The school allows for retroactive drops for courses in some situations. A student started the term, received a disbursement, and subsequently, the school retroactively withdrew the student from the term. How does this affect the R2T4 calculation?
The return of Title IV funds (R2T4) regulations do not recognize retroactive institutional refund policies. Please see the following excerpt from page 5-5 of the 2020-21 FSA Handbook: "The R2T4 regulations do not dictate an institutional refund policy. Instead, a school is required to determine the earned and unearned portions of Title IV aid as of the date the student ceased attendance based on the amount of time the student spent in attendance or, in the case of a clock-hour program, was scheduled to be in attendance."
The R2T4 calculation is based on the amount of time the student actually spent in attendance. This speaks to the necessity of making cost of attendance adjustments and aid adjustments due to never attending courses before doing the R2T4 calculation. However, keep in mind that for Direct Loans, at the time of disbursement, you are only required to verify at least half-time attendance.
For additional information, try NASFAA's Student Aid Index. It is a central hub of all the important financial aid resources you need with direct links to legislation, regulation, Dear Colleague Letters, and other ED and NASFAA references. It is updated on a rolling basis with the latest news and changes. Search Return of Title IV Funds and Administrative Capability.
Publication Date: 11/30/2020