Return of Title IV Funds
A recipient of federal Title IV financial aid who withdraws or is dismissed from school during a payment period or period of enrollment in which the student began attendance will have the amount of Title IV funds they did not earn calculated according to federal regulations. This calculation will be based on the student’s last date of attendance and the date the school determines that the student has withdrawn from school (see withdrawal policy), or the date of dismissal for a student who is dismissed by the institution.
The period of time in which Title IV financial aid is earned for a payment period or period of enrollment is the number of calendar days the student has been enrolled for the payment period or period of enrollment up to the day the student withdrew, divided by the total calendar days in the payment period or period of enrollment. The percentage is multiplied by the amount of Title IV financial aid for the payment period or period of enrollment for which the Title IV financial aid was awarded to determine the amount of Title IV financial aid earned. The amount of Title IV financial aid that has not been earned for the payment period or period of enrollment, and must be returned, is the complement of the amount earned. The amount of Title IV financial aid earned and the amount of the Title IV financial aid not earned will be calculated based on the amount of Title IV financial aid that was disbursed for the payment period or period of enrollment upon which the calculation was based. A student will have earned 100% of the Title IV financial aid disbursed for the payment period or period of enrollment if the student withdrew after completing more than 60% of the payment period or period of enrollment.
The US Department of Education regulations indicate that it is not sufficient for a student to simply log in to an on-line class to demonstrate “academic attendance” and thus trigger either initial attendance and financial aid eligibility or an LDA (Last Date of Attendance) for purposes of R2T4 (Return of Title IV Aid) calculations. On-line programs must use very specific means to document that a student participated in class or was otherwise engaged in an academically-related activity, such as; submit an assignment, take a quiz, contribute to an on-line discussion and in some cases post to an on-line gallery.
For R2T4 purposes in a term based program with modules, a student is considered to have withdrawn, If they do not complete all of the days they were scheduled to complete in the payment period or period of enrollment. The R2T4 calculation is required for all students who have ceased attendance; other than those on an approved LOA, or those who have attested to an expected return to a future module within the same term.
Exception: In order to NOT be considered withdrawn, the school must obtain a written confirmation from the student stating the student’s intention of return to a future module within the same term. The fact that the student is scheduled to attend the next module will NOT be acceptable.
Schools are required to determine Title IV funds that must be refunded based upon the percentage of the payment period completed prior to withdrawing. Title IV funds must be returned to the program based upon a tuition refund or if the student received an overpayment based upon costs not incurred but for which Title IV was received.
Once the amount of Title IV financial aid that was not earned has been calculated, federal regulations require that the school return Title IV funds disbursed for the payment period or period of enrollment and used for institutional costs in the following order:
- Loans
- Unsubsidized Federal Direct Stafford Loans
- Subsidized Federal Direct Stafford Loans
- Federal Direct PLUS loans received on behalf of the student.
- Federal Pell Grants.
- Federal SEOG
- Other grant or loan assistance authorized by Title IV of the HEA.
If the amount of unearned Title IV financial aid disbursed exceeds the amount that is returned by the school, then the student (or parent, if a Federal Parent-PLUS Loan) must return or repay, as appropriate, the remaining grant and loan funds. The student (or parent, if a Federal Parent-PLUS Loan) will be notified of the amount that must be returned or paid back, as appropriate.