Withdrawals and the CHAPTER

2
Return of Title IV Funds
This chapter will discuss the general requirements for the treatment of Federal Student Aid
funds when a student withdraws and will then discuss the principles applicable to the work-
sheets.

IMPORTANT: As this chapter was being prepared, Congress passed legislation that
might substantially alter the Return of Title IV Funds. ED will issue a Dear Colleague
Letter that addresses changes subsequent to the new legislation.
WITHDRAWALS
This chapter explains how Federal Student Aid (FSA) funds are Return of Funds cites
HEA, Section 484B
handled when a recipient of those funds ceases to be enrolled prior
34 CFR 668.22
to the end of a payment period or period of enrollment. These
requirements do not apply to a student who does not actually cease
attendance at the school. For example, when a student reduces his or
her course load from 12 credits to 9 credits, the reduction represents a The FSA Assessment module
change in enrollment status not a withdrawal. Therefore, no Return that can assist you in understanding and
calculation is required. assessing your compliance with the
provisions of this chapter is "Return of Title IV
The Return of Title IV Funds (Return) regulations do not dictate Funds," at
an institutional refund policy. Instead, a school is required to
determine the earned and unearned Title IV aid a student has http://ifap.ed.gov/qamodule/
earned as of the date the student ceased attendance based on the ReturnTIVFunds/ReturnTIVFunds.html
amount of time the student spent in attendance. The calculation of
Title IV funds earned by the student has no relationship to the
student’s incurred institutional charges.

Up through the 60% point in each payment period or period of

enrollment, a pro rata schedule is used to determine the amount of
FSA funds the student has earned at the time of withdrawal. After the
60% point in the payment period or period of enrollment, a student
has earned 100% of the Title IV funds he or she was scheduled to
receive during the period.

For a student who withdraws after the 60% point-in-time, there are
no unearned funds. However, a school must still complete a Return Reminder
calculation in order to determine whether the student is eligible for a
post-withdrawal disbursement.

The Return regulations do not prohibit a school from developing

its own refund policy, or complying with refund policies required by
a state or other outside agencies. Although an institutional, state, or
agency refund policy will determine the charges a student will owe
after withdrawing, those policies will not affect the amount of Title
IV Aid the student has earned under the Return calculation.

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General requirements
FSA funds are awarded to a student under the assumption that the
student will attend school for the entire period for which the assistance
is awarded. When a student withdraws, the student may no longer be
eligible for the full amount of Title IV funds that the student was
originally scheduled to receive.

If a recipient of Title IV grant or loan funds withdraws from a

school after beginning attendance, the amount of Title IV grant or
loan assistance earned by the student must be determined. If the
amount disbursed to the student is greater than the amount the
student earned, unearned funds must be returned. If the amount
disbursed to the student is less than the amount the student earned,
and for which the student is otherwise eligible, he or she is eligible
to receive a post-withdrawal disbursement of the earned aid that was
not received.

Worksheets and software

Technical questions The Department has developed worksheets and software to assist
Technical questions on the Return of Title IV schools in implementing the Return regulations (you can find blank
funds software are handled by the CPS at worksheets at the end of this chapter). There is one worksheet for
students who withdraw from credit-hour programs and one for
800-330-5947 students who withdraw from clock-hour programs. These worksheets
or via email at
are also in portable document file (PDF) format on the Department’s
[email protected].
Information for Financial Aid Professionals Web site at

http://ifap.ed.gov

The Department has also developed Return of Title IV Aid

software that automates the Return calculation. The software can be
downloaded from ED’s FSA download site

http://www.fsadownload.ed.gov

Access to R2T4 software via CPS A new Return of Title IV Funds on the Web product has recently
Online been released. It is accessible via the main menu of the FAA Access at
Individual staff members must be enrolled the CPS Online Web site
in the SAIG in order to have access to the
Return software.
http://www.fafsa.ed.gov/FOTWWebApp/faa/faa.jsp
Your school’s SAIG Destination Point
Administrator (DPA) can enroll the
The use of the Department’s worksheets and the software is
selected staff members via the SAIG optional.
Enrollment Web site at

http://www.fsawebenroll.ed.gov

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Consumer information
In the consumer information a school must make available upon Consumer information cite
request to prospective and enrolled students, the school must include Section 485(a)(1)(F), 34 CFR 668.43
a statement of – For more information see chart on
“Institutional and Financial Assistance Infor-
mation for Students” in “Volume 1 – Student
• any refund policy with which the school must comply;
Eligibility.”
• the requirements for the treatment of Title IV funds when a
student withdraws; and
• the requirements and procedures for officially withdrawing Sample summary provided
from the school. A sample summary of the requirements of
34 CFR 668.22 is provided at the end of this
An institution should provide sufficient information for a student chapter.
or prospective student to be able to determine the financial
consequences of withdrawing, and how to officially withdraw. A
student should be able to estimate how much federal student aid he
or she will earn if the student withdraws, and how much he or she
may have to return. In addition, because the Return provisions do not
affect institutional refund policies, the school must provide the student
with information on both the federal student aid requirements and
the school's refund requirements and explain the interaction
between the two. A school should include some discussion of how it
might adjust a student's charges to take into account any Return of
Title IV funds that the school may be required to make. Finally, a
student or prospective student should be informed that Federal
Student Aid may not cover all unpaid institutional charges due to the
institution upon the student’s withdrawal.

As a part of the institution’s disclosure of the procedures for

officially withdrawing, the school must identify the office or offices
that it has designated to accept notification of official withdrawals.

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GENERAL TITLE IV PRINCIPLES WITH

SPECIAL APPLICABILITY IN THE RETURN
OF TITLE IV AID
Title IV recipient
Definition of a Title IV recipient
In determining whether the requirements of The requirements for the treatment of Title IV funds when a
34 CFR 668.22 apply, a school must first de- student withdraws apply to any recipient of Title IV grant or loan
termine whether a student was eligible to re- funds who ceases all attendance. For purposes of these requirements,
ceive any Title IV funds.
a recipient of grant or loan assistance is a student who has actually received
Title IV funds or has met the conditions that entitled the student to a
If a student never begins attendance cite late disbursement. These conditions are listed in a chart on Late
34 CFR 668.21, Disbursements in Volume 4 – Processing Aid and Managing Federal
34 CFR 682.604(d)(3) and (4), and
Student Aid Funds.
34 CFR 685.303(b)(3).

