Return of Title IV Funds: Treatment of Payment Periods that Contain Modules, Compressed Courses, Mini-Sessions, Etc.


The next step in the regulatory process is public comment on the NPRM, due no later than August 2, 2010. Your input by August 2 is vital on these critical Title IV regulatory proposals. All of the issues addressed in the NPRM are significant, but NASFAA has published a preliminary summary of the issues that will likely have the greatest impact on financial aid offices. NASFAA will also publish a series of in depth articles on the issues to help you analyze the proposals. Please copy NASFAA ( on any comments you submit.

The June 18 Notice of Proposed Rulemaking (NPRM) includes two topics related to the return of Title IV funds (R2T4) when a student withdraws before completing a payment period:

  • Treatment of payment periods that contain modules, compressed courses, mini-sessions
  • Definition of an institution that is required to take attendance and use of attendance records

This article deals with the treatment of terms that include courses taught over less time than the full term. The issue of taking attendance will be discussed in a separate article.


Dear Colleague Letter (DCL) GEN-00-24 from December of 2000 gives the guidance that institutions now apply in term-based programs to payment periods that include modules (e.g., a semester comprises three 5-week modules), compressed courses (e.g., a 10-week quarter includes 3-week courses that meet every day as well as 10-week courses that meet three times a week), mini-sessions (e.g., a summer term consisting of combined mini-sessions that vary in length), and so forth. The NPRM would significantly revise that guidance and codify it in regulation.

Note that even if you offer no compressed courses or modules in your regular terms but do combine your summer mini-sessions into one standard term, you would be affected by the proposed regulatory changes.

The guidance in the DCL was intended to allow parallel treatment of students who finish some, but not all of the classes in a payment period. In payment periods where all classes span the entire length of the term, a student who completes at least one course is not considered to have withdrawn. Rather, the student's change in enrollment status may trigger recalculations of aid. Currently, a student enrolled in a term made up of modules or including compressed courses is treated the same way: if the student completes at least one course, regardless of how long it is, the student is not considered to have withdrawn. For example, a student registers for classes in all three 5-week modules comprising a term but completes only the first 5-week module; this student is not subject to the return of Title IV funds calculation. If he never begins one or both of the remaining two modules, his Federal Pell Grant would have to be recalculated based on a revised enrollment status and he would not receive subsequent Stafford Loan disbursements once he ceases enrollment.

The December 2000 DCL guidance included four principles for these types of terms:

  • A student who completes at least one course in a term, regardless of its length, is not considered to have withdrawn.
  • Conversely, a student who does not complete at least one course is subject to R2T4.
  • A student who does not complete his or her first scheduled module but subsequently indicates that he or she will attend another scheduled module in that term may be considered still enrolled.
  • When a student withdraws without completing at least one course, the payment period to be used in the Return of Title IV Aid calculation includes all of the modules that the student was scheduled to attend in the term.

The Department of Education (ED) has found that some schools schedule very short sessions, for example a week in length, at the beginning of a term, and a student who completes just that course is not treated as withdrawn. In a term that is 15 weeks long, such a student could receive aid based on 15 weeks' worth of living expenses, when in fact the student's actual attendance was only one week in duration. Even though the Pell Grant might have to be recalculated based on a change in enrollment status, any disbursed loan amounts applied to institutional charges would not have to be returned. (Loan amounts that would otherwise have to be returned by a student who withdraws would be repaid under the terms and conditions of the loan, just as if the student had completed the term.) Equitable treatment breaks down here, because a student enrolled in a program format where all classes span the term would in fact be treated as withdrawn based on the fact that he or she has stopped attending at a point in time.

[Note that the cost of attendance for a student who was scheduled to attend only one module or only compressed courses that do not in combination span the entire term would include living costs only for the period of time that the student is actually scheduled to attend.]

At the negotiated rulemaking that preceded this NPRM, non-federal negotiators generally agreed with ED that the current policy does not achieve the parity it sought, and that improvement in the policy was needed. However, despite several suggested alternatives, negotiators had not found a reasonable substitute by the time negotiations had to end, and so no agreement was reached on this issue. The NPRM reflects ED's proposal, which a number of negotiators pointed out replaces one type of inequity with another.

