there is Ashlynne Haycock-Lowman. Ashlynne?

MS. HAYCOCK-LOHMANN: Good morning.

MS. K. SMITH: Okay. And Dom Chase did 

just- he did just check in. Good morning, Dom. Okay. 

Next, we'll go to our Federal negotiator. So our Federal 

negotiator today is Dave Musser. Dave will introduce 

himself and the other Department of Education. Those at 

the Department that will be assisting him. Dave?

MR. MUSSER: Good morning. So we have 

a few changes of plans today. Regarding, who will be 

joining us here at the table. Unfortunately, our good 

friend Greg, has encountered some challenges with 

weather. And he has no power. And will likely not be able 

to join us today. So in his stead, we've invited, Aaron 

Washington, who I think most of you know, will be leading 

the subcommittee for trio for the Department. But he's 

also our subject matter expert for return of Title IV. 

He's going to join us at the table. And just in case I 

have any problems with weather, as we are also getting 

those same problems where I live in Maine, and we want to 

be sure that we have a seamless experience for you guys 
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here if that happens. So I just wanted to say welcome to 

Aaron, who I like very much and who is an extremely 

knowledgeable and great person to work with.

MR. WASHINGTON: Thank you, David. And 

I'm so happy to be here with you all today. I recognize 

so many faces from previous rulemakings. I won't- I'm not 

going to- I won't be on camera unless David has issues. 

So I'll turn my camera off, mute myself and then I'll 

just jump in if, unfortunately, David disappears from our 

screens.

MR. MUSSER: Really hoping that 

doesn't happen. It didn't keep me up at all last night 

either. I'll tell you. So, I also wanted to just mention 

we went once- if we, if and when we get through R2T4 this 

afternoon, I'll be handing it off to Herman Bounds, our 

Director for Accreditation at the Office of Postsecondary 

Education, to start walking you guys through the issue 

paper for the accreditation issue.

MS. K. SMITH: Okay. Alright. Thank 

you, Dave. And, welcome, Aaron. We won't see you on 

camera today. We know, but we know we'll see you on 

Friday because you are leading our trio subcommittee. 

You're the negotiator for that. So welcome and welcome to 

you, David. Alright. So.

MS. JEFFRIES: Krystil, let's make 
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note of the fact that for this morning for the R2T4 

discussion with David and Aaron, general counsel will be 

Denise Morelli. This afternoon when we get or later when 

we get into accreditation and Herman is the Federal 

negotiator for that, he will be assisted by Donna Mangold 

from OGC. Alright?

MS. K. SMITH: Yes. So we'll be 

hearing from Denise and Donna today as well from OGC. 

Thank you. And Cindy and I will be co-facilitating today. 

So thank you Cindy. Alright. So without further ado, we 

do want to go ahead and get started with our issue paper 

four which is the subject of our discussion this morning. 

That title is Withdrawals and Return of Title IV funds 

hereinafter referred to as R2T4. And I have a big note 

about that. So I don't say anything other than those four 

letters, as I get used to it. So we will begin with that.

There are a couple. Cindy?

MS. JEFFRIES: Krystil, can I just 

cover, some process clarification for today? Based on 

feedback that we received, trying to make things in a 

more seamless, logistical and easier to follow, process. 

The intent today is that we will revert back to the 

normal process of the Department presenting the summary 

and overview of the issue paper. Okay? And for R2T4, as 

we walk through the Department's proposal, it will be 
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done section by section. And David will cover, for 

example, section 668.21. The overview of that. And then 

we will look at the reg text for that. We will not be 

sharing additional proposals at this time. The 

negotiators, you are always, always welcome and 

encouraged to raise your hand, use your three minutes. If 

you've already submitted a proposal regarding these 

topics, you're free to refer to language in that. Just to 

bring it to the attention of the Department, and your 

fellow negotiators. But the conversations will be related 

to the Department's document. At this point in time, 

until such time as everybody has time to review 

additional proposals between, the sessions themselves. If 

you haven't submitted a proposal, please still bring up 

your and you're encouraged to bring up your, ideas, 

concerns, suggestions for, you know, alterations to the 

language. We encourage you, to put these non-written ones 

into a word format document with the rationale for 

proposing your changes and a red line version of it that 

we will send to the Department. The Department is asking 

that proposals be submitted no later than one week from 

the close of the session tomorrow. So that would be next 

Thursday. If at all possible, to give them ample time to 

fairly and thoroughly review your proposals. Okay? So 

this is all in an attempt to try to make it a little less 
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confusing as to what we're talking about at a particular 

given point in time. Okay? Questions on that? DC?

DR. PRINCE: Yeah. Question. I'm 

assuming the problem you're trying to solve is 

streamlining of what we're actually talking about when 

we're talking about it, which I totally get. But I wonder 

whether or not by doing that, you're stifling discussions 

of helping other people understand what other folks are 

trying to say, because a lot of the times we know that we 

get into level of technicality. And so it seems as though 

if we do that and people can't share what they're 

thinking in a way to communicate to us, hey, here are the 

changes I'm thinking about in this proposal. Then are we 

stifling negotiations or discussions that could be 

fruitful for other people to understand where other 

people's perspectives are?

MS. JEFFRIES: No, it is not an 

attempt to stifle anyone's conversation. In fact, we 

encourage the conversation. Everyone has received the 

documents that have been submitted to date, so you should 

have them in front of you so that if a negotiator who 

submitted one refers to it, that, you know, you're able 

to see exactly what they're talking about and why they're 

talking about it. And the process is always allowed for 

some back and forth conversations and questions about 
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that as they relate to the proposals, these initial 

proposals that the Department has made.

MS. K. SMITH: Okay. Alright.

MS. JEFFRIES: Krystil?

MS. K. SMITH: Yep. Alright. Thank 

you, Cindy, for those process updates. As she mentioned, 

this is just an attempt to streamline. We know that, as 

we go through these issue papers, they do get lengthier 

and more complex. So with that being said, we will turn 

it over now to Dave Musser. And we are going to begin 

with the summary of the issues, on page one of, the 

proposal paper. Dave?

MR. MUSSER: Alright. Thank you, 

Krystil. And then, Vanessa will be screen sharing for us 

today. So if you could bring up that first page of the 

issue paper. Alright, so return of Title IV, one of my 

favorite topics. But for many of you, probably not 

something that you are intimately familiar with, except 

perhaps for our financial aid negotiators and some of our 

institutional negotiators. This is a statutorily required 

calculation that is performed when a student begins 

attendance and subsequently ceases enrollment. The 

statutory rules provide that the institution, when it 

determines that a student has withdrawn, must determine 

the period that the student was scheduled to complete, 
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which comprises the denominator of the calculation. And 

then they have to determine how much of the period the 

student completed, which comprises the numerator of the 

calculation. And that yields a percentage that goes out 

to a one decimal point, that is used to determine the 

amount of Title IV aid that the student has earned for 

the period. Now, there's a lot of complexity. That sounds 

like a fairly straightforward calculation. But it 

introduces a significant amount of complexity, because 

there are many different circumstances that can actually 

apply in practice. And those of us who are familiar with 

R2T4 know that that complexity has caused this issue to 

consistently reach the top ten compliance findings. 

Schools, often make some minor errors, sometimes more 

systemic significant errors if they get one of their 

policies wrong related to R2T4. So it is and it's also 

the subject of an entire volume of the FSA handbook 

because of its complexity. So if you could scroll down, 

Vanessa. So in this rulemaking, we are attempting to

achieve a number of goals. But one of them is to improve 

and simplify the R2T4 process, to make it easier for 

institutions to understand the requirements, to increase 

the accuracy of the R2T4 calculations, but also to help 

withdrawn students repay their credit balances. As many 

of you know, the issue of students who withdraw with 
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institutional debts, is an issue that the Department is 

concerned about. We have seen research that shows that 

students in those situations often find it difficult to 

either reenroll or transfer their credits elsewhere. So 

we do seek to reduce the number of circumstances when 

that happens. We also hope to address unique 

circumstances for what constitutes a withdrawal. As we'll 

get into in just a moment. And we'd also like to codify

some long standing practices into regulation, in an 

effort to make it clearer what the Department's 

particular perspective is on a couple of different 

topics. So with that, I think we can move into our actual 

proposals here. And Vanessa, I think you can scroll down 

a little bit more to the first one. So sit still on page 

one. We're going to run through this proposal. So the 

first proposal is actually related to a part of the 

regulations, 34 CFR 668.21. That is not R2T4. That 

section is specifically focused on cases where students 

do not begin attendance, in what we call a payment 

period. And by the way, a payment period is generally an 

academic term, although it could be a different period of 

time for programs that don't have terms. But in cases 

where a student receives Title IV aid and does not begin 

attendance, the requirements in 668.21, provide for some 

very specific instructions for what to do with the Title 
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IV funds that the student and their institution have 

received. And just to keep in mind, the reason that 

students can receive Title IV funds before they begin 

attendance is that we allow institutions to provide Title 

IV funds to a student at no more than ten days prior to 

the start of a payment period. Because many students need 

those funds ahead of time, in order to purchase books to 

secure housing and a variety of other things that may be 

necessary before they begin, they actually begin 

attendance in the academic term that they're enrolled in. 

So when this happens, it does sometimes happen that the 

student, for whatever reason, fails to actually start 

attendance at even one class at the institution. So the 

requirements are for all of the students grants. So Pell 

grants, Federal Supplemental Educational Opportunity 

grants, FSEOG, TEACH grants. The institution is required 

to return all of those funds dollar for dollar to the 

Department. Additionally, if the institution credited 

loan funds, Direct Loan funds, to the student's account, 

the institution will return all of the loan funds that 

were actually credited to the student's account back to 

the Department. However, there is a circumstance where 

the student actually received Direct Loan funds, 

exceeding the amount that the student was charged, and 

the student has a left over credit balance that they 
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received prior to failing to attend. Generally within 

that ten day period before the start of classes. In those 

circumstances, the schools are not required to return the 

amount that the student themselves received unless they 

were aware that the student was not going to attend at 

the time that classes began. So if the school was not 

aware, and should not have been aware of the student 

being unable to attend, then under the current 

regulations, the school is required to send a demand 

letter, essentially to the student servicer to have the 

servicer collect the entire amount of loan funds that 

disperse to the student as soon as possible. So for a 

variety of reasons, we believe that that final part of 

the process is unnecessary and unfair to students who may 

have been unable to attend for reasons for a variety of 

reasons, many of which are completely outside their 

control. So, if you could scroll down a little bit more, 

Vanessa. Oh. Sorry. Go back up. We went a little too far 

here. So, what we're proposing to do here, is to actually 

allow students to repay the amounts that they received, 

and before they failed to attend, in accordance with 

their master promissory note. And essentially, that would 

mean that their grace period would begin immediately. 