The return requirements apply only to the receipt of or

If a student withdraws before Title IV qualification for aid that can be included in the calculation. For
funds are disbursed
example, the requirements of 34 CFR 668.22 do not apply to Federal
Even if a student paid all institutional
Work-Study funds. Therefore, the Return requirements do not apply
charges and ceased enrollment prior to
Title IV funds being disbursed, the
to a student if the only Title IV program assistance that the student has
institution must determine the Title IV funds received or could have received was FWS funds.
earned by the student and follow the
procedures for making a post-withdrawal Please note that if the student never actually began attendance
disbursement. for the payment period or period of enrollment, 34 CFR 668.22
does not apply. Likewise, if a student began attendance, but was not
and could not have been disbursed Title IV grant or loan funds
prior to withdrawal, the student is not considered to have been a
Title IV recipient and the requirements of 34 CFR 668.22 do not
apply. In these cases, Title IV funds would be handled in accordance
with other Title IV regulations (see margin).

Withdrawals and verification, cite

Verification
DCL-GEN-04-03 The Return calculations impose no additional liability for
interim disbursements made to students selected for verification.
However, the Return requirements do place limits on interim
disbursements that can be made to students selected for verification
who have ceased attendance. A school may not make an interim
disbursement to a student after the student has ceased attendance.

The Department establishes deadlines for the submission of

required verification documents that apply to all Title IV programs.

For campus-based program funds and subsidized FFEL and

Direct Loan program funds, an institution may establish an
institutional verification deadline that may be earlier than the date
established by ED. The institution must include its verification
deadlines in the consumer materials it provides to students.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

The following rules apply when a school is completing a Return

calculation for a student subject to verification.

1. A school must always complete a Return calculation within

30 days of the date the institution determined the student
withdrew.
2. Unless a student subject to verification has provided all
required verification documents in time for the school to
meet the 30-day Return deadlines, the school includes as Aid
Disbursed or Aid That Could Have Been Disbursed in the
Return calculation, only those Title IV funds not subject to
verification.
3. If a student who failed to provide all required verification
documents in time for the school to meet the 30-day Return
deadlines later provides those documents prior to the
applicable verification deadline, the school must perform a
new Return calculation on all of the aid the student
qualified for based on the completed verification documents
and make the appropriate adjustments.

When verification is completed

before the Return deadline
An institution must return any unearned funds or offer any post-
withdrawal disbursement within 30 days of the date of the
institution’s determination that the student withdrew. If a student
provides all documents required for verification after withdrawing
but before the verification submission deadline and in time for the
institution to meet the 30-day Return deadlines, the institution
performs the Return calculation including all Title IV aid for which
the student has established eligibility as a result of verification and
for which the conditions of a late disbursement had been met prior
to the student's loss of eligibility due to withdrawal. (See Volume 4 –
Processing Aid and Managing Federal Student Aid Funds, and
34 CFR 668.164(g)(2).)

When verification is not completed

before the Return deadline
If a student who has withdrawn does not provide the required
documents in time for the school to complete the verification
process and meet the 30-day Return deadlines noted above, the
institution includes in the Return calculation only the Title IV aid
that was not subject to the verification process. For a student who
failed to provide all required verification documents, the only aid
that may be included in a Return calculation are PLUS loan funds,
Student Support Services (SSS) grants, unsubsidized Stafford loan
funds, LEAP, grants and GEAR-UP grants (verification is not
required for receipt of these funds) for which the conditions of a
late disbursement (as discussed under Title IV aid that could have been
disbursed) were met prior to the student's loss of eligibility due to
withdrawal.

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If an institution has made an interim disbursement to a student

who has failed to provide all the documents required for verification
in time for the institution to meet the 30-day Return deadlines, at
that point in time the student has failed to establish eligibility for
those Title IV funds affected by verification. Therefore, the
institution must return any Title IV funds subject to verification that
were disbursed to the student on an interim basis, and may not
include any of those funds as aid that was or could have been
disbursed in the Return calculation.

When verification is completed

after the Return deadline
If an institution is unable to meet the If, before the verification deadline but after the institution has
requirement to offer any amount of a completed the Return calculation, a student provides all the
post-withdrawal disbursement that is not documentation required for verification, the institution must
credited to a student's account to the
perform a new Return calculation including as Aid that could have
student (or parent for a PLUS loan) within
been disbursed all Federal Student Aid for which the student has
30 days from the date of the institution's
determination that the student withdrew,
established eligibility based upon verification and for which the
once verification is complete the institution conditions of a late disbursement have been met prior to the
must offer the funds as soon as possible student's loss of eligibility due to withdrawal. If, as a result of
and should provide the student or parent verification, the student’s eligibility for Federal Pell Grant, FSEOG,
with the minimum 14-day response period and Federal Perkins funds has been reduced, only the reduced
whenever possible. amount is included in the new Return calculation.

An institution must make any post- For additional information on Verification, please consult The
withdrawal disbursement that results from Application and Verification Guide.
the subsequent Return calculation by the
applicable 120-day late disbursement
deadline.
Approved leave of absence
A leave of absence (LOA) is a temporary interruption in a
student's program of study. LOA refers to the specific time period
during a program when a student is not in attendance. An LOA is not
required if a student is not in attendance only for an institutionally
scheduled break. However, a scheduled break may occur during an
LOA.

