Withdrawals and the Return of Title IV Funds

This volume covers how a school should manage Title IV funds when a student completely withdraws from a payment period or period of enrollment.

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There are several updates to the Return of Title IV Funds (R2T4) requirements as outlined in the final rules contained in 90 FR 470 (January 3, 2025) and Electronic Announcement GENERAL-26-20 that become effective July 1, 2026. Two of the new regulatory requirements – Leave of Absence (LOA) allowances for incarcerated students enrolled in term-based Prison Education Programs (PEPs) and a new withdrawal exemption treating students as never attended – were able to be early implemented as of February 3, 2025 and were previously incorporated into the 2025-26 FSA Handbook. The rest of the new regulatory requirements are now included in the 2026-27 FSA Handbook as highlighted below.

In Chapter 1, under the “Date of Determination at Institutions Required to Take Attendance” section, we provided clarification and additional information associated with a school required to take attendance and the 14-day timeframe to identify students who withdraw as outlined in the final regulations contained in 90 FR 470.

Under “Title IV Withdrawals from Programs Offered in Modules” in Chapter 2 Part 1, we added an additional question when determining if a student is a withdrawal if attending modules in order to account for the new withdrawal exemption, bringing the series of questions to ask to six questions.

We added updated guidance and new examples under the “Determining the Number of Days a Student is Scheduled to Complete in Modules” in Chapter 2 Part 1 referencing the new regulatory requirement associated with only counting days in modules students attend and the removal of R2T4 Freeze Dates.

In Chapter 2 Part 1, under “Clock-Hour Programs” section, we added examples and updated how schools with clock-hour programs determine the number of scheduled clock hours to use in step 2 of the R2T4 calculation as required under the new regulations found in 90 FR 470.

Under Case Studies 4 and 5 in Chapter 3 Part 1, we added clarifying guidance (in both the examples and corresponding worksheets) with respect to how an institution must account for scheduled clock hours under step 2 in the R2T4 calculation according to the new regulatory requirements contained in 90 FR 470.

We added updated guidance and modified examples in Case Studies 6 and 7 (including the corresponding worksheets) in Chapter 3 Part 2, with regards to the new regulatory requirement outlining the number of days a school must factor into an R2T4 calculation when a student withdraws from a program offered in modules.

And finally, we moved the worksheets to the top of Chapter 3 before the case studies.