They would, if they have a grace period available, they 

would have their six month grace period. Then they would 
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go into repayment, just like they would in under any 

other under the terms of any other Direct Loan. And then 

they would repay the Direct Loan in accordance with those 

requirements. Now, Vanessa, if we could go down to the 

page where we have the actual red text so that everyone 

can see what we're talking about here? I believe that's 

on page eight of the issue paper. Actually, maybe a 

little bit. Actually, no, sorry. It's a little further 

out. There it is on page six. And so, as you can see, we 

simply struck the concept of a final demand letter in the 

regulations. And we focused on simply having the student 

repay the amount in accordance with the master promissory 

note. And then I will pause here and open up the floor 

for discussion.

MS. K. SMITH: Okay. Any comments on 

that, 668.21? Barmak?

MR. NASSIRIAN: It's just because I 

don't know the answer. How do you treat when you talk 

about disbursements credited to the institution, how do 

you treat automatic billing for things like textbooks 

that we discussed earlier?

MR. MUSSER: So the concept that we 

use is in the cash management regulations and the concept 

is allowable charges. And there's two different kinds of 

allowable charges. There are charges that include tuition 
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and fees that the student is automatically billed for and 

where essentially the student really doesn't have, 

doesn't have a choice in the matter. If they receive 

Title IV funds, the funds can immediately be put toward 

those expenses immediately. There is a second category of 

expenses that require the student's acknowledgment before 

payment is made. So I think Barmak what you're asking is, 

if books and supplies are included, for example, as part 

of tuition and fees, then those charges would be 

automatically debited and the Title IV funds would bethey would pay for those charges. And the student would 

not receive a credit balance for the amount of the books 

and supplies. They would not be required, they would not 

need to authorize the institution to pay for those 

charges with their Title IV funds. So what happens in 

this case is that those funds would all be returned to 

the Department. And the remaining portion that they 

student did get as of credit balance would be repaid by 

the student in accordance with the master promissory 

note.

MR. NASSIRIAN: Just to follow up, but 

the institution would be at liberty to bill a student for 

those charges, wouldn't it?

MR. MUSSER: Yes they would. There's 

nothing that would prevent them from doing that.
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MR. NASSIRIAN: Here's something to 

keep in mind when we go back to the cash management 

language on mandatory and automatic billings. Thank you.

MS. K. SMITH: Okay. And just to note 

that, Don Chase is coming in for the business officers as 

the alternate. We'll go to JoEllen.

MS. PRICE: My question is, does this 

intend to include all Direct Loans including Parent PLUS 

Loans because it mentions the student borrower but 

doesn't mention a parent borrower?

MR. MUSSER: I believe it would work 

the same way for plus loan funds. If they are credited to 

the account, then they get returned dollar for dollar. If 

they are, if they're actually in excess of the 

institutional charges and there is a credit balance 

provided the credit balance technically goes to the 

student. But of course, the parent would be obligated to 

repay the remaining amount in accordance with the plus 

loan NPN in that case.

MS. K. SMITH: Thank you. Jason?

MR. LORGAN: Thank you. So, we think 

that this would be a step in the right direction to 

addressing student debts, but we'd like to ask the 

Department to consider taking this a step further, to 

consider how these loan debts may impact the student's 
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future ability to return to higher education. For 

example, studies show that students are more likely to go 

into default on student loan repayment if they withdraw 

from the university, and this is particularly prescient 

for low income students. And we would ask that maybe 

greater leniency be exercised for defaulted or delinquent 

loans tied to R2T4 for borrowers returning to higher 

education. Thank you.

MS. K. SMITH: Alright. Thank you, 

Jason. Just to note as well that Michael McComas, will be 

coming in today for the entirety of the discussion of the 

R2T4. He is the alternate and he will be joining the 

table. Thank you. Robyn?

MS. R. SMITH: Yes. Hi. This is the 

same issue that I raised with the cash management or that 

was raised by Sophie, about concerns with Pell Grant 

overpayments. I know that Pell Grant- I see that Pell 

Grant overpayments are not included in the proposal for 

an Income Driven Repayment or sort of the repayment terms 

under the promissory note. Pell Grant overpayments are 

extreme hardship for many of our clients because there is 

no kind of repayment plan. They are required to 

immediately repay the full lump sum or they are 

ineligible for Federal Financial Aid. And often this this 

population can't afford to pay a full lump sum, and that 
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prevents them from trying to go back to college or to 

complete their education. And I know the Department told 

us that its debt collector and I'm not sure which one, 

sometimes offers repayment plans to students, but I've 

talked to other legal aid folks, and none of us have ever 

seen that happen in any of our cases. So my question is, 

again, whether the Department would be willing to 

consider adding in sort of a similar repayment plan for 

Pell Grant overpayments similar to something like SAVE. 

It's certainly something I think that will go ahead and 

propose. But this is a big issue for low income Pell 

Grant students and quite a common occurrence.

MR. MUSSER: We certainly encourage 

you to submit that proposal. Thank you, Robyn.

MS. K. SMITH: Alright. Thank you. 

Dom?

MR. CHASE: I won't appoint that I was 

going to make as I made, so I won't make it again so I'll 

just briefly express support. I think this is a really 

good change.

MS. K. SMITH: Thank you, Dom. 

Carolyn?

MS. FAST: Just also wanted to express 

strong support for this change that will really make a 

difference for students that some of which are in a very 
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bad situation when these withdrawals happen, that can 

prevent them from re-enrolling when they're able to later 

on. And also, I just wanted to follow up on what Barmak 

said that this sort of seems to also provide additional 

information about why automatic charges for textbooks 

having them be included without the students ability to, 

you know, opt-in is problematic because these are the 

kinds of situations where students would be hit with 

additional fees for things that they absolutely, you 

know, won't be able to use and probably know that pretty 

soon.

MS. K. SMITH: I think we're losing 

Carolyn. Is it just me?

MR. ROBERTS: No, she cut out for me 

as well. She froze.

MS. K. SMITH: Alright. So she has 

frozen. When she comes back, we'll put her- we'll get her 

back in queue. For now, we'll move on to Jillian.

MS. KLEIN: Thanks. I also am 

supportive in general of this proposal. I would just say, 

and this is probably more procedural for the Department 

and doesn't need a sort of red text for it, but I think 

it would be most beneficial for students if it's just 

clear from the Department that if they do choose to repay 

this overpayment right away, they will avoid accruing 
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interest. Whereas I'm assuming they're put back into 

their regular repayment plan, they would start accruing 

interest immediately. So I would just ask that the 

Department sort of strongly consider how they message 

that to students so that students aren't surprised that 

they're all of a sudden accumulating interest on these 

funds. Thanks.

MR. MUSSER: Thanks, Jillian.

MS. K. SMITH: Okay. Are there any 

more comments about the first point 668.2182 romanette 

ii? Okay. Hearing none, we can go on to the next, 

section.

MR. MUSSER: Okay, I just wanted to 

mention, I just saw in the chat that poor Carolyn also 

lost power just now. So we have her alternate stepping in 

for her for the time being.

MS. K. SMITH: Thank you.

MR. MUSSER: Alright, Vanessa, we can 

go on to the next item on page two of the issue paper. 

Increase accuracy and simplicity of performing R2T4 

calculations. So, there are a number of circumstances, in 

the R2T4 world, when the a student has completed part of 

the payment period. But not all of the payment period. 

And the Department needs to- has to decide whether they 

have withdrawn or not. So before I get into the meat of 
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this particular provision, I want to go back in history a 

little bit to explain why the Department takes this 

approach at all, because it may not be immediately 

apparent. So when you have a student who is enrolled in a 

class that spans an entire term, how you decide how the 

R2T4 calculation works is pretty straightforward. The 

denominator is the whole term. And then you look at how 

much of that term they complete. And that's the 

calculation. The process gets a lot more complicated when 

you have classes that do not span the entire term, often 

called modules, and formally called modules in an R2T4 

context. These shorter classes comprise a shorter period 

of time that a student might be scheduled to attend. That 

the school, rightly would not- where a school rightly 

would not want to include the entire payment period in 

the denominator of the calculation. If, for example, the 

student was only attending the first of two modules that 

comprise the entire term. As an example, let's say that 

there was module A, which was 45 days, and then module B, 

which was another 45 days. If the student was only 

enrolled in module A, you would only want to consider the 

denominator for module A when performing the R2T4 

calculation. Now we'll get into those- to the details 

about how to determine how the calculation works in just 

a second. But there's another question that comes up 
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related to modules about what do you do when a student 

completes a module that comprises part of a term but not 

the entire term? The obvious answer is that you just 

treat them as a completer. They completed. You don't need 

to do an R2T4 calculation and that was how the Department 

originally handled this. But unfortunately, schools, some 

schools realized that this was an opportunity for a 

loophole, and they would structure very short courses at 

the beginning of their terms, often just a week or less. 

And if the student completed one of those courses, even 

if there was only a half credit or a credit associated 

with that very short course, the student could then never 

be subject to the R2T4 requirements. So this was a 

significant loophole that the Department decided to close 

shortly afterward by establishing requirements for 

schools to consider such a student withdrawn anyway. So 

now fast forward somewhat. The Department recognized, 

after some time that this approach also created some 

unfairness to students. Students could complete modules 

that comprised a significant portion of the payment 

period. And based on a difference of a few days in terms 

of when they're enrolled for other modules, they might 

still be subject to the R2T4 requirements. So what we 

decided to do was to create some exemptions to R2T4 based 

on completion that would ensure that a student was 
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completing a substantial portion of coursework, during a 

payment period. We created two exemptions to accomplish 

this. The first one is for completing a module or modules 

that comprise 49% or more of the payment period. And the 

other one, which was suggested by a very sharp, 

negotiator at the time, was if the student completed 

coursework that comprised at least half time enrollment. 