An LOA must meet certain conditions to be counted as a

temporary interruption in a student’s education instead of being
counted as a withdrawal requiring a school to perform a Return
calculation. If an LOA does not meet the conditions in 34 CFR
668.22(d), the student is considered to have ceased attendance and to
have withdrawn from the school, and the school is required to
perform a Return calculation.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

In order for an LOA to qualify as an approved LOA – When calculating the maximum time
frame for a student’s approved LOA, the
1. the school must have a formal written policy regarding school must ensure that it accounts for all
leaves of absence requiring that all requests for leaves of periods of nonattendance (including week-
absence be submitted in writing and include the reason for ends and scheduled breaks).
the student’s request;
In addition, since an approved LOA may
2. the student must follow the school’s policy in requesting the not be more than 180 days, a school might
LOA; have to reduce the length of a students
3. there must be a reasonable expectation that the student will LOA if the 180th day is scheduled to fall on
return from the LOA; a day the school would be closed.

4. the school must approve the student’s request for an LOA in

accordance with the school’s policy;
5. the institution may not assess the student any additional
institutional charges, the student's need may not increase,
and therefore, the student is not eligible for any additional
Federal Student Aid;
6. the LOA together with any additional leaves of absence must
not exceed a total of 180 days in any 12-month period;
Reminder
7. except in a clock-hour or nonterm credit-hour program, a
student returning from an LOA must resume training at the
same point in the academic program that he or she began Disbursement rules for students
the LOA; and on leave of absence (LOA)
8. if the student is a Title IV loan recipient, the school must You may NOT make a disbursement of the
explain to the student, prior to granting the LOA, the effects proceeds of a FFEL or Direct Loan to a
that the student’s failure to return from an LOA may have student on an LOA.
on the student’s loan repayment terms, including the
expiration of the student’s grace period. You may disburse Pell Grant, FSEOG, and
Perkins funds to a student on an LOA.
A student granted an LOA that meets the criteria in this section is
not considered to have withdrawn, and no Return calculation is You may pay any funds that are part of a
required. Upon the student’s return from the leave, he or she Title IV credit balance (and therefore are
continues to earn the Federal Student Aid previously awarded for the funds that have already been disbursed) to
a student on an LOA.
period.

Full tuition credit

An institution may grant a full tuition credit
toward the course the student chooses to
reenter as a way to comply with the
requirement that the institution not assess
the student any additional charges upon
return from an approved leave of absence.

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Written formal policy required

Among the policies and procedures a school must maintain is one
that discusses the procedures a student must follow in applying for a
leave of absence, and the criteria the institution will apply in
determining whether to approve the application. An institution’s LOA
policy must specify that all requests for an LOA must be submitted in
writing, must be signed, and must be dated.

As mentioned previously, the regulations provide that an

institution must determine, before it grants an LOA, that there is a
reasonable expectation that the student will return from the leave. In
order for the institution to make such a determination, and in order
for it to ensure that the student meets the criteria in the institution’s
LOA policy, the institution must know the student’s reason for
requesting the leave. Therefore, an institution’s LOA policy must
specify that the reason for a student’s leave request be included on a
student’s application for an LOA.

An institution’s policy must require a student to apply in advance

for an LOA unless unforeseen circumstances prevent the student from
doing so. For example, if a student were injured in a car accident and
needed a few weeks to recover before returning to school, the student
would not have been able to request the LOA in advance. A school
may grant an LOA to a student who did not provide the request prior
to the LOA due to unforeseen circumstances if the school documents
the reason for its decision and collects the request from the student at
a later date. In this example, the beginning date of the approved LOA
would be determined by the institution to be the date the student was
unable to attend school because of the accident.

A school must publicize its LOA policy. The school may do this by
including that policy in the consumer information the school makes
available to students (see Volume 2 – School Eligibility and Operations).

Reasonable expectation of return

This condition is specified to make clear that a school may not
grant a student an LOA merely to delay the return of unearned Title
IV funds.

Completion of coursework upon return

in term-based credit-hour programs
Approved leaves of absence are viewed as temporary interruptions
in a student’s attendance. For term-based programs, where the
payment period is the term, a student returning from an LOA must
complete the term in order to complete the payment period and be
eligible to receive a second or subsequent disbursement.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Therefore, for students enrolled in credit-hour term programs, in

order for an LOA to be an LOA, a school must allow a student
returning from an LOA to complete the coursework that he or she
began prior to the LOA. In addition, the institution may not impose
additional charges and may not award the student additional Title IV
assistance.

Completion of coursework upon return in clock-hour

and credit-hour nonterm programs
For nonterm-based programs, the regulations provide that the
payment period is the period of time it takes a student to complete
both half the number of credits and half the number of weeks of the
academic year, program, or remainder of the program. For clock-hour
programs, the payment period is the period of time it takes a student
to complete half the number of clock hours in the academic year.
Therefore, for clock-hour and nonterm programs it doesn’t matter
whether the student returns to the same course and point when the
LOA began, or the student starts in a new course within the program
(so long as there are no additional charges).

For clock-hour programs and nonterm credit-hour programs upon

returning from an LOA a student need not complete the same
coursework he or she began prior to the leave. For a nonterm
program, once the student has earned half the required credits, and
completed half the number of weeks in the period, the student has
earned the Title IV funds he or she was previously paid. For a clock-
hour program, once the student has completed half the number of
clock hours, the student has earned the Title IV funds he or she was
previously paid. At that point, if otherwise eligible, the student may
receive a second or subsequent disbursement of Title IV program
funds.

A student may return early

A school may permit a student to return to class before the
expiration of the student’s LOA in order to review material previously
covered. However, until the student has resumed the academic
program at the point he or she began the LOA, the student is
considered to still be on the approved LOA.

The days the student spends in class before the course reaches the
point at which the student began his or her LOA must be counted in
the 180 days maximum for an approved leave of absence. A student
repeating coursework while on LOA must reach the point at which he
or she interrupted training within the 180 days of the start of the
student’s LOA.

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The requirement that an institution not impose additional charges

when an approved LOA ends and the student resumes his or her
program of study applies when a student returns to repeat prior
coursework. Moreover, even if the student enters at the beginning of
the module or course from which he or she took the leave of absence,
a student is not eligible for any additional Title IV program assistance
for this preparatory phase.

