Return of Title IV Funds
The law specifies how the school must determine the amount of Title IV program assistance that has been earned if a student withdraws from school. The financial aid office will perform a Return of Title IV Funds calculation when a federal student financial aid (Title IV) recipient withdraws from his/her program. This process ensures that the institution correctly calculates the amount of federal student financial aid earned by the student and returns any unearned funds back to the respective federal student financial aid program(s). In some cases, the student will be required to return unearned Title IV funds. In addition, the Return of Title IV process may result in the student owing the school for unpaid tuition and fees.
The requirements for Title IV program funds when you withdraw are separate from the institutional refund policy. Therefore, the student may still owe a balance to the school to cover unpaid institutional charges.
For students who notify the school they are withdrawing, the school uses the last date of attendance at the official date of determination for the Return of Title IV calculations.
For students who withdraw without notifying the school, the school will use 14 calendar day absences to determine that the student has unofficially withdrawn. The last day that the student ceased attending will then be used as the withdrawal date for calculating any return of federal funds to the U. S. Department of Education. If a student has a federal loan, it is his/her responsibility to inform the funding agency/lender that he/she is no longer in school. It is also the student's responsibility to arrange for a federal loan exit counseling session with the school's financial aid office. Note: Students who withdraw from the school will not receive transcripts unless all financial obligations are met.
The portion of Title IV funds a student is allowed to retain is calculated on a percentage basis by dividing the total number of clock hours scheduled to be completed as of the withdrawal date in the period, by the total clock hours in the payment period.
For example, if the student withdrew at 114 scheduled clock hours of a payment period that has 500 clock hours, the student has completed 22.8 percent of the period and therefore has earned 22.8 percent of federal student financial aid that was disbursed or could have been disbursed. That means that 77.2 percent of the aid that was disbursed or could have been disbursed remains unearned and must be returned to the federal student financial aid programs(s).
A student earns 100 percent of federal financial aid once he or she has completed more than 60 percent of the scheduled clock hours in the payment period.
If the amount of aid disbursed to the student is greater than the amount of aid earned by the student, the unearned portion must be returned to the federal student financial aid program(s). In returning unearned funds, the school is responsible for returning the portion of the excess equal to the lesser of:
1. The institutional charges for the payment period multiplied by the unearned percentage of funds, or
2. The entire amount of excess funds.
A student may be required to return excess unearned Title IV funds. However, if the excess unearned funds consist of Title IV loans, then the student repays the loan(s) in accordance with the terms and conditions of the promissory note. If the excess unearned funds consist of a Title IV grant, the student is required to repay only the portion which exceeds 50 percent of the amount of grant received over $50.
If the amount of aid disbursed to the student is less than the amount of aid earned by the student, a postwithdrawal disbursement may be available to assist the payment of any outstanding tuition and fee charges on the student’s account. The postwithdrawal disbursement will be made from Title IV grant funds before available Title IV loan funds. If part of the postwithdrawal disbursement is a grant, the institution may apply the grant funds to tuition and fees or disburse the grant funds directly to the student.
If a student is eligible to receive a postwithdrawal disbursement from Title IV loan funds, the student (or parent in the case of a PLUS loan) will be asked for his/her permission to either disburse the loan funds to the student’s account to reduce the balance owed to the institution, or disburse the excess loan funds directly to the student (or parent in the case of a PLUS loan). The school has 30 days from the date it determines the student withdrew to offer the postwithdrawal disbursement of a loan to the student (or the parent in the case of a PLUS loan).
The student (or parent) has 14 days from the date the school sends the notification to accept the postwithdrawal disbursement in writing. If the student accepts the postwithdrawal disbursement, the school will make payment as soon as possible, but no later than 180 days from the student’s withdrawal date. No portion of the postwithdrawal disbursement of loan funds will be disbursed if the student (or parent) does not respond to the notification.
Once the unearned portion of the return of funds has been calculated, the financial aid office will return the aid to the appropriate federal student financial aid program(s) within 45 days of the date of determination that the student withdrew. The order of return is specified below. The unearned funds will be “charged back” to the student’s tuition account, and this may result in unpaid tuition and fees. The student will then be billed for any unpaid institutional charges that result from the return of funds to the Title IV programs, and will be responsible for full payment. A student will not be allowed to re-enter, register, or receive an official academic transcript until the outstanding balance has been paid in full.
Unearned Title IV funds will be returned to the federal student aid programs in the following order:
1. Unsubsidized Direct Loan
2. Subsidized Direct Loan
3. Direct PLUS4. Federal Pell Grant