So through that rulemaking, we established both of those 

exemptions, and schools then implemented them shortly 

after we heard from schools that the exemption for half 

time enrollment was very easy to implement. You know, you 

see clearly on a student's academic transcript, they got 

they got a C and a B, they're not subject to R2T4, you 

know, immediately without having to do any other work. On 

the other hand, figuring out whether students completed 

49% or more of the number of days in the payment period 

became much more administratively complicated. Schools 

had to figure out exactly what proportion of their term 

each of their modules comprised. They had to watch 

carefully to see which of those modules the student 

completed. And in cases where there were many modules, 

more than two, for example, if there were 3 or 4, this 

became a challenging administrative process. So what 

we're proposing here, because we believe there is 

substantial overlap between the two exemptions. We're 
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proposing now to eliminate the exemption for completion 

of 49% or more of the payment period as a means of 

reducing administrative burden for institutions, while 

retaining what we believe is a fair and reasonable 

exemption for completion of at least half time 

coursework. So Vanessa, can we scroll down then to yeah, 

page six to look at the text. So you can see here and 

scroll down a little bit more, Vanessa. I think I'm right 

this time. Yeah. So we struck the three romanettes there

and scroll back up a little bit, which included the 

exemptions for 49% or more, of having one module, 49% or 

more comprising multiple modules. And then we took the 

remaining text and scroll up a little bit more, Vanessa. 

And we incorporated that into as you can see, paragraph 

two here. So now the only exemption related to completion 

here, completion within a payment period is, if 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. And then I'll pause there and open it up 

for discussion again.

MS. K. SMITH: Alright. Thank you. 

Jillian?

MS. KLEIN: Dave, I hear you trying to 
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butter me up before I make my comments. So a reminder for 

everybody, six of us on this committee agreed to this 

language, five years ago when we first negotiated this. 

So appreciate the opportunity to provide some comments. 

What I'll say broadly is I think, I understand that the 

Department's goal with this rulemaking, related to R2T4, 

is simplicity. And I think this is the opposite of that. 

And I understand and am empathetic for institutions that 

maybe feel like this is complicated or confusing, but I 

also am not sure that they're just, all due respect, I'm 

not sure there's been enough guidance from the Department 

on this- on the R2T4 package in general after we reached 

consensus in 2019, to alleviate some of those concerns 

broadly and would just more, urge the Department to 

consider retaining the language that we wrote in 2019 and 

providing more guidance to institutions in order to 

implement the 50%, or the 49% change. And if I can, I'd 

like to share the language from the NPRM on this from 

2020. Because I think it's still true. And these were the 

Department's words. So the Department proposes to treat a 

student as having completed a period, of the student has 

completed a substantial portion of the time or coursework 

that the student was scheduled to attend during the 

period. We believe this approach prevents against abuse, 

while also avoiding punitive consequences for students 
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who complete a substantial amount of coursework during 

the period. I don't think I could say it any better than 

that. And I think the Department's own words are very 

accurate in terms of the impact to students. Especially 

when we think about, programs offered in an innovative 

fashion, we think about adult students whose attendance 

might not look like a traditional semester or, quarter, 

like we have historically seen and would just strongly 

recommend that the Department retain the language we had 

in the past in order to not penalize these students for 

completing a significant portion of their payment period. 

Thanks.

MS. K. SMITH: Alright. Thank you, 

JoEllen?

MS. PRICE: Okay. So I've been doing 

financial aid administration for 36 years, 17 of those 

years, in the past 17 years at community colleges. And 

the way it works now is a student that's- community 

college students can generally cannot attend full time, 

so they generally take half time or three quarter time, 6 

to 9 credits. And so the way it works now is if the 

student is in 2 or 3 courses over the course of the full 

semester, and they for some reason have to drop two of 

those courses and can stay in one of those courses and 

completes that one course, we are able to- they're able 
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to retain all their financial aid funding. What I was 

happy about with this change, even though I will admit it 

was very difficult to understand at first, it took us 

quite a bit of time to understand how it works and to 

implement it at our schools, but once we understood it, 

what this does is for that student that's taking those 

six credits in modules, let's say a 16 week semester, 

eight weeks, they're taking three credits, the second 

eight weeks, they're taking three credits. If they 

complete that first course and complete those three 

credits, we were able- they were able to retain their 

eight even if they weren't able to stay in that second 

eight week course at the end of the semester. So this 

allowed us to help the students retain their aid, no 

different than the student who's taking six credits over 

the 16 week semester and had to withdraw from one of 

those courses. So for me, it created more fairness for 

students, one that's taking a full 16 week semester 

versus a student that's taking modules eight weeks and 

then the second eight weeks. So I do understand that it 

was difficult to implement these changes at the time, and 

it took us some time to understand it and get into the 

groove of how it works. But for community colleges, this 

change helped our students. And so I understand 

complexity is not easy. I've been doing financial aid a 
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long time. We got a lot of guidance and help, especially 

from our national association. So this particular item 

has helped students. And I would I really be sad to see 

it go away.

MS. K. SMITH: Alright. Thank you, 

JoEllen. Jason?

MR. LORGAN: Thank you. So, we 

appreciate the Department's eye to simplify the module 

calculations. UC campuses have noted the exemption 

introduced added complexity and or could not be applied 

based on their summer module structures. So to create 

greater simplicity, we'd support retaining a minimum 

completion measure using half time or more completed 

enrollment for a standard time in which there are 

modules. And additional, under the proposal, it is 

unclear what the institutions responsibility is should a 

student continue in another module that follows a module 

where the student withdrew. For example, a student 

withdraws from session A in summer time, but continues on 

in session B and begins and completes the enrollment. 

Prior to the exemption, campuses were required to 

document a student's intent to continue on in courses 

that had yet to begin in another module in which they 

were registered. And finally, though this proposal 

simplifies the calculation, the administrative burden is 
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substantial for institutions that operate on traditional 

standard time calendars, with the exception of summer, 

which is not a required term. This is particularly 

notable when the summer of R2T4 returns in these sessions 

are weighed against the amount of staff time and 

documentation required. We would support exempting 

institutions from module R2T4 treatment in certain 

scenarios. For example, if the institution meets a 

designated maximum limit of returns compared to their 

total annual Federal awards portfolio and functions on a 

standard time calendar, with the exception of an optional 

summer term. Thank you.

MS. K. SMITH: Thank you. Jo?

MS. BLONDIN: Yes. So in Ohio, 60 to 

90% of community college students are part time. Six 

hours, six credit hours. And in addition to that, as a 

state, we've been incentivized to create shorter-term 

programs and programs that are in these modules in order 

to meet the needs of business and industry and our 

students' needs, as they work. So I think that I agree 

with JoEllen's statement and would just love that seen. 

Thank you.

MS. K. SMITH: Okay. Barmak?

MR. NASSIRIAN: You know, I appreciate 

the Department's attempt to simplify where it can. 
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Obviously, withdrawals are a problem both ways because 

very often they end up tripping up the lowest income 

students who were never expected, had they remained 

enrolled, they would never be expected to in many cases 

to pay a dime towards the cost of attendance. But when 

they withdraw or drop out, they end up with balances 

against the institutional balances that prevent them from 

pursuing higher Ed. I understand the need to protect the 

lifetime eligibility of students for Pell. I understand 

the need to make sure they're not unnecessarily burdened 

by loans. But I think as a policy proposition, the 

Department should do its utmost to error on the side of 

preventing these balances for low income students. So, 

you know, if institutions are willing to go through the 

work, the complex work of complying with the 49% 

exemption, I don't see why the Department would want to 

eliminate that as an option. I don't know how many 

institutions would, but I tend to think that it would be 

institutions that are acting on behalf in the best 

interest of their students, not institutions that are 

trying to game the system. So if it's not a pathway to 

manipulation for institutional gain by predatory 

institutions, I would think the Department would want to 

keep this. That's just my initial reaction to the idea 

for the Department to contemplate. Thank you.
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MR. MUSSER: And thanks, Barmak. And a 

quick comment about that. I want to be very clear that 

the exemption is not optional. So the school does have to 

figure out how much of its payment period each module 

comprises, and it cannot treat a student as withdrawn if 

they have completed a sufficient number of modules. And 

that's really the reason for some schools finding it to 

be administratively burdensome. And obviously not all 

find it so burdensome that it's not worth having around. 

So thank you all for your feedback.

MS. K. SMITH: Alright. I do just want 

to note that Carolyn Fast is back. Welcome back, Carolyn. 

We'll be on the lookout again for your power concerns. So

welcome back. Are there any additional comments on that 

section? Alright. Hearing none, I think we are.

MR. NASSIRIAN: May I ask a question?

MS. K. SMITH: Barmak?

MR. NASSIRIAN: Yeah. With regard to 

mandatory application of this exemption. Is there an 

option for the Department to make it discretionary for 

the institution, at least so that you don't unduly burden 

those who really can't do it, but allow those who are 

willing and are able to do it to use this algorithm?

MR. MUSSER: We can look at that. 

Yeah. Thanks, Barmak.
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MS. K. SMITH: Okay. I think we are 

clear to go on to the next one. Bottom of page two.

MR. MUSSER: Bottom of page two. 

Vanessa? Okay, so we don't often get into a topic related 

to return on Title IV that is almost totally new. So for 

even for those of you who know R2T4, this one ought to be 

interesting for you. So some more history about this 

particular area of policy. For many years, many 

institutions have maintained, with certain withdrawal 

policies related to very specific circumstances. That are 

designed to be more lenient to students who have special 

circumstances. So, for example, a very common version of 

this is what's sometimes called a medical withdrawal. 

Where a student comes to the institution, lets them know 

that they have a very serious medical condition, even 

though they may be half or three quarters of the way 

through the term, the student is going to be unable to 

complete the coursework through no fault of their own. 

Many schools have policies where if the school approves 

the student's request, they would refund 100% of the 

students tuition and fees for the period, putting the 

student at effectively a zero balance for some students. 

Although they may have other expenses that they have 

accrued for the period, such as living expenses and 

books, that the schools generally don't also refund. 
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Another form of this full refund approach often occurs 

when a student withdraws very close to the beginning of a 

term. Many institutions allow for a full tuition and fee 

refund if the student withdraws in the very first few 

days of a class, or sometimes during an add/drop period, 

that sort of thing. So for many years, some schools 

believed that if they did perform that full refund, and 

if they treated the student in their system as having 

never attended the period, essentially, in some cases 

going as far as to omit that any courses from their 

transcript for that period. They've also believed that 

they were not subject to the return of Title IV 

requirements. That was not accurate. The Department's 

interpretation of the law, is that if a student, 

generally if a student attends even one day in a payment 

period or period of enrollment, the student is entitled 

to at least some portion of their Title IV aid based on 

what the return of Title IV calculation determines they 

are eligible for based on how much of they actually 

completed of the period. So when we looked at this issue, 

you know, we've long felt that these are these are often 

very generous policies that are reasonable, and that are 

really in the student's best interests in many cases. And 

we recognize why the institution thought that they might 

not be subject to R2T4 in these cases because they are 
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effectively returning much of the student's tuition. 