Since a student is still considered to be on an LOA while repeating

prior coursework, if the student fails to resume attendance at the point
in the academic program where he or she interrupted training at the
beginning of the LOA, the student must be treated as a withdrawal. In
that case, at an institution that is not required to take attendance,
the date of the student’s withdrawal that must be used in the Return
calculation is the date the student began the LOA.

At an institution that is required to take attendance, the Last

Date of Attendance (LDA) is used as the withdrawal date for a student
that does not return from a LOA .

Leaves of absence versus the grade of incomplete

At term-based schools, students who are unable to complete the
requirements of an individual course are often assigned the grade of
incomplete (I). Students are usually expected to complete the
required work within a reasonable time in order to receive credit and a
passing grade.

If a student is assigned an incomplete status for one or several

courses but continues to attend other courses, the student is not
considered to have withdrawn. A student who is awarded the grade of
incomplete in all of his or her classes is not considered a student on an
approved LOA unless the LOA meets the criteria in this section.

Because of the criteria that must be met in order for a LOA to be

an approved LOA, term-based schools can grant LOAs that meet the
Department’s criteria for an approved LOA in a very limited number
of cases. A term-based credit-hour institution that wishes to explore the
possibility of granting an LOA that meets the criteria specified in 34
CFR 668.22(d), should call its Case Management Team for additional
information.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

No additional charges
An LOA is a temporary break in the student’s attendance during
which, for purposes of determining whether a Return calculation is
required, the student is considered to be enrolled. Since students who
are continuously enrolled are not assessed additional charges, any
additional charges to a student, even minimal reentry charges, indicate
that the institution does not truly consider the student to be on an
approved LOA.

No additional Title IV assistance

Since an institution may not assess any additional charges to a
student returning from LOA, the institution may not award any
additional Title IV aid until the student has completed the coursework
in which the student was enrolled when the leave was granted.

Leave of absence not to exceed 180 days in any 12-

month period
Institutions, at their discretion and for any reason, may grant a
student multiple leaves of absence as long as the total number of days
for all leaves does not exceed 180 days within a 12-month period. This
12-month period begins on the first day of the student’s initial LOA

When a student fails to return from a leave of absence

At an institution not required to take attendance, if a student does
not return to the school at the expiration of an approved LOA (or a
student takes an unapproved LOA), the student’s withdrawal date is
the date the student began the LOA. At an institution required to take
attendance, the withdrawal date for the same student would always be
the student’s last day of attendance.

Explanation of consequences of withdrawal to

loan recipients
A student who is granted an approved LOA is considered to
remain in an in-school status for Title IV loan repayment purposes. If a Deferment or Forbearance
student on an approved LOA fails to return, the school must report to A student who has exhausted his or her
the loan holder the student’s change in enrollment status as of the grace period and is unable to begin
repayment of a loan may apply for a
withdrawal date.
deferment or forbearance of payment.

One possible consequence of not returning from an LOA is that a

student’s grace period for a Title IV program loan might be exhausted.
Therefore, in order for a LOA to be an approved LOA, prior to
granting a leave of absence, a school must inform a student who is a
Title IV loan recipient of the possible consequences a withdrawal may
have on the student’s loan repayment terms, including the exhaustion
of the student’s grace period.

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Unapproved leaves of absence

A school may grant a student an LOA that does not meet the
conditions to be an approved LOA for Title IV purposes (for
example, for academic reasons). However, any LOA that does not
meet all of the conditions for an approved LOA is considered a
withdrawal for Title IV purposes. The student’s withdrawal date at an
institution not required to take attendance is the date the student
begins the LOA. At an institution required to take attendance, the
student’s withdrawal date is the student’s last day of attendance.

An unapproved LOA may not be treated as an unofficial

withdrawal. An unofficial withdrawal is one where the school has not
received notice from the student that the student has ceased or will
cease attending the school. If a school has granted a student an
unapproved LOA, the school would know immediately that the
student had ceased attendance for Title IV purposes, and must use
the specified withdrawal date in the Return calculation.

Institutional charges
Institutional charges are used to determine the portion of
unearned Title IV aid that the school is responsible for returning.
Schools must ensure the inclusion of all appropriate fees as well as
applicable charges for books, supplies, materials and equipment in
Step 5, Part G of the Return calculation (see Example of Determining
Institutional Charges). Institutional charges do not affect the amount of
Title IV aid that a student earns when he or she withdraws.

Use of institutional charges in determining the

school's responsibility for return
The institutional charges used in the calculation usually are the
charges that were initially assessed the student for the entire payment
Institutional charges cite period or period of enrollment as applicable. Initial charges may only
34 CFR 668.22(g)(1)(ii) be adjusted by those changes the institution made prior to the
34 CFR 668.22(g)(2) student’s withdrawal (for example, for a change in enrollment status).
DCL-GEN-00-24 If, after a student withdraws, the institution changes the amount of
institutional charges it is assessing a student, or decides to eliminate all
Fees as noninstitutional charges institutional charges, those changes affect neither the charges nor aid
Application fees are excluded from earned in the calculation. (Please see Step 3 — Amount of Title IV aid
institutional charges because they are not an earned by the student, for a further discussion of aid earned and
educational cost. (Federal Register, Vol. 59, institutional charges.)
No. 82, April 29, 1994, page 22356).
The return regulations presume Title IV program funds are used
to pay institutional charges ahead of all other sources of aid.
Institutional Charges may not be reduced even if other sources of aid
are used to pay those charges. For example, a school may not reduce
institutional charges when an outside agency supplying aid requires
that aid to be used for tuition.

