Financial aid professionals face some new requirements when it comes to returning federal funds for those students who don’t attend or withdraw.
Some schools may have already implemented part of the new regulations, but in a March 27 Electronic Announcement, the Department of Education reminded schools that all changes to the R2T4 regulations are effective on July 1, 2026. In the announcement, the Department outlined the changes that were made to the R2T4 final regulations, including two provisions that could be implemented early. The new regulations apply to students who withdraw, otherwise cease attendance, or begin an approved leave of absence (LOA) on or after July 1, 2026.
Schools that opted to implement some provisions before July 1 are still subject to the same requirements as those who wait until July 1. Several of the regulations have no option for early implementation and are effective July 1.
Additional information is included in the announcement, which addresses the following:
- Institutions required to take attendance: The new regulations codify longstanding guidance that an institution that is required to take attendance must document the date of the institution’s determination that the student withdrew no later than 14 days after the student’s last date of attendance as determined by the institution from its attendance records. The R2T4 calculation must be completed no later than 30 days following the date of determination and any required return of funds to the Department occurs no later than 45 days following the date of determination.
- Clock-hour programs: Schools must use a single method when using scheduled clock hours to calculate the percentage of the payment period or period of enrollment completed for a clock-hour program. The new regulations specify that the scheduled hours in a second or subsequent payment period or period of enrollment do not begin to accrue until the student successfully completes the prior period.
- Modules: R2T4 calculations that use modules will consider a module part of the payment period used in the denominator of the calculation only when a student begins attendance in the module. Schools will no longer need to consider which modules a student was scheduled to attend at the time of withdrawal; thus, R2T4 Freeze Dates will no longer be applicable.
Regulations that could have been implemented as early as February 3, 2025, include:
- Confined or incarcerated individuals: This regulation allows a confined or incarcerated individual in a term-based setting to return from an approved leave of absence at a different point in their eligible prison education program (PEP) than the point at which the student left off.
- Students treated as never having begun attendance: Institutions are exempt from performing the R2T4 calculation if a student is (1) treated as never having begun attendance; (2) the institution returns all Title IV aid disbursed to the student for the payment period or period of enrollment, including all Title IV credit balances provided to the student or parent; (3) institution refunds all institutional charges to the student for that payment period or period of enrollment; and (4) the institution writes off or cancels any payment period or period of enrollment balance owed by the student to the institution due to the institution’s returning of Title IV funds. This is also known as the “Full Refund Withdrawal Exemption.”
- Special considerations: Schools will want to take note of the special considerations for the “Full Refund Withdrawal Exemption” that are outlined in the announcement, as well as the reporting requirements for these students.
Volume 5 of the 2025–26 FSA Handbook includes information on the regulations that may be implemented early. Information on the R2T4 regulations effective July 1 will be published in the 2026–27 FSA Handbook.
Questions regarding the new R2T4 regulations should be sent through the Customer Support form on the FSA Partner Connect website with “Policy Guidance” selected as the topic.