However, simply returning the tuition and fees for the 

student, refunding the tuition and fees for the student, 

but not addressing the other expenses that the student 

had for the period, could still leave the student in a 

position where they owe the institution for some portion 

of their expenses that they, for example, got out of as a 

credit balance or that they couldn't have refunded 

because they had lived in the dorms for several months. 

So what we are proposing here is a new withdrawal 

exemption, that effectively does put into policy the 

approach of allowing an institution to avoid completing a 

return of Title IV calculation, if they fully refund the 

student's tuition, if they treat the student as having 

never begun attendance, they return all of the student's 

Title IV funds for the period. And, they write off or 

cancel any debt, that's owed to the institution as a 

result of the return of Title IV funds. So for schools 

that have generous tuition refund policies, it would be a 

benefit to them if they decided to move forward with one 

of those that they would not have to perform in R2T4 

calculation for a student, in these cases. So if we could 

scroll down now to, I think page seven, where we have the 

regulatory text. Thank you, Vanessa. So this is a new 

item under the options for exemptions from the return of 
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Title IV process. And it says, a student is not 

considered to have withdrawn if the institution's records 

treat the student as having never attended courses for 

that payment period or period of enrollment. The 

institution returns all Title IV aid to the student that 

they receive for that period. They refund all 

institutional charges and they write off or cancel any 

current year balance owed by the student to the 

institution due to the return of Title IV funds to the 

Department. Now, the last thing I want to say about this 

item is that this is intended to be entirely optional. 

Unlike some of the other exemptions, which in the past 

have been mandatory. Here. The institution does have to 

make a conscious choice, especially with six romanette 

one here to treat the student as never having attended 

during the period. And if they do so, and they meet all 

of the other requirements here, then on a discretionary 

basis, they could avoid completing an R2T4 calculation 

for a student. And I'll stop there and open up the floor.

MS. K. SMITH: Okay. Alright. I don't 

see anything from Denise. So we'll go ahead on with 

JoEllen.

MS. PRICE: Okay, first of all, I 

applaud the Department on this particular item. I know 

schools, especially, community colleges, have struggled 
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with this one because we do give students a time and 

add/drop period. And if they drop the course even after 

attending one class, that course goes away. So it has 

been nearly impossible for us to track that information 

and get the information we need to do the calculations. 

So I definitely support and applaud that. The only 

question I have happens to be the language on page two, 

where it says on number four, rights offer cancels any 

debt owed to the institution that results from the R2T4 

funds. But it's my understanding that we would not have 

to do the calculation in this case where we meet the 

conditions of, one, two and three. So can you explain, 

how we would determine that would result from R2T4 funds 

if we don't do the R2T4 calculation?

MR. MUSSER: Yeah. And I think that's 

a wording issue. When we said return of Title IV funds, 

that sounds like the calculation, but what we meant was, 

first, due to you returning all of the Title IV aid for 

the period so that you would just look at the at the 

difference between the two.

MS. PRICE: Okay. Thank you.

MS. K. SMITH: Alright. Jillian?

MS. KLEIN: Thanks. I also just want 

to applaud the Department. I think it's a great change. I 

think it also incents institutions to offer trial periods 
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or periods when, you guys I'm sorry about my lights. An 

opportunity for students to try a couple weeks in a 

program or a class and see if it's right for them without 

providing a scenario where the student then is in debt 

that maybe they weren't expecting to be in. My one 

question actually is related to the last thing you said, 

Dave, which is I think you just said this is optional, 

and I don't, just in the spirit of simplicity and making 

sure students aren't confused, I don't see anything in 

the reg text that suggests that that's optional for 

institutions. So if that's the Department's intention, I 

would just ask that you make that clear in the language.

MR. MUSSER: We can consider that. 

Thanks, Jillian.

MS. K. SMITH: Okay. Thank you. DC?

DR. PRINCE: Actually, I wanted to go 

off of JoEllen's point. It didn't- I was going to say 

that but my question comes down to why make it optional 

if we know it's better on behalf of, sounds like 

everybody. I've talked to some financial aid directors 

like, yeah, this would be great. But if it's optional, 

financial aid directors are only subject to their 

leadership. And they'd be like, well, I may not want to 

do this. And so we're not really helping some of our 

processors, I would call them, to be able to help the 
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institution think through this. So help me understand 

your optional versus mandatory and what is your ethical 

or your ethical definitions or checkbox red lines to 

determine what of these will be optional and which one of 

these will be mandatory.

MR. MUSSER: That's a good question. 

So when you read the text as we wrote it, you know, we 

called it optional here. Primarily because the 

institution has the complete discretion as to how they 

treat the courses that a student attended during one of 

these periods as to whether they transcript them or not, 

whether they record whether the student was there or not. 

So what we meant in this case really was, that that's the 

optional component is that the school has the choice as 

to whether to say we're acknowledging that the student 

was here for this period, or we're saying that they never 

attended for this period. And what we had in mind is that 

if they say the latter and they do all of these other 

things which many schools I don't think would necessarily 

choose to do, especially that last item of writing off 

the student's- all of the student's debt for the period. 

If they do all those things, then they can also forego 

the R2T4 calculation. So in the sense that if they if the 

school decides to do all of these things, they actually 

would they would not have to do the calculation. We 
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called it optional. But I guess I take your point, if all 

of these conditions are met, then the school essentially 

would be required to do this. But essentially the school 

does have to make a choice here, because if they don't do 

all these things then they are subject to R2T4 and they 

have to do a calculation. So the Department really wasn't 

treating this as something that if all these conditions 

were met, was optional, it was more is the school willing 

to meet all of these conditions? And we don't expect- we 

would- we didn't feel that we would be able to require 

all schools to, for example, fully refund tuition in 

these circumstances, write off all these debts, etc., 

even though we'd like them to. So that's really what we 

intended with the concept of optional. Now we did hear 

from both Barmak regarding the other item the other 

exemption and about this one, that the concept of 

discretionary exemptions is something that people are 

interested in. I don't know whether that is something 

that is legally permissible at all. So we'll have to take 

a look at that and see whether it's even an option. But 

that's our approach right now.

MS. K. SMITH: Jason?

MR. LORGAN: Thank you. So we would 

support this proposal. We would just like to request the 

statute define institutional charges as tuition if that 
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is the intent. And while tuition refund policies are 

under the institution's purview and the student would get 

a full refund, for example, if they withdrew, you know, a 

day before the end of the add/drop period, if they lived 

in housing and ate in dining for a month's time period, 

that would be a prorated refund. So, we just wanted to 

ask for some better definition on what that means.

MS. JEFFRIES: Jason. Jason, thank you 

for that. I'd like to encourage you to put your question 

in the chat. If you don't intend to write a proposal for 

submission. Thanks.

MS. K. SMITH: Thank you. Joe. Joe, 

you're on mute.

MR. WEGLARZ: My apologies. So I 

believe it sounds like this proposal is definitely going 

in the right direction so I do want to thank the 

Department of Ed for putting this in that right 

direction. And I think, this question might have just 

been brought up regarding, Jason actually was sort of 

touching base on this, if the student does get a 100% 

refund on tuition and fees, potentially allowing us to 

also not have to go through the return of Title IV, would 

they be able to use a portion of Title IV funding to pay 

the room and or the board that may have incurred a 

liability, alright, during their time in attendance? Or 
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is an all or nothing?

MR. MUSSER: So the way that it's 

currently written is an all or nothing. So any debt and 

remember any debt to the institution. So we're not 

looking at debts that are outside the institution. If 

they're in some kind of other housing that has an 

unaffiliated, etc.. But if the institution charges for 

housing, charges for books, charges, etc., any of those 

kinds of things, the expectation is that the school would 

fully write off any remaining debts that the student had 

in order to essentially put the student on sound 

financial footing. And when they depart, that would be 

the condition.

MR. WEGLARZ: Thank you.

MS. K. SMITH: Alright. Carolyn?

MS. FAST: Hi. Just two points. One, I 

wanted to indicate really strong support for this 

provision that the Department has proposed as something 

that could be very helpful to, students who are in a bad 

situation. And by creating this sort of discretion for 

schools to make the decision to avoid some work and 

inconvenience and really benefit the students. I think a 

terrific idea and a really good way of creating 

incentive. I also just want to say that unfortunately, we 

have seen some bad actors, schools that seem to have as 
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part of their business model, enrolling students that 

really would not be generally for-profit colleges, often 

online, and often have the incentive to try to enroll 

students in programs that they're not going to be able to 

complete or they would not benefit from or don't really 

benefit any students. And in that case, those are 

situations where this unfortunately would not really help 

because, since it's giving the school the discretion, you 

know, we still have the problem of students who would be 

in worse positions, lose their future eligibility and 

potentially have this problem. So I don't have a great 

solution for it right now. But I wanted to flag that as 

something that we can think about as we move forward in 

these discussions.

MS. K. SMITH: Thank you, Carolyn. 

Diana.

MS. HOOLEY: Thank you. I had a 

question about, it's a process question, I suppose, and 

it may be that it's answered in another regulation. So 

I'll just pose the question and you can let me know or, 

you know, respond later. But is there a reporting 

requirement with this as far as the school certifying 

that the institutional debt has actually been waived? 

This would be important, you know, down the line if for 

some reason there's some point of error where the 
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school's trying to collect this and the student would 

need to be able to say, no, this has been written off. Or 

something like that. I'm just wondering if there's, like 

a reporting or compliance piece to this.

MR. MUSSER: It's a good question. 

There are really very few reporting specificspecifically reporting items that an institution has to 

complete related to return of Title IV. However, they are 

required to maintain documentation of all the things that 

they do with R2T4. And it is one of the areas that nonfederal and Federal auditors review very, very closely. 