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When to prorate charges Prorated charges example

For students who withdraw from a non term-based educational Institutional charges are $8,000 for a
program, the school has the choice of performing the Return nonterm-based program that spans two
calculation on either a payment period basis or a period of enrollment payment periods of 450 clock hours each.
basis. If a school with a nonterm program chooses to base the Return The school chooses to calculate the
treatment of Title IV funds on a payment
calculation on a payment period, but the school charges for a period
period basis. A student withdraws in the
longer than the payment period (most likely the period of
first payment period. The prorated amount
enrollment), there may not be a specific amount that reflects the of institutional charges for each payment
actual institutional charges incurred by the student for the payment period is $4,000. However, because of the
period. In this situation, the student's institutional charges for the $1,000 in fees charged at the beginning of
payment period are the prorated amount of institutional charges for the period, the school has retained $5,000
the longer period. However, if the school has retained Title IV funds of the Title IV funds for institutional charges
in excess of the prorated amount, the institutional charges for the for the payment period. Therefore, the
payment period are equal to the amount retained. institutional charges for the payment pe-
riod are $5,000.
Effects of waivers on institutional charges
If your school treats a waiver as a payment of tuition and fees that
have actually been charged to a student, then the waiver is considered
a financial aid resource, and the full amount of the tuition and fees Waiver Example
must be included in Step 5, Part G of the Return calculation. On the An institution charges state residents $900
per semester. Out-of-state students are
other hand, if the student is never assessed the full charges, the waiver
charged an additional $2,000 for a total of
is not considered to be financial aid, and only the actual charges would
$2,900. However, the institution grants
be included in the Return calculation (see DCL GEN 00-24, January waivers of the out-of-state charges to out-
2000 for a further discussion of waivers and the Return calculation). of-state athletes. The waiver is considered
a payment to those charges (financial aid
Institutional versus noninstitutional charges resource) and the full $2,900 would need
to be included in any Return calculation.
Institutional charges generally are defined as the charges for
tuition and fees, room and board, and other educational expenses that
are paid to the school directly. If a fee (like a registration or
technology fee) is required for all students in a program, then the fee
should be considered an institutional charge for all students in the
program. A charge does not have to appear on a student’s account to
be considered an institutional charge.

The following educational expenses must be considered

institutional charges –

• all charges for tuition, fees, and room and board (if
contracted with the school) (If an institution enters into a
contract with a third party to provide institutional housing, Reminder
the institution has to include the cost of housing as an
institutional charge in a Return calculation.); and

• expenses for required course materials, if the student does

not have a real and reasonable opportunity to purchase the
required course materials from any place but the school.

Exceptions: Excludable costs are costs a school may exclude

from the total amount of institutional costs, such as the
documented cost of unreturnable equipment, and

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Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2006-2007

Three principles associated with documented cost of returnable equipment if not returned in
institutional charges good condition within 20 days of withdrawal.
Published in a January 7, 1999 policy
bulletin, these principles are applicable to Noninstitutional charges include –
determining institutional charges.
• charges for any required course materials that a school can
Principle 1: Most costs charged by the document a student had a real and reasonable opportunity to
school are institutional charges purchase elsewhere (see the discussion that follows);
The most important principle to keep in mind
is that all tuition, fees, room and board, and • charges to a student's account for group health insurance
other educationally related charges a fees, if the insurance is required for all students and the
school assesses a student are institutional coverage remains in effect for the entire period for which
charges, unless demonstrated otherwise. If the student was charged, despite the student's withdrawal;
you want to exclude specific charges or and
costs from a calculation, you must
document that the charges are not • charges to a student's account for discretionary
institutional charges. educationally related expenses (e.g., parking or library fines,
the cost of athletic or concert tickets, etc.).
Principle 2: An institutional charge does
not need to be assessed to all students Demonstrating a real and reasonable opportunity
A charge assessed to all students enrolled A school may treat charges for books, supplies, equipment, and
in a course or program is an materials as noninstitutional charges if the school can substantiate that
institutional charge whether or not it is
its students have the option of obtaining the required course materials
assessed to all students at the school.
from an alternative source. The school must be able to document that:
Moreover, a charge does not have to be
specified in a student’s enrollment
(1) the required course materials were available for purchase at a
agreement to be considered an relatively convenient location unaffiliated with the school; and (2) the
institutional charge. school provided financial aid funds in a way and at a time that made it
possible for the student to purchase the materials in a timely manner.
Principle 3: Charges on a student’s
A signed statement by a student that he or she had the option to
account are not always school charges; purchase the materials from an alternative source is not sufficient
school charges do not always documentation.
appear on a student’s account
With the student's authorization, a school Book vouchers and institutional charges in the return of
may credit a student's account with Title IV Title IV funds calculations
funds to pay for noninstitutional charges. If a
student withdraws from the school with
If a book voucher issued by a school cannot be used to purchase
debits for noninstitutional charges on his or course materials from a convenient unaffiliated source, the student
her account, the school should exclude does not have a real and reasonable opportunity to purchase his or her
those charges from the Return calculation. course materials elsewhere. In that case the school must include the
cost of books and materials purchased with the voucher as
Conversely, there may be institutional institutional charges in Step 5, Part G of the Return calculation.
charges that do not appear on a student’s
account. If a school disburses Title IV funds Returning equipment
to a student to buy required books,
equipment, supplies, or materials and the If a school can substantiate that its return policies are reasonable,
student does not have a real and consistent, and fair to all students, and students are notified in writing
reasonable opportunity to purchase them of those policies when they enroll, the school may exclude
from another source, those costs must be documented costs for nonreturnable equipment, and returnable
classified as institutional charges. equipment, if not returned in good condition within 20 days of
withdrawal. A policy that classifies all used books or equipment as
nonreturnable is not reasonable or fair. An acceptable policy must
specify the specific circumstances that would prevent the school from
selling the books or equipment to other students.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Example of school charges versus non-school charges

Aerospace Tech requires its students to purchase a titanium-plated

tool set by the first day of class. Aerospace's enrollment agreement does
not contain a charge for the tools, and it does not say that the student is
required to purchase the tools from Aerospace or a vendor affiliated with
Aerospace. As it happens, the required tools are available for purchase
from Aerospace and from a retailer across the street. As a routine practice,
Aerospace gets written authorization from its students to credit all
financial aid to their school accounts, hold any credit balances, and
establish a line of credit for students at the campus store so they can
purchase the required tools by the first day of class. Most students buy the
tools at the campus store and charge the purchase to their school
accounts.

