With only days remaining in the Biden Administration, the US Department of Education (ED) released long-awaited rules on distance education and return of Title IV funds.
Background
ED formally began a negotiated rulemaking in January 2024 that addressed a host of Title IV regulatory issues related to program integrity, institutional quality, and the federal TRIO programs. The negotiators examined potential regulatory changes to accreditation, cash management, distance education, return of Title IV funds (R2T4), state authorization, and opening up the TRIO programs to undocumented students. Consensus was reached for the proposed changes to TRIO; on all other issues, the negotiators failed to reach consensus.
ED released proposed rules for public comment in July 2024 on three of the six topics: distance education, R2T4, and TRIO. ED did not release proposed rules on cash management, accreditation, and state authorization. ED further winnowed down the final regulations on December 28, when it published final rules for R2T4 and distance education. In doing so, ED made minor technical changes to TRIO but omitted the larger proposal to open up the program to undocumented students. The new distance education and R2T4 rules are currently slated to go into effect on July 1, 2026, with institutional reporting obligations related to distance education enrollments beginning July 1, 2027.
Distance Education
The final rule on distance education increases oversight and reporting requirements for online learning programs and includes wins for the regulated community. Starting on July 1, 2027, institutions will be required to report detailed information about Title IV students enrolled in distance education or correspondence courses to ED’s National Student Loan Data System (NSLDS). ED’s stated aims for the reporting requirements are to “better understand the outcomes and effectiveness of online learning.” In commentary to the final rule, ED shared that additional instructions for reporting the data are forthcoming.
Separately, the rule promulgates a definition of “distance education course.” This is described in the rule as courses consisting entirely of distance instruction notwithstanding in-person, non-instructional requirements.
Closely watched by our institutions, ED did not to move forward with several key distance education proposals. For example, institutions will not be required to report all of their fully online programs at a virtual additional location and will use the NSLDS process for tracking distance education students instead, as noted above. ED also nixed the proposal that would have prohibited Title IV eligibility for asynchronous clock-hour programs offered through distance education.
R2T4
R2T4 is an important component of the federal financial aid programs because it determines how funds should be handled by an institution when a student withdraws. The final R2T4 rule introduces several exemptions to the determination of when a student is considered withdrawn, such as when the institution’s records treat the student as having never attended courses for that payment period or period of enrollment.
Other key changes include confirmation that a module would be considered part of the payment period used in the denominator of the R2T4 calculation only when a student begins attendance in the module. Further, under certain circumstances, the rule allows incarcerated individuals to return at a different point in their eligible prison education program than the point at which the student left off. Finally, the rule prescribes a new process for calculating R2T4 calculations for programs measured in clock hours, and it codifies current guidance that institutions that are required to take attendance must document a student’s withdrawal date within 14 days of the student’s last day of attendance.
Here, again, ED decided not to implement certain concepts included in the proposed rule. ED declined to adopt the blanket requirement that all distance education programs take attendance. This was initially intended by ED as a means of determining a formal date of withdrawal for the purposes of R2T4 calculations but has now been abandoned.
Incoming Trump Administration
We do not yet know how the Trump Administration will approach implementation of these new rules. We expect many Biden-era rules, from loan forgiveness and gainful employment to borrower defense and Title IX, to be scrapped or rewritten. The incoming Trump team may also open up additional rules beyond those addressed during the Biden years for revision. We should know more later this year on the Trump Administration’s planned regulatory agenda as well as the processes they plan to use to accomplish their goals.
For now and until ED makes further announcements, our institutions should plan to come into compliance with these new distance education and R2T4 rules by July 1, 2026 and prepare for the required NSLDS reporting no later than July 1, 2027. As always, we will keep you up-to-speed on all of the latest regulatory developments. | 