So most of the compliance work on return of Title IV 

happens on the back end, at the end of the year. So, for 

example, if this were to be published and implemented, 

what the Department would likely do is update its audit 

guides to direct auditors to consider cases where the 

school has forgone the R2T4 calculation and ensure that 

all of these conditions have been met. They might pull a 

sample of files, etc. So although the schools don't 

report directly to the Department, there is and as I 

mentioned, it's one of the top ten findings, there is a 

compliance apparatus for dealing with R2T4 generally and 

that we could incorporate this into.

MS. K. SMITH: Alright. Thank you. 

Barmak?
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MR. NASSIRIAN: I want to go back to a 

very important point that DC raised. It's something I 

struggle with in connection with this and other issues, 

and that is the conundrum that we collectively face in 

trying to figure out which is in the student's best 

interest. Allowing the school to keep the money, and 

relieving the student from facing institutional balances 

that may prove insurmountable and may completely 

checkmate their ability to pursue education. Which is 

obviously not a good thing. Or in the alternative, 

depleting their eligibility for future aid, which is the 

consequence of making that first choice. I know there is 

some misgiving among some of the experts we've spoken 

with regarding the treatment proposed here for 

incarcerated individuals. But the very idea of billing 

somebody who's incarcerated for a balance because they 

were transferred or in lockdown just strikes me as so 

counterproductive that my own inclination is to error on 

the side of thinking, the lesser evil would be to allow 

the institution to keep the funds to eliminate- to return 

the funds, and to eliminate any balances that the student 

might otherwise face. Even if that means that they 

deplete some of their Pell eligibility. So I think I'm in 

support of the language, but I think DC raised a pretty 

important point. There are no clean outcomes here. We are 
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making a choice, it seems to me, between the lesser of 

two evils. And that has to do with the fact that R2T4 

exists in the first place for really low income students, 

it shouldn't, but that's the choice we have. Thank you.

MS. K. SMITH: Thank you, Barmak. 

Robyn.

MS. R. SMITH: So I just want- we're 

going to talk about the incarcerated borrower provision 

separately, correct? I just want to make sure that that's 

right because I don't think that's on the table yet. And 

I definitely have concerns about that proposal.

MR. MUSSER: That's right. I think and 

I want to make sure with Barmak, I think he was referring 

to this particular exemption as it might apply to an 

incarcerated student. If that's wrong, Barmak, correct 

me, but I think that's what he meant.

MS. R. SMITH: Okay. Got it. Thank 

you. I think I'll just wait to talk about those in the 

next section. My concern also, I echo both Barmak and 

Carolyn's concerns. I do think this is- it's great the 

Department is thinking about this. I'm just concerned how 

it could be abused by schools. Like if a student only 

completes 10% of the program and they withdraw, but now 

they're on the hook for repaying- sort of that all count 

towards their lifetime eligibility limit. So that again, 
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is an issue for us.

MR. MUSSER: I want to make sure I 

understand. Part of the proposal is that the school would 

return all of the students Title IV funds for the period. 

That act automatically eliminates both debt and any 

lifetime eligibility used. So when you return Pell Grant 

funds in those circumstances, the Pell [inaudible] also 

is reduced in those cases.

MS. R. SMITH: So just to be clear, it 

means the school's still returning the Title IV aid, but 

they just don't have to do the R2T4 calculation because 

they're, okay. Thank you.

MR. MUSSER: Yeah. Even if they did 

the R2T4 calculation, they would end up returning the 

vast majority of the aid in many of these cases. But this 

is essentially just makes them return all of it along 

with these other conditions.

MS. K. SMITH: Thank you. JoEllen.

MS. PRICE: Just so that I fully 

understand. And I know Zack also posed this question. So 

what we're doing in this instance is we're allowing the 

school to determine that a student is considered as 

having never attended, even if they attended classes, 

lived in the dorms, ate the meal plans. If we comply with 

the requirements of treating them as if they never began 
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reversing all the charges, reversing all the aid, am I 

correct in saying that?

MR. MUSSER: That's correct.

MS. PRICE: Thank you.

MS. K. SMITH: Okay. Alright. Seeing 

no other comments, we'll move on to our next section, 

which I believe is on page three. Correct?

MR. MUSSER: That's right.

MS. K. SMITH: Alright. So (A)(7) on 

three.

MR. MUSSER: And as we were talking 

about earlier, this is the last withdrawal exemption that 

we'll talk about today. And it pertains specifically to 

confined or incarcerated individuals. So as the 

Department has implemented the changes in the FAFSA 

Simplification Act that allow, find or incarcerated 

individuals to qualify for Pell Grants for the first 

time. And as we are continuing to implement the Second 

Chance Pell experiment, we have seen on numerous 

occasions some very significant challenges that both 

students and schools face. When students are required to 

cease their coursework for reasons that are completely 

out of their control in their environment at prison 

facilities. So we've seen a number of different 

circumstances that have come up. For example, there are 
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cases where a prison may fully lock down for a period 

that happened during the Covid-19 pandemic, and schools 

were required to discontinue their coursework during 

those periods. In many cases, schools have ways of 

bridging the gap between those periods, depending on the 

type of program, they can allow students to go on what's 

called an approved leave of absence for a period. But 

they are not permitted to do that if they discontinue 

coursework. And in many of the other- and there are also 

cases that where that would never be an option for 

institutions here. So what happens in these cases is that 

the student is forced to discontinue their coursework 

after beginning attendance through no fault of their own 

and through circumstances that often affect the general 

instruction that the institution is offering, but may 

affect just the student. And then they are subject to the 

return of Title IV funds process, which could require 

that some of their Pell Grant be returned. This is also 

possible. And though this would be a very rare 

circumstance that the school, the student may even owe a 

Pell overpayment in these circumstances, that is 

sometimes an outcome of the return of Title IV 

calculation. So the Department, is attempting to avoid 

some of the very negative circumstances that could apply 

in these cases. We are still working through what our 
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full legal authority to do this would be. How far we can 

go in this area. But what we decided to do was present 

the committee with the best idea that we had as of today, 

and let you respond to that and give us feedback, and 

we'll come back in the next round with what we believe is 

both legally supportable and the best possible policy 

option under the circumstances. But under this proposed 

exception, the school would not have to return funds in 

certain cases, when incarcerated students are forced to 

discontinue their coursework for reasons outside their 

control. In these cases, the student would still be 

subject to the Pell lifetime eligibility. So as Barmak 

mentioned, that is a downside to any situation where a 

student doesn't complete coursework and doesn't make 

progress toward completing a credential, but still uses 

their Title IV funds for that period. So even if the 

student doesn't have funds returned, they do still have 

whatever funds are remaining on the student's account 

would add toward their lifetime eligibility. So we 

proposed to create a provision with a non-exhaustive list 

of conditions that would apply, as well as give the 

Department the discretion to establish other conditions 

that we become aware of as time goes on. And keep the 

financial aid community aware of those all of those 

conditions that may apply. So, Vanessa, if you could 
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scroll down to the red text here. So this is seven, this 

is the last of the withdrawal exemptions, and it's just 

below the item that we just spoke about. So under (7), a 

confined or incarcerated individual, as defined in 34 CFR 

600.2, is not considered to have withdrawn any time the 

requirements of an approved leave of absence are not met. 

If any of the following events occur: a complete 

correctional facility lockdown, involuntary transfer to a 

different correctional facility, which we understand is 

very frequent. And it affects many students in our second 

chance Pell experiment and elsewhere. And as I mentioned, 

other events as determined by the Secretary, which we 

would formally announce to the community, in preparation 

for a new award here. So this is page (7), by the way. 

Thank you, Krystil, for keeping me on track. But I'll 

stop there and open it up for discussion.

MS. K. SMITH: Okay. Seeing nothing 

initially from Denise. Any additions. We'll go with 

Robyn.

MS. R. SMITH: Yeah. Dave, you 

mentioned the concern that we have, which is that, this 

would mean that students could end up spending down their 

Pell eligibility in cases where they never earned any

credits. And also, and I've been talking to the folks 

that work with the prison, the prison programs, and they 
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have concerns that right now they work with a lot of 

these schools to either get the students on a leave of 

absence because some of them can return, or to go to do 

what is to give them a full refund and provide a more 

generous sort of refund policy of the type that you that 

is in (A)(6). And so we're really concerned that this 

provision will remove the incentive of schools that are 

already working with the program with these programs that 

already do give these kinds of generous refund policies 

or that they won't be encouraged to do so in the future. 

So that's the really the main concern we have, and I'm 

not sure how to address that. But that's the big concern. 

The other is that there is concern that schools, if this 

provision is there, schools will enroll people that are 

at a very high risk of being transferred or being unable 

to complete the education because of different 

circumstances in the prison. So that's another concern. 

I'm not sure how we address that. I really- we really 

appreciate the Department's thinking about this. But we 

really don't want to see people losing their Pell Grant 

eligibility limits when they can get a more generous 

refund policy from the institution.

MS. K. SMITH: Okay. Joe?

MR. WEGLARZ: So I guess I'm trying to 

understand. One of the criteria was an involuntary 
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transfer. And just to give you some history, I used to 

teach in correctional facilities years back for a number 

of years. So I know it's a political discussion, so I 

don't want to go down that track at all. But can they 

voluntarily request a transfer? And if so, I'm not sure, 

you know, whether or not this proposed policy should 

apply to that situation. And I don't know enough about 

the policy and correctional facilities, so I could just 

be coming in from left field on this discussion. But, 

because if they also, if they do get transferred, and I 

know logistically this sounds like it would be very tough 

to monitor. I mean, I remember when I used to teach in 

the facilities, they were some of them were transferred 

based on disciplinary issues and I'm not sure whether or 

not, should that be a consequence when it comes toward 

their Federal aid eligibility or future Federal aid 

eligibility? So did I make sense?

MR. MUSSER: You did to me. Thanks, 

Joe. And just to clarify, at least as currently worded, 

the proposal would only apply in involuntary transfer 

situations where the individual is transferred against 

their will. And for the reason you just described, we 

didn't feel that a voluntary transfer was a situation. 

Yeah.

MS. K. SMITH: Okay. Thank you. Jo?
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MS. BLONDIN: Yes. A lot of community 

colleges have these programs. And just something that 

concerns me always is a student losing any type of Pell 

eligibility because it's a situation such as this. So I 

would just again echo previous comments and make sure 

that we're doing everything we can to preserve a 

student's Pell eligibility.

MS. K. SMITH: Thank you. Robyn.