Although the cost of the tools is not listed as a charge in the student's
enrollment agreement, Aerospace requires that the tools be purchased by
everyone in the program of study. Therefore, as a general rule, the tool
charges would be considered school charges. However, under the
exceptions rule, the tool charges do not have to be considered school
charges if Aerospace can demonstrate that – (1) the tools were available
for purchase elsewhere; (2) Aerospace made financial aid available to
students in time to purchase the tools from another vendor before the
first day of class; and (3) Aerospace's practices provide students with an
equal opportunity to purchase tools from the campus bookstore or the
retailer across the street.

In this case, the school meets the first criterion, the tools are available
at the store across the street, so an opportunity could exist. However, the
school fails to satisfy the second and third criteria because the school's
routine practice of crediting students' accounts with all financial aid, and
extending lines of credit for purchases at the campus bookstore,
discourages students from purchasing the required tools from another
vendor. Unless a student specifically requests that Aerospace not hold his
or her credit balance, a student whose education is funded primarily
through financial assistance has to purchase the tools at the campus store.
As a result, the cost of the tools must be classified as school charges.

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Treatment of Title IV credit balances when a student

withdraws
Treatment of Credit balance The Return of Title IV Aid provisions require a different treatment
when a student withdraws, cite of a Title IV credit balance when a student withdraws than was
DCL GEN 04-03, February 2004 required under the earlier "Refund and Repayment" provisions. This
treatment applies only to the handling of Title IV credit balances. For a
discussion of credit balances in other circumstances, please see
Volume 4 – Processing Aid and Managing Federal Student Aid Funds.

When a student withdraws during a period, a Title IV credit

balance created during the period is handled as described below:

1. Do not release any portion of a Title IV credit balance to the

student and do not return any portion to the Title IV
programs prior to performing the Return calculation. The
institution must hold these funds even if, consistent with the
14-day credit balance payment requirement of 34 CFR
668.164(e), it would otherwise be required to release them.
2. Perform the Return calculation including any existing Title
IV credit balance for the period in the calculation as
disbursed aid.
3. Apply any applicable refund policy (state, accrediting
agency, institutional, etc.) to determine if doing so creates a
new or larger Title IV credit balance.
4. Allocate any Title IV credit balance as follows –
a. Any Title IV credit balance must be allocated first to
repay any grant overpayment owed by the student as a
result of the current withdrawal. The institution must
return such funds to the Title IV grant account within
14 days of the date that the institution performs the
Return calculation.

Although not included in a Return calculation, any

Title IV credit balance from a prior period that remains
on a student's account when the student withdraws is
included as Title IV funds when you determine the
amount of any final Title IV credit balance when a
student withdraws. Remember, the school must use the
final credit balance first to satisfy any current student
grant overpayment.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

b. Within 14 days of the date that the institution performs

the Return calculation, an institution must pay any New 14-day deadline
remaining Title IV credit balance funds in one or more In most cases, the cash management
of the following ways — regulations require a school to refund a
Title IV credit balance to a student within 14
• in accordance with the cash management days. However, when a student withdraws,
regulations to pay authorized charges at the a school is required to perform a Return
institution (including previously paid charges that calculation to determine, among other
now are unpaid due to a return of Title IV funds things, whether adjustments to the credit
by the institution); balance will occur.

A school may not use a Title IV credit balance to For this reason, the existing 14-day
payment requirement is placed on hold in
return funds for which it is responsible as a result
order to determine the final amount of any
of a Return calculation (Step 5, item J).
Title IV credit balance. Your school does not
• with the student’s authorization, to reduce the need to obtain a student's or parent's
student's Title IV loan debt (not limited to loan authorization to hold a Title IV credit
debt for the period of withdrawal); or balance that existed prior to the Return
calculation (beyond the original 14-day
• to the student (or parent for a PLUS loan). deadline) while you determine the final
amount of the credit balance.
c. If the institution cannot locate the student (or parent)
to whom a Title IV credit balance must be paid, it must
In order to allow an institution time to
return the credit balance to the Title IV programs. The appropriately apply any credit balance
Department does not specify the order of return to the after it has been recalculated, a new
Title IV programs for a credit balance. We encourage 14-day deadline is triggered when a
institutions to make determinations that are in the best school performs a Return calculation. The
interest of the individual student. new 14-day deadline begins on the date
the school performs the Return
You must apply your school refund policy before allocating a calculation, not the date the school
Title IV credit balance. However, you are not required to actually performs any calculations required by its
complete the refund process (for example, by making a refund to a institutional refund policy.
student) before completing the steps for allocating the Title IV
Of course, in order to determine the correct
credit balance.
Title IV credit balance, the school must take
into account both the results of the Return
In order to accommodate differences in institutional accounting calculation and any applicable refund
and administrative processes, you are not required to actually apply policy.
the Title IV credit balance to the student’s grant overpayment
before applying the Title IV credit balance to other debts, as long as
the grant overpayment is satisfied by the 14-day deadline. You may
use school funds instead of the actual Title IV credit balance to
satisfy any student grant overpayment.

For the treatment of credit balances when a student dies, see

the discussion under Death of a student later in this chapter.

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Example of a school performing a Return calculation for a

student on whose account there is a Title IV credit balance
Legolas, a first-time student at Northern Mirkwood Community College (NMCC)
began classes on September 1. His account was credited with a Pell Grant of $2,000
and debited with institutional charges of $500, creating a Title IV credit balance of
$1,500. Because NMCC has several mini semesters in which Legolas had expressed
an interest, the school obtained the student’s permission to hold the Title IV credit
balance while Legolas considered his options.