Proposed Rule  

The NPRM would add a definition of "withdrawn" under 668.22(a) to read as follows:

    "(2) A student is considered to have withdrawn from a payment period or period of enrollment if, prior to withdrawing--
      "(i) In the case of a program that is measured in credit hours, the student does not complete all the days in the payment period or period of enrollment that the student was scheduled to complete; and
      "(ii) In the case of a program that is measured in clock hours, the student does not complete all of the clock hours in the payment period or period of enrollment that the student was scheduled to complete."

The NPRM would also clarify that when determining the percentage of the payment period completed for credit-hour programs, the total number of calendar days in a payment period or period of enrollment includes all days within the period that the student, prior to withdrawing, was scheduled to complete (continuing to exclude scheduled breaks of at least 5 days).

A number of questions arise from the definition of "withdrawn." First, do they really mean all days (or all clock hours)? It is not uncommon for students to be absent for some days, for example, due to illness or simply because their instructors do not take or demand attendance at all class sessions as long as the student completes all assignments and tests. Clock hour programs also allow a certain amount of excused and unexcused absences. How are limited absences to be treated under this language? If a student obtains a grade, for example, or earns the clock hours for a given course, should that course not be considered to have been completed regardless of absences?

How would leaves of absence be treated? Incompletes?

Questions also arise regarding proof and documentation. If an institution is not required to take attendance, and does not do so, under what circumstances would they have to prove that the student in fact attended all days, and what would constitute that proof? Would the issue arise only if all grades are Fs or if it becomes otherwise apparent that the student has ceased attendance without formally withdrawing?

Here are some examples that we would like to know how to treat under the proposed regulations. If you have other scenarios that you cannot figure out how the proposed rule would treat, include them in your response to the NPRM. Please copy NASFAA on any responses you file with ED.

Sam is scheduled to attend all 3 mini-sessions of a combined summer term; the first runs 6 weeks, the second runs 3 weeks, the third runs 6 weeks. Sam finished the first 6-week session, and began the second. He gets ill after one week, misses the next two weeks, and takes an incomplete. He then attends the third session and completes both it and the course for which he took the incomplete.

Sam then enrolls for the 15-week fall semester for classes that all span the full term. He attends the first 2 weeks, has a relapse and is out for 2 weeks, but upon returning is able to catch up and completes the term.

Peter is scheduled to complete the entire payment period, in which he is registered for courses that span the entire term plus one course that is compressed over the second half of the term. Due to extenuating circumstances is not able to attend the first week of classes. The school determines that his delayed attendance at the very beginning of the term does not impact his aid amounts. Does that assessment essentially change the days he was actually scheduled to complete, or has he failed to complete "all days" even though he attends through the end of the term?

In the fall, Jane is scheduled to complete 3 modules that make up the semester. She completes the first 2, but never begins the third. She received Pell Grant and a loan disbursement for the entire term based on attending 3 modules. Under the NPRM, would the school first recalculate her Pell Grant and then apply the return of funds formula?

In the spring, Jane is scheduled to complete 3 modules that make up the semester; immediately after completing the first module, she notifies the school she cannot attend the second module, but will attend the third. The financial aid office's policy in that case is to recalculate both her cost of attendance and revise her aid based on her new enrollment status. Her costs are high enough that even as revised, her loan eligibility would not change when her reduced Pell Grant is taken into account. Does such re-packaging revise the days she is scheduled to attend, or is she considered to have withdrawn from the payment period? If she is considered to have withdrawn, when is the return calculation performed and when must funds be returned? How does the institution determine whether the student has completed 60% of the payment period? ED's Federal Student Aid Handbook stresses that 60% completion means passing a point in time.

Mary attends throughout the semester, but at the very end of the term becomes ill and misses the last 6 days of class. She takes all of her finals and submits all of her papers, and receives passing grades in all of her classes. Must she be considered "withdrawn" because she did not complete all days she was scheduled to attend?

Edward enrolls for fall semester and for an intersession compressed class that occurs after the end of the term but before the beginning of the spring term. The school attaches the intersession class to the fall term (so as to remain in a standard term environment) and imposes no additional costs for the course. Since the school's policy is to consider the intersession class to be part of fall term and does not charge extra for it, no costs are added to the student's cost of attendance. Edward's plans change, and he drops the intersession class near the end of the fall term before the intersession class begins. Has he failed to attend all days which he had been scheduled to attend?


Publication Date: 6/21/2010

Related Content

Return of Title IV Funds


Return of Title IV Funds Highlights: AskRegs FAQ


View Desktop Version