MS. R. SMITH: Thanks. One option 

would be to add in (A)(6). Sort of this kicks in only if 

(A)(6) is something that the school tries first. I don't 

know again how you would do that because (A)(6) is sort 

of a voluntary program. Just trying to think through how 

we could encourage schools to do (A)(6) before they get 

to (A)(7). I also want to point out there are other 

circumstances that are involuntary that really impact 

prisoners that you might want to add to the list, 

including, if there's a medical transfer for a medical 

situation where the prisoner is transferred to another 

facility. Sometimes solitary confinement. And then I 

understand there's often loss of internet access for 

extended periods of times in prisons. So that's anotherthose are three situations that I would go down. I also 

want to caution against judging prisoners because we 

don't- we aren't in prison. They're already being 
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punished and in very difficult circumstances. And things 

happen in prison that a lot of people don't have control 

over. So, anyway, I just don't want to go down the road 

where we're judging people who are already in prison on 

whether or not they can get an education.

MS. K. SMITH: Alright, Robyn. Now, 

Denise, I saw your hand. Did you? Did you, Denise?

MS. MORELLI: No, I was just going to 

say we're going to take back all the suggestions, Robyn. 

So and I think we'll be looking at the language in light 

of comments.

MS. K. SMITH: Okay. Thank you. 

Alright. Seeing no other comments, we'll move on to 

668.22 (B)(2). Dave that's going to be on the towards the 

bottom of page three.

MR. MUSSER: Alright. Thank you. 

Vanessa, already has it up. So on this item, this is 

probably a little bit more minor. We propose to codify 

into regulation, some very, very long standing 

subregulatory guidance, I think, going on for almost 25 

years now, requiring schools to determine the date that a 

student withdrew within 14 days for attendance taking 

programs. So the issue here is that, there is a date 

called the date of determination, that recognizes that 

the clock for completing returns shouldn't really start 
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ticking until the school is aware that an individual has 

withdrawn. And so for schools that are not required to 

take attendance, the date of determination is often the 

end of the period if the school finds out that the 

student has just walked away without their knowledge, or 

it's on the date of an official withdrawal if the school 

is officially informed. But for schools that are required 

to take attendance, there is an expectation that the 

school be aware of a student that is not attending, and 

then within a reasonable timeframe, make a determination 

that they have fully withdrawn. So the Department 

published subregulatory guidance many years ago, 

requiring schools to make that determination within 14 

days of the student's - of the day the student ceased 

attendance. And what we're doing here is essentially just 

putting that into actual regulatory text, where it was 

previously subregulatory guidance. And, Vanessa, if you 

could scroll down to page eight, where we have the actual 

red text. As you can see, we simply added the phrase 

within 14 days of a student's last date of attendance. 

And by the way, this applies only if you scroll up just a 

tiny bit, Vanessa, for a moment, this is for the 

withdrawal date for a student who withdraws from an 

institution that is required to take attendance under 

668.22 (B), you scroll back down, Vanessa. And then we 
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simply deleted the cross reference there at the end of 

that one, but that doesn't really have too much effect. 

And I'll stop there and open it up again.

MS. K. SMITH: Okay. With nothing 

additional from Denise, we'll start with JoEllen.

MS. PRICE: Okay. Quick question. So 

most of my career I've worked at schools that were not 

attendance taking schools, but currently I work at a 

school that takes attendance. And what I'm asking is, are 

you saying that the last time a student attended was 14 

days ago, and they haven't attended in the last 14 days, 

we now have to consider them unofficially withdrawn? 

First question. Second question is, what do you mean by 

days? Do you mean calendar days? Do you mean business 

days? Do you mean scheduled class days? Those are my two 

questions.

MR. MUSSER: Yes, it is calendar days. 

And we can go back and clarify that. And yes, the answer 

is, what happens in most cases, at least in my experience 

when speaking with schools, is that, the school will 

begin reaching out to a student, when a certain number of 

days has passed. So let's say ten, eleven days, and then 

they'll make a decision if they don't hear from the 

student at all, or if they hear a confirmation from the 

student that they don't intend to return, then they will 
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move forward with the date of determination. In some 

cases that happens, and then they establish a date of 

determination on that date, or they don't even do that. 

And they just, move forward a little bit in the hopes 

that a student will reach out. We don't encourage that, 

but it could happen. And then if the student begins 

attendance again, obviously the clock is reset and then 

you have another 14 days. So the expectation, though, is 

that the clock for doing the returns begins on the 14th 

day. And so the school is expected to be aware that the 

student is no longer in attendance at that point.

MS. K. SMITH: Thank you, Dave. 

Alright. Seeing no other comments on that section, we can 

move on to the next section. Which is on page four.

MR. MUSSER: Yep. This one starts on 

the top of page four. And Vanessa, if you could scroll 

down just a tiny bit more. Perfect. Okay. So this item is 

designed to increase the accuracy and simplicity of 

performing R2T4 calculations. So, as you can see here, 

accurate withdrawal dates are a very important part of 

the R2T4 process, both for general program integrity and 

for fairness to students. Many institutions, as Jo just 

mentioned, are not attendance taking. And in fact, most 

traditional institutions are not required to take 

attendance. And therefore are not subject to the very 
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strict requirements that accompany attendance taking 

requirements. For many years, there has been an open 

question about whether distance education programs are 

required to take attendance. And the Department has taken 

a number of different positions on this topic over time. 

There's a recognition that in many cases, institutions 

are collecting a substantial amount of data about 

students when they are enrolled online. Including but not 

limited to, logins, participation in classes that are 

that are online, participation in chats, submitting 

quizzes, participating in other learning activities on 

the learning management system, etc.. So an open 

question- a question has come up, well, if a school is 

collecting that much information about a student's 

engagement, is that student- is that institution 

effectively required to take attendance? Now, under a 

traditional program on campus program, if an institution 

requires its instructors to take attendance, the 

institution is treated as attendance taking. Because we 

had a number of issues with this long ago. Schools would 

take attendance. They weren't technically required to by 

an outside entity, but they would take attendance. And 

they would use that attendance to justify a withdrawal 

date, if it was beneficial to the R2T4 calculation. So, 

for example, if they recorded a date of attendance on or 
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after the 60% point. Which is the point at which you 

treat the student as having completed the entire period 

and they earn 100% of their aid. Then they would use that 

date. But if they had, even though they had attendance 

dates, that showed that student completed far less. They 

would often simply revert to the midpoint of the period, 

which is an option for schools that don't take 

attendance. Essentially, it's the law's way of 

acknowledging that in some cases, the school just doesn't 

have any attendance information about a student. Except 

to note that they've attended at least once, and that 

there's not a good date to use. So the midpoint is used. 

And the school essentially has to return 50% of the 

student's Title IV aid for the period. So the Department 

has wanted to ensure accuracy in R2T4 calculations for 

some time. And we believe that in most cases, and in 

fact, under statutory requirements, institutions collect 

offering online programs collect attendance quite 

frequently. They are already required to ensure that 

there's regular and substantive interaction between 

students and instructors, which is itself a form of 

academic engagement and attendance. In addition to all 

the things I just mentioned, submitting assignments, 

attending synchronous lectures or course discussions, 

etc. So for all these reasons, the Department, proposes 
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to eliminate the confusion associated with whether online 

programs are required to take attendance. And we are 

proposing to require any distance education course to be 

treated as attendance taking, which would require 

institutions to use their data from their learning 

management system, for example, to determine a student's 

last date of attendance and use that in the R2T4 

calculation. You can scroll down a little bit more, 

Vanessa. It also means that the school will be required 

to perform- to determine the student had withdrawn 

relatively soon after they ceased attendance. As we just 

discussed a few moments ago. So, Vanessa, I think we can 

scroll down to the changes to the regulatory language. I 

believe that's on page eight. Yep. So here again under 

(B) withdrawal date for a student who withdraws from an 

institution that is required to take attendance. The 

institution is required to take attendance if these are 

the conditions that may require a school to be treated as 

attendance taking. We would simply add at the end of that 

section, (D) the institution offers a program through 

distance education as defined under 34 CFR 600.2. And I 

will pause there and open up the floor.

MS. K. SMITH: Okay. I will start with 

Denise because you have some additional comments.

MS. MORELLI: Well, I just wanted to 
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point out this is an area that we've had abuse from what 

the Department considers bad actors. So I just wanted to 

throw that out as an addition to the reasons that Dave 

added that we have seen abuse from bad actors in this 

area.

MS. K. SMITH: Alright. Thank you. 

Denise. Alright. We'll go with Jo.

MS. BLONDIN: Yes. Just a point of 

clarification. Like I said, I'm new at this. If you could 

put the regulation back, I mean, the language back up 

there because the last item that was added said, and if 

you offer a program through distance education, are you 

talking about attendance taking for the purposes of 

distance education, or does that flag and mean the entire 

college is distance ed? I'm just curious. Thank you.

MR. MUSSER: So we've talked about 

this at length. That's an extremely good question as it 

pertains to this topic. We've talked about this at length 

and our view and we may need to tweak the language there 

a little bit. But our view here is that an attending- a 

distance education course is essentially an attendance 

taking course. So any time the student is enrolled in 

distance education that they would essentially, under 

this proposal be treated as attendance taking for that 

course. But what that actually means, and this is an 
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important technical detail, is that if the student is 

enrolled in a combination of online courses and on 

traditional courses, then they would not be considered 

attendance taking for the period in question. Because 

although you might have accurate attendance records for 

the one course, you would not have accurate necessarily 

have accurate attendance records for the remaining 

courses, so you would not know whether the students 

records from that one course were sufficient. Although, 

if you did have a record that showed, for example, that 

they completed more than 60%, you would be allowed to use 

that under those circumstances. So what we are focusing 

on an individual course being attendance taking not 

necessarily an entire program. It wouldn't make your 

entire program attendance taking if you had, for example, 

one distance education course.

MS. BLONDIN: And it would be handled 

by students?

MR. MUSSER: And it would be handled 

what? Sorry.

MS. BLONDIN: By students.

MR. MUSSER: Yes, that's right.

MS. BLONDIN: By students enrollment 

type. Okay. That's complex. Thank you.

MS. K. SMITH: Thank you. Jillian.
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MS. KLEIN: Actually, I have a further 

nuance to that question, which is I don't think that's 

what the language says. So the first part of the 

regulatory text says an institution. So the whole 

institution is required to be taking attendance if they 

offer one program through distance Ed. So I'm trying to 

understand. I think I have a similar but different 

question to start as Jo asked about because and I 

understand that this section has always said an 

institution, but I think it's, we're not, I mean, 

obviously Capella is, but like, we're not in an 

environment where most institutions offer only distance 

Ed or only on ground.