On September 30, when he has completed 25% of the semester, Legolas informs
the school that he has decided to withdraw in order to pursue his dream of
winning a gold medal as an Olympic archer. NMCC places a hold on Legolas’s
account while it performs the required Return calculation and applies its
institutional refund policy.

The school performs the required Return calculation on October 20, and
determines that the Amount of unearned funds due from the school is $375, and that
the Initial amount of unearned funds due from the student is $1,125. Since the $1,125
is composed entirely of grant funds, the Amount for the student to return is a grant
overpayment of $562.50.

Before Legolas withdrew, the Title IV funds on his account totaled $2,000, and
$500 of that $2,000 was used to cover the existing charges. There were no charges
due the school, and the Title IV credit balance was $1,500. After the school returned
the $375 it is required to return, the new total of Title IV funds on the student’s
account was $1,625 ($2,000 — $375), and the new Title IV credit balance was $1,125.

Then, the school applies its institutional refund policy. Under NMCC’s refund
policy, a first-time student who withdraws before the 50% point in the semester is
entitled to a 80% refund of institutional charges. Since Legolas withdrew at the 25%
point of the semester, he is entitled to a refund of 80% of the amount he was
charged or $400 ($500 X .80). So, the new institutional charges on the student’s
account are $100, and the new (final) Title IV credit balance is $1,525 ($1,625 —
$100). Note that this new credit balance is larger than the credit balance that
existed before the student withdrew.

Because Legolas has a Title IV credit balance on his account, NMCC has 14 days
from October 20 (the date they performed the Return calculation) to return the
student’s grant overpayment (it can use its own funds or Title IV funds) from the
student. After the school returns the $562.50 grant overpayment, the Title IV credit
balance of the student’s account is $962.50 ($1,525.00 – $562.50). The school must
pay those funds to the student within 14 days of October 20.

Note: With a never before achieved perfect score, Legolas won a gold medal in the
Olympic archery competition.

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PRINCIPLES WITH UNIQUE APPLICATIONS

IN THE RETURN OF TITLE IV AID
Institutions required to take attendance
Only a school that is required to take attendance by an outside
entity is considered a school that is required to take attendance for
purposes of calculating the amount of Title IV program assistance
earned when a student withdraws.

A school that elects to take attendance, including a school that

voluntarily complies with an optional attendance requirement of an
outside entity, is not considered a school that is required to take
attendance.

If an outside entity determines that an institution is required to Verifying an agency’s position

take continuous attendance for a limited period, including for census Unless an outside entity has determined that
purposes, then the institution is considered to be one that is required an institution is required to take
to take attendance for that period of time only. However, if an outside attendance, the institution would be
entity requires attendance taking only for a single day of census considered to be one that is not required to
activity, ED would not consider the institution to meet the definition take attendance. If a school in unsure
of an institution required to take attendance for that one day. whether an outside entity requires a school
to take attendance, the school should inquire
Institutions that are required to take attendance for a limited of the outside entity, and document the
period must document a student’s attendance through that period. If agency’s response.
an institution determines that a student was not in attendance at the
end of that period, the student’s withdrawal date would be determined
according to the institution’s attendance records.

If the institution demonstrates that the student attended past the For example, ten students at Peabody
end of the limited period, the student’s withdrawal date is determined University receive assistance from the
in accordance with the requirements for an institution that is not state. The state requires the school to take
required to take attendance. attendance for the recipients of the state’s
education benefits. Peabody University is
not required by any other outside entity to
If a school is required by an outside entity (for example, a state
take attendance for any of its other
Workforce Development Agency), to take attendance for only some
students. Seven of the ten students who
students, the school is required to use those attendance records for receive state benefits are also Title IV
only the cohort of students under the outside agency’s jurisdiction to program recipients. If any of those seven
determine the student’s withdrawal date (the last date of academic students withdraw from the school, the
attendance). The school would not be required to take attendance for school must use the state required
any of its other students, or to use attendance records to determine attendance records for them to determine
any of its other students’ withdrawal dates, unless the school is the withdrawal date as required for
required to take attendance for those students by another outside institutions required to take attendance.
entity. For all other Title IV program recipients at
Peabody University who withdraw, the
school must determine the withdrawal
date in accordance with the requirements
for students who withdraw from a school
that is not required to take attendance.

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Date of the institution’s determination that the student

withdrew
Date of determination that a The date of the institution’s determination that the student
student has withdrawn withdrew varies depending on the type of withdrawal. For example, if
34 CFR 668.22(l)(3) a student begins the official withdrawal process or provides official
notification to the school of his or her intent to withdraw, the date of
the institution’s determination that the student withdrew would be the
date the student began the official withdrawal process, or the date
of the student’s notification, whichever is later. If a student did not
begin the official withdrawal process or provide notification of his or
her intent to withdraw, the date of the institution’s determination that
the student withdrew would be the date that the school becomes aware
that the student ceased attendance. The types of withdrawal and the
corresponding definition of the date of the institution’s determination
that the student withdrew are listed in the chart on Withdrawal Dates at
the end of this chapter.

For a student who withdraws without providing notification from a

school that is not required to take attendance the school must
determine the withdrawal date no later than 30 days after the end of
the earlier of (1) the payment period or the period of enrollment (as
applicable), (2) the academic year, or (3) the student’s educational
program.
Example of making a
determination at a school
Date of determination at institutions that are
required to take attendance required to take attendance
Consider a school that makes a Institutions that are required to take attendance are expected to
determination on September 10 that a have a procedure in place for routinely monitoring attendance records
student has not been in attendance since to determine in a timely manner when a student withdraws. Except in
September 1. The school contacts the
unusual instances, the date of the institution's determination that the
student who tells the school he or she’s
student withdrew should be no later than 14 days after the student's
been ill but plans on coming back during
the next week (and this falls within the time
last date of attendance as determined by the institution from its
period for excused absences and ab- attendance records. The institution is NOT required to
sences allowed by state, accrediting administratively withdraw a student who has been absent for 14 days.
agency and other applicable policies). For However, after 14 days, it is expected to have determined whether the
the moment, the school may delay taking student intends to return to classes or to withdraw.
any action. However, if the student does
not return, the school must complete a Re- This requirement does not affect a student's withdrawal date. At an
turn calculation using September 1 as the institution that is required to take attendance, a student's withdrawal
student’s last day of attendance, and Sep- date is always the last date of attendance as determined by the
tember 15 as the date of the institution’s institution from its attendance records.
determination that the student withdrew.
The school must return any unearned
A student who ceases attendance during a payment period or
funds by October 15.
period of enrollment is a withdrawal for Title IV purposes unless the
student is on an approved LOA. Therefore, for a student who has
ceased attendance, the institution must either –
Date of determination at an
institution required to take
attendance, cite • place the student on an approved LOA(provided that the
34 CFR 668.22(b)(1) conditions for an approved LOA are met); or
DCL GEN 04-03, February 2004
DCL GEN 04-12, November 2004

