Return of Title IV Federal Financial Aid
Treatment and Return of Title IV Aid When a Student Withdraws
(Summary of the requirements of 34 CFR 668.22)
Students who stop attending a class during the semester may not be eligible for some or all of the financial aid received for the semester. Funds for which students are no longer eligible must be returned to the appropriate program fund. Students considering withdrawing or taking a leave of absence during the semester are strongly encouraged to visit the Financial Aid Office and the Cashier’s Office to determine the possible changes to their charges and financial aid.
The law specifies how your school must determine the amount of Title IV program assistance that you earn if you withdraw from school. The Title IV programs that are covered by this law are: Federal Pell Grants, Iraq and Afghanistan Service Grants, TEACH Grants, Direct Loans, Direct PLUS Loans, Federal Supplemental Educational Opportunity Grants (FSEOGs), and Federal Perkins Loans.
Though your aid is posted to your account at the start of each period, you earn the funds as you complete the period. If you withdraw during your payment period or period of enrollment (your school can define these for you and tell you which one applies), the amount of Title IV program assistance that you have earned up to that point is determined by a specific formula. If you received (or your school or parent received on your behalf) less assistance than the amount that you earned, you may be able to receive those additional funds. If you received more assistance than you earned, the excess funds must be returned by the school and/or you.
The amount of assistance that you have earned is determined on a pro rata basis. For example, if you completed 30% of your payment period or period of enrollment, you earn 30% of the assistance you were originally scheduled to receive. Once you have completed more than 60% of the payment period or period of enrollment, you earn all the assistance that you were scheduled to receive for that period.
If you did not receive all of the funds that you earned, you may be due a post-withdrawal disbursement. If your post-withdrawal disbursement includes loan funds, your school must get your permission before it can disburse them. You may choose to decline some or all of the loan funds so that you don’t incur additional debt. Your school may automatically use all or a portion of your post-withdrawal disbursement of grant funds for tuition, fees, and room and board charges (as contracted with the school). The school needs your permission to use the post-withdrawal grant disbursement for all other school charges. If you do not give your permission (some schools ask for this when you enroll), you will be offered the funds. However, it may be in your best interest to allow the school to keep the funds to reduce your debt at the school.
There are some Title IV funds that you were scheduled to receive that cannot be disbursed to you once you withdraw because of other eligibility requirements. For example, if you are a first-time, first-year undergraduate student and you have not completed the first 30 days of your program before you withdraw, you will not receive any Direct Loan funds that you would have received had you remained enrolled past the 30th day.
If you receive (or your school or parent receive on your behalf) excess Title IV program funds that must be returned, your school must return a portion of the excess equal to the lesser of:
- your institutional charges multiplied by the unearned percentage of your funds, or
- the entire amount of excess funds.
The school must return this amount even if it didn’t keep this amount of your Title IV program funds.
If your school is not required to return all of the excess funds, you must return the remaining amount.
Time frame for the return of Title IV funds
A school must return unearned funds for which it is responsible as soon as possible but no later than 45 days from the determination of a student’s withdrawal.
Order of return of Title IV funds
A school must return Title IV funds to the programs from which the student received aid during the payment period or period of enrollment as applicable, in the following order, up to the net amount disbursed from each source:
Unsubsidized Federal Stafford Loan
Subsidized Federal Stafford Loan
Direct PLUS Loan
Federal Pell Grants for which a Return is required
Federal Supplemental Educational Opportunity Grans (FSEOG) for which a return of funds is required.
For a sample return of title IV aid refer to the Financial Aid Handbook.