MR. MUSSER: We'd welcome feedback 

about a way, a better way to word that, but that was not 

our intent to essentially apply this requirement to an 

entire institution or an entire program. Just because of, 

you know, one distance education course.

MS. KLEIN: Okay. And then sort of my 

second comment is, just thinking about- and, I mean, I 

know you'll get this, Dave, in terms of, like, direct 

assessment programs. I strongly believe that there needs 

to be sort of a carve-out in this idea for direct 

assessment programs, given that those programs operate 

where the learning is agnostic, sort of to the source 
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provided by the institution. And so, you know, would love 

to think about how we can consider that for purposes of 

this conversation. I think there's a separate 

conversation about, and I'll give an example here at 

Capella, for our doctoral programs, often in doctoral 

programs. And I haven't been all the way through one, so 

I think I'm speaking accurately, but there are probably 

other experts at the table who can speak to these. 

Doctoral programs, either in a more traditional sense or 

through an online format, there's lots of activity and 

work and learning that's happening outside of a 

classroom, outside of the work that's being logged in the 

course room, because students are doing research, they're 

meeting, you know, with other folks sort of outside of 

the academic context, and they're doing a ton of writing. 

And so, you know, we'd love to come back with a proposal, 

I guess, to the Department and anybody else who's sort of 

interested in this topic about ways that we can make sure 

that we're not disadvantaging those types of- students in 

those types of programs where we know that the reality of 

their educational experience maybe doesn't match with 

sort of the more traditional construct of online 

education that I think the Department's trying to get at 

here.

MS. K. SMITH: Okay. Thank you. Erika?
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MS. LINDEN: Thank you. I do want to 

reiterate, I think the way it's written, it would require 

an institution that has both on campus and distance Ed to 

become fully or become attendance taking for everything. 

So I would like you to consider making that language more 

specific. Are we at the point of talking about how we 

know- how we're going to determine whether the student, 

the distance learning student, is still engaged or not? 

We're going to do that later.

MR. MUSSER: I think it's relevant 

here.

MS. LINDEN: Okay. Well, I just want 

to suggest that we have some- we offer some flexibility 

for students or for institutions to use either 

information tied within their LMS about students activity 

with course-specific activity or logins and not have one 

be the only method by which to do that.

MR. MUSSER: I want to be a little 

careful here. Thank you, Erika. I appreciate that. The 

Department's policy, is that, merely logging in is not a 

form of academic attendance. That only demonstrates their 

interaction with the system. But logging in and 

performing any other academic activities. So, for 

example, taking a quiz, looking at one of the learning 

activities, engaging in the class. The combination of 
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those two things represents academic attendance, so that 

would be the only time that you would record attendance.

MS. K. SMITH: Thank you. Robyn?

MS. R. SMITH: I want to express my 

thanks to the Department and my very strong support for 

this provision. The legal aid organizations, we have seen 

a massive amount of abuse in this area over the years. I 

have a couple clients who enrolled in online programs at 

online schools. They didn't attend a single a day and yet 

the schools did not return any of their Title IV aid. And 

it should be noted that it's very difficult for students 

to get an unpaid refund discharge. Because the Department 

basically looks at whatever the school has reported and 

will deny an unpaid refund discharge to the student 

unless they can provide documentation showing that they 

were in fact at the school. That kind of documentation is 

very hard to get from online institutions. They don't 

traditionally provide that in response to FERPA requests 

and then you really have to push them to give you the 

online records. And so I really think that this is an 

important provision and strongly supported. I also am 

concerned- raised the same concerns as Dave regarding 

logins alone being sufficient to prove attendance. 

Thanks.

MS. K. SMITH: Okay. Thank you. 
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Carolyn?

MS. FAST: Yes. I also strongly 

support this provision and also have a similar concern. 

But, just wanted to mention that, I have heard that in 

some of the situations where students are preyed upon by 

predatory programs, that they are actually pressured to 

log in at various points in order- so that the school can 

make the case that they, you know, that they are 

attending. So I wanted to reiterate this as a form of 

abuse that the Department should be responding to. And I 

do think it's appropriate to make sure that the 

attendance is not equal to just logging in, because we 

have seen that as an area where bad actors have sought to 

abuse the system.

MS. K. SMITH: Alright. Barmak?

MR. NASSIRIAN: Carolyn said it well, 

I'll just reiterate that we do get a lot of complaints 

that schools are essentially manipulating data withdrawal 

by inducing students to log in to what looks like an 

academic LMS for purposes of procedural interaction with 

the school. So, when the Department re-drafts this as I 

think it probably will have to given the objections that 

have been raised, it would be good to make sure that only 

substantive academic interactions may be used, and that 

they should all be used consistently and tracked in the 
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system with audit trails that can be validated after the 

fact if there's a dispute. Thank you very much.

MR. MUSSER: Thank you, Barmak. And I 

would call your attention to the definition of academic 

engagement in 34 600, CFR 600. That's where that issue is 

dealt with. Those are our requirements for treating a 

student as having attended. But we'll certainly take that 

comment.

MS. K. SMITH: Alright. Before we get 

to Denise, I do want to note that, Scott Dolan is coming 

in as alternate for the private nonprofits. His hand is 

up. Denise?

MS. MORELLI: I just want to thank 

everybody for the comments, but do want to make sure the 

committee knows that we do- the program reviewers do look 

at this in our compliance area, we are looking at the 

engagement and whether or not it's just a log in. And we 

are so aware of predatory schools, you know, forcing 

students to get back on. And so it is something the 

Department is looking at. So I just wanted to make sure 

you know we are aware and we are working on it in our 

compliance work.

MS. K. SMITH: Alright. Thank you. 

Diana?

MS. HOOLEY: We also strongly support 
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this provision for requiring attendance for distance Ed 

learning. It's something that we do see complaints from 

students for and about, you know, with the issue of 

having to, you know, owe so much more than they were 

ever, you know, actually incurred. So we do strongly 

support this proposal. Thank you.

MS. K. SMITH: Scott?

MR. DOLAN: Yes. Thanks so much. I 

think I'm fully in support of the importance of having 

accurate withdrawal dates. I'm curious as to the evidence 

that we have that tracking withdrawal dates and its 

impact on return to Title IV is substantially different 

for a distance Ed courses than it is for residential 

traditional face to face. Having taught in both, I can 

tell you, students, just because they're on campus, do 

not always raise their hand to tell you when they're 

leaving a specific course to withdraw. So I just, you 

know, it would be helpful to have a bit more evidence of 

where these bad actors are, what the scale and scope of 

that is and, you know, why there's one provision that's 

going to apply differently to distance Ed than it is tothan it would be to on campus programs. And I also am a 

little bit concerned that there's an assumption that we 

have a clear definition of what a distance education 

course is and that those are consistently implemented 
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across institutions in the same way. We are a distance 

Ed, fully distance Ed institution, we have mechanisms in 

place to track not only logins but attendance as is 

required by financial aid. There are pretty sophisticated 

systems that we use to do this being fully online. The 

provision here, as stated, is going to require private 

nonprofits that have distance Ed of any variety to think 

about and implement similar kinds of systems. And to do 

so without a clear definition of what is truly a distance 

Ed course for that institution. And if the goal is to 

simplify the process, I'm not certain the intended 

language is doing that for the constituency that I 

represent.

MR. MUSSER: Thanks, Scott. I would 

just make sure I think this is what you're referring to 

but there is a definition for distance education under 34 

CFR 600.2. I think a strong argument could be made that 

it is not a clear cut definition. So I definitely take 

that point. But that's the definition that institutions 

would be operating under.

MR. DOLAN: I guess, just to quickly 

respond. But there's an assumption, I think, that's made 

in the language around learning management systems and 

how those are being used and monitored and how easily it 

would be to implement this at more traditional 
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institutions and fully online institutions. So I guess, I 

also get a little concerned that we talk about the 

technical capability of monitoring distance education in 

one venue as being relatively straightforward and easy 

when it comes to this provision. But in another instance, 

under another issue around clock hours, we're saying it's 

too difficult to manage and monitor asynchronous online 

activity for institutions, so we should remove that. So 

unrelated, but I think, you know, just being clear about, 

you know, what this would mean and the implications for 

institutions just being clear about the language so that 

we can define it.

MR. MUSSER: I appreciate that. And I 

guess I just want to make one clarification about the 

distinction between those two things. Whereas, attendance 

taking in distance education, is I acknowledged that 

there are cases where it may be difficult to suss out 

what's really attendance and what's not. And any activity 

on any given day counts as attendance in that 

environment. Whereas in a clock hour environment, the 

school actually has to track the students ongoing 

activity minute by minute in order to determine whether 

they've completed specific hours within an activity. And 

we do believe that that requires greater expertise than a 

more traditional environment where it's less frequent.
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MS. K. SMITH: Alright. Barmak?

MR. NASSIRIAN: Yeah, I appreciate the 

comments. I just have to say we do see a disproportionate 

faces of problematic behavior in online environments than 

we do in person. You can understand why it's the old 

line, on the internet, nobody knows you're a dog. It's 

much easier to defraud people from a distance than it is 

to do so in person. And I think part of the rationale 

that the Department is using here is that the Department 

is attempting to balance compliance burdens against the 

benefits that would ensue as a result of imposing 

additional compliance. In this case there are there are 

systemic advantages to distance delivered programs that 

enable better reporting, better recording and better 

reporting of attendance activities in ways that would be 

problematic and difficult to impose on in-person 

programs. So I think there is a rationale for treating 

the two a little differently. And, yes, you know, 

capabilities vary from program to program, institution to 

institution. But if you can't, I mean, it's really I 

struggle to understand how it's possible to offer a 

distance education program that doesn't have audit trails 

to know who is in and what they're doing. If you don't 

have that capability, you're probably not offering a 

particularly robust academic coursework. So I think there 
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are reasonable grounds for the Department to do this, and 

I strongly support what they're doing. There needs to be 

a little redrafting, it seems to me, around the margins.

MS. K. SMITH: Okay. Seeing no 

additional comments. I think we are free to move on to 

page four, the middle, starting with section 668.22 (F).

