The U.S. Department of Education has announced new regulations aimed at enhancing the reporting of distance education and revising how institutions calculate the return of federal financial aid when a student withdraws. These rules, set to take effect on July 1, 2026, will require institutions to report data into the National Student Loan Data System (NSLDS) regarding students receiving federal financial aid who are enrolled in distance or correspondence courses.
U.S. Under Secretary of Education James Kvaal emphasized the importance of these measures, stating, “Online learning can reach more students and sometimes at a lower cost to students, but what we know about the outcomes of online education compared to traditional in-person instruction is woefully inadequate.” He added that the new reporting requirements would help assess student outcomes in online programs and assist students in making informed decisions.
The final rules reflect feedback from institutions favoring NSLDS data collection over an alternative proposal requiring reports on fully online programs at virtual locations. The Department has set a compliance deadline for NSLDS reporting by 2027 to allow schools adequate preparation time.
Changes concerning the Return of Title IV Funds (R2T4) aim to simplify calculations and address unique withdrawal circumstances. Notably, they introduce an optional process for avoiding R2T4 calculations under specific conditions and offer flexibility in leave policies for incarcerated students facing interruptions in their educational programs.
These regulations were refined following public comments on a proposed rulemaking notice issued last summer. The Department opted not to pursue several draft provisions after considering public input. Among these were adjustments to Federal TRIO program eligibility and proposals related to attendance requirements for online programs.
Additionally, while not advancing a proposal against asynchronous clock-hour programs via distance education, the Department reminded institutions that such hours cannot count as homework and must include verified instructor interaction.
The final rules are available for public inspection at the Federal Register today and will be officially published on January 3, 2025. Institutions may choose early implementation of certain provisions within 30 days; however, NSLDS reporting will become mandatory starting July 1, 2027.