MR. MUSSER: That's good. I think we 

probably have time for about one more of these topics 

before we break for lunch, and this is a complicated one, 

so I hope we can get through this one. So, we're going to 

go and talk about clock our programs again. Now, first a 

few basics. There are actually two different units of 

measurement that we use for R2T4, for credit hour 

programs and for clock hour programs. Credit hour 

programs use days as the unit of measurement. So when you 

establish your denominator, you establish a number of 

days in the payment period or a period of enrollment, and 

you look at how many days the student completed within 

the longer period. For clock hours, it's very different. 

The denominator for clock hours is actually scheduled 

hours. It's not completed hours as it is for credit hour 

programs. It's scheduled hours. This was a change that 

was made by Congress back in 2006, in the Higher 

Education Reconciliation Act. And is intended to make the 

clock hour calculations more closely aligned with how 
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credit hour calculations work, because you have no idea 

how much a credit hour student is attending throughout a 

period. They're just moving through time and similarly 

scheduled hours elapsing is intended to be a treatment, a 

very similar treatment for clock hour programs. So, there 

has been, it's very straightforward to do this 

calculation in the first payment period in a clock hour 

program. Essentially what the school does is they take 

their scheduled instruction calendar and they add up the 

amount- number of hours of instruction that the student 

was expected to have completed on each day and that adds 

up over time. And then whenever the student withdraws, 

the school looks at how many hours they would have been 

scheduled to complete at the time of the withdrawal. So, 

for example, if they, would be expected to have done 300 

hours when they stop attending, and the payment period 

was 450 hours, that's the numerator and denominator for 

the R2T4 calculation. However, the question becomes more 

complicated when you get into second or subsequent 

payment periods. And there has been a long standing 

question among institutions that the Department has 

declined to answer, for many years because we did not 

have regulatory support for either option. So I'm 

actually going to walk you through an example that 

distinguishes between the two ways that this can be done, 
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and to express the difference between the two. And I want 

to be clear, currently both of these are options are 

permitted. We don't require schools to do one or the 

other. So if they're doing either of these they are in 

compliance. So actually, Vanessa, can you scroll back up 

a second? Yeah. Here we go. So the basic outline for this 

example is, the school has an academic year of 900 hours. 

As a result they have a two payment periods in the 

academic year, each of them 450 hours. The students in 

these programs, in this program, are scheduled eight 

hours a day. And there are 70 class days, equals 560 

cumulative scheduled hours for this particular student. 

The student completes the 450 hours on day 68, and then 

withdraws on day 70 just after beginning his second 

payment period. And so let me stop there to remind 

everybody that, in order for the student to get 

disbursements from the second payment period, they have 

to complete both the hours and the weeks, half the hours 

and the weeks in the academic year, which means they have 

to complete the payment period of 450 hours. So you can 

kind of sense already there's a difference between what 

the student has completed and what they were scheduled to 

complete at the time that they withdrew. So now, Vanessa, 

scroll down a little bit to the actual two methods. So at 

the time that the student ceased attendance, they were 
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scheduled to complete 560 hours. So if you only look at 

that and take nothing else into account, then you would 

simply take 560, you would subtract the first payment 

period, 450, and that would give you 110 hours. 110 over 

450 is 24.4% earned for the second payment period. But in 

actuality, the student has not actually completed almost 

any portion of the second payment period at the time that 

they withdraw. The student completed the payment- the 

prior period just two days before they withdrew. So under 

method two, the student- we start counting the hours for 

the second payment period on the day that the student 

completes the first one, and there has been two days that 

have elapsed since they completed the first payment 

period. So the student is scheduled to have completed 16 

hours and the calculation would then read 16 over 450 

equals 3.6% earned for the second payment period, which 

is much less, which would require a larger return of 

Title IV funds. So the Department's concern is that 

schools and some schools have little incentive to ensure 

students are progressing in these programs. And they're 

inclined to use the method that earns students the most 

Title IV aid. We're also concerned about the confusion 

that has arisen between the two different types of 

calculations. Many schools don't know which one they're 

supposed to use. We've had questions from auditors about 
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which one is appropriate. So the Department decided to 

select one and use the one that we feel is most accurate 

and also reduces the some of the confusion that surrounds 

the R2T4 process. So if you could scroll down, Vanessa, 

to the regulatory text, which I believe is on page eight. 

So here, this is the section where we are describing how 

to calculate the percentage of payment period completed. 

As you can see, in a 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. 

So it's just making it clear that the scheduled hour 

clock or the scheduled hours begin accruing only after 

you completed the prior period. And I will stop there and 

open it up for debate.

MS. K. SMITH: Okay seeing nothing 

additional from Denise. Any comments on this? Well, Dave, 

you did an excellent job explaining.

MR. MUSSER: Well, in that case, I 

think we can go on to our very last topic for R2T4.

MS. K. SMITH: You think you have 

enough time to cover it?

MR. MUSSER: I think so. I think we 
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will get some discussion on this. So if we go over, we 

can continue the discussion after lunch. So this is the 

final item that we want to talk about today. This is also 

related to the concept of modules in the return of Title 

IV process. We, in the last rulemaking, we established a 

concept known as the R2T4 freeze date. In order to help 

schools determine what the true denominator of their R2T4 

calculations were. The freeze date concept is really 

important because without it, the Department's 

regulations require the school to monitor a student's 

enrollment throughout the period and adjust for numerous, 

potentially numerous changes in enrollment for modules 

from start to finish. Which is very administratively 

complicated for schools and often results in errors in 

the calculation if the school gets any part of it wrong. 

The Free State concept was subregulatory concept that the 

Department used to allow schools to lock in that 

denominator, essentially at a date of their choice, which 

typically is the census date or another date or the 

school locks in enrollment. If you could scroll down a 

little bit, Vanessa. We still feel that this concept is 

somewhat confusing and involves a lot of work on the part 

of the institution to establish what the denominator is. 

It also is different. It differs for a lot of different 

institutions depending on what their policy is. So to 
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simplify the whole process, we propose to modify this 

provision to focus on a much clearer and simpler way of 

determining whether to count the days in a module in the 

denominator of the calculation. And that is to simply 

only count those days if the student attends the module. 

So if the school has a record of a student's attendance 

of the module, then the module is included in the 

denominator of the calculation. There are no other 

considerations that the school has to keep up with. And 

we also felt that this might be help reduce burden, 

additionally, because schools are already required to 

monitor whether students attend at least one day in most 

modules, if they are Pell Grant schools, because they 

have to do that in order to know how much the student 

will qualify for in Pell Grant funds at the end of the 

period, you have to know how much they attended. So I'll 

stop there and we'll go down to the regulatory text just 

so you can see that on page nine. And as you can see, 

previously it read, coursework in that module was used to 

determine the amount of the student's eligibility for 

Title IV HEA funds. As you can imagine, that is a very 

complicated concept. And we've revised that to say only 

when a student begins attendance in the module. And I'll 

open it up for comment.

MS. K. SMITH: Okay. JoEllen?
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MS. PRICE: So it's my understanding 

that you're going to do away with a freeze date, R2T4 

freeze date altogether. Is that my understanding?

MR. MUSSER: That is the proposal 

right now.

MS. PRICE: Okay, great. Because I got 

to tell you, it's been one of the most confusing parts of 

R2T4. And I'm not even sure I know of anyone who 

understands it at this point. So it has been very 

confusing. I think this makes it much clearer. And it'll 

make it a lot easier for us to determine the numerator 

and the denominator for this particular item. So thank 

you for this.

MS. K. SMITH: Okay. So with two 

minutes until noon, and seeing no other comments, I think 

we can go ahead and break for lunch. We'll be breaking 

for lunch, at 12 eastern, coming back at 1 eastern. We'll 

see everyone back promptly at 1 eastern. Thank you.

MR. MUSSER: Thanks, everyone.

 
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Zoom Chat Transcript

Program Integrity and Institutional Quality- Session 1, Day 3, Morning, 

January 10, 2024 

*Chat was copied as presented, as a result minor typos or grammatical errors 

may be present.

From (P) Joe Weglarz NACUBO to Everyone:

Dom (A) for NACUBO has a comment

From P. Jo Blondin, Community Colleges to Everyone:

Agree, Robyn. So many of those students are community college 

students.

From A, Emmett Blaney, Student/Borrower to Everyone:

I would also like to express support for both this change AND 

with Robyn’s suggestion to consider inclusion for Pell grant 

overpayment.

From A, Magin Sanchez, Civil Rights/Consumer Rights to Everyone:

Carolyn lost power, will be stepping in

From P. Jo Blondin, Community Colleges to Everyone:

And we are as community colleges. We have to based on the 

structure of so many workforce programs.

From P, Jillian Klein, Proprietary Instit to Everyone:

+1 Barmak's comments

From (A) Zack Goodwin (he/him), Financial Aid Administrators to 

Everyone:

Adding a question: Can we clarify a bit what it would mean for an 

'institution’s records [to] treat a student as having never attended 

courses?' Removing courses from a transcript? Something else?

From P Jason Lorgan, Public Four-Year Institutions of Higher Ed to 

Everyone:

We would support this proposal and would request the statute 

define institutional charges as tuition if that is the intent. For 

example, if a student lived and ate on campus for a month, that might 

be a pro-rated refund, while tuition and fees might be a full refund.

From Krystil Smith | FMCS Facilitator to Everyone:

Page #7

From A, Magin Sanchez, Civil Rights/Consumer Rights to Everyone:

I echo support for Robyn’s comments for the department to 

consider how to further consider these implications for Pell Grant 

eligibility and what can be done.

From P - Carolyn Fast, Consumer/Civil Rights to Everyone:

Replying to "I echo support for R..."

+1

From P-Robyn Smith-Legal Aid Orgs. to Everyone:

To Department: One option to explore re the incarcerated 

borrower provision is whether the Dept. could exclude the Pell Grant 

from counting towards lifetime eligibility.

From P. Jo Blondin, Community Colleges to Everyone:

Reacted to "To Department: On..." with ���

From P - Carolyn Fast, Consumer/Civil Rights to Everyone:

Reacted to "To Department: One ..." with ���
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From P Erika Linden - Private Nonprofit HIEs to Everyone:

Agree with Jillian's concern

From P Erika Linden - Private Nonprofit HIEs to Everyone:

Yielding to alternate Scott Dolan for private nonprofits.

From Krystil Smith | FMCS Facilitator to Everyone:

Reacted to "Yielding to alternat..." with ���

From P - Carolyn Fast, Consumer/Civil Rights to Everyone:

It should explicitly say that log in alone is not attendance