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

• withdraw the student and, if the student returns, treat the

student as a reentry if permitted under the regulations.

If an institution has a policy that states the number of excused

absences after which a student will be administratively withdrawn, it
may delay contacting the student until that date. However if the
student eventually is determined to be withdrawn, the date of
determination of the students withdrawal remains 14 days from the
student's last day of attendance.

An institution must return the amount of Title IV funds for which

it is responsible as soon as possible, but no later than 30 days after it
determines or should have determined that the student withdrew.

As noted above, the date of the institution’s determination that the

student withdrew is not necessarily the same as a student’s withdrawal
date. A student’s withdrawal date is used to determine the percentage
of the payment period or period of enrollment completed and,
therefore, the amount of aid a student has earned. The date of the
institution’s determination that the student withdrew is used in the
following circumstances:

• A school must offer any amount of a post-withdrawal

disbursement that is not credited to the student’s account
within 30 days of the date of determination.
• If the student or parent submits a timely response that
instructs the school to make all or a portion of the post-
withdrawal disbursement, the school must disburse the funds
within 120 days of the date of determination.
• A school must document a student’s withdrawal date and
maintain the documentation as of the date of
determination.
• Within 30 days of the date of determination, a school must
notify a student if a grant overpayment is due.
• A school that is collecting an overpayment must require
repayment of the full amount of the overpayment within two
years of the date of determination.
• The school must return the amount of Title IV funds for Date by which funds must be
which it is responsible no later than 30 days after the date of retuned, cite
determination. 34 CFR 668.22(j)

• The amount of aid disbursed as of the date of determination

is used to determine the amount of unearned aid that must
be returned.

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Use of payment period or period of enrollment

The worksheets require that a school indicate whether the
Changing the basis of the calculation is being done on the basis of a payment period or a period
calculation of enrollment. For students who withdraw from semester, trimester, or
A school may change the basis for its
quarter programs, a school must perform the Return calculation on
Return calculations for new students as they
a payment period basis. For students who withdraw from a
begin classes. However, for continuing
students, since the institution’s Return policy
nonstandard term-based or nonterm-based educational program, the
must be included in the published materials school has the choice of performing the Return calculation on either
the school provides to students as part of the basis. The institution must use the same basis (payment period or
consumer information requirement, the period of enrollment) in its calculations for all students within a
school would have to change its catalogue, program who cease attendance.
its written policies and procedures, and its
enrollment agreements (if any), and allow An exception is allowed for students who transfer to or reenter a
sufficient time for those continuing school that offers nonterm-based or nonstandard term-based
students who would be governed by the educational programs. For students who transfer to or reenter a
new policy to receive and review the nonterm-based or nonstandard term-based educational program a
materials.
school may make a separate selection of payment period or period of
enrollment to use in calculating their Return of Title IV funds.

The periods used for transfer and re-entry students do not have to
be the same. A school may choose to use payment period for transfer
students and period of enrollment for reentry students.

Payment period
The definition of a payment period is the same definition used for
other Title IV program purposes. This definition is found in
34 CFR 668.4 (see Volume 3 – Calculating Awards and Packaging).
Schools that use payment periods as the basis for their Return
calculations should note that making multiple disbursements within
a payment period does not create a new or additional payment
period.

Period of enrollment
Period of enrollment cite A period of enrollment is the academic period established by the
34 CFR 668.22(l)(2) school for which institutional charges are generally assessed (i.e., the
length of the student’s program or the academic year, but consistent
with the period for which loans generally are certified).

Applicability
The use of payment period or period of enrollment is important
for many aspects of the Return calculation. For example, if a school is
determining the treatment of Title IV funds on a payment period
basis, the student’s Title IV program assistance to be used in the
calculation is the aid that is disbursed or that could have been
disbursed for the payment period. Also, the institutional charges used
in the calculation would have to reflect the charges for the payment
period.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Generally, the higher the institutional charges, the greater the

amount of unearned aid that is to be returned by the school
(see Step 4). In some cases this mitigates against a school using the
period of enrollment as the basis for the Return to Title IV funds
calculation. An institution must prorate the charges for the period
of enrollment to correspond to a payment period if the institution
has elected to use the payment period rather than period of
enrollment basis for the Return calculations.

If, for a nonterm or nonstandard term program, a school

chooses to calculate Returns on a payment period basis, but the
school charges for a period longer than a payment period (e.g.,
period of enrollment), total institutional charges for the period will
be the greater of the –

• prorated institutional charges for the period, or

• the amount of Title IV assistance retained for institutional
charges as of the student’s date of withdrawal.

Rounding
Enter dollars and cents using standard rounding rules to round to
the nearest penny. Final repayment amounts that the school and
student are each responsible for returning may be rounded to the
nearest dollar.

Percentages are calculated to four decimal places, and rounded to

three decimal places. The third decimal place is rounded up if the
fourth decimal place is 5 or above. For example, .4486 would be
rounded to .449, or 44.9%.

The one exception to the rounding rule occurs in determining

the percentage of Title IV program assistance earned. Students who
withdraw at any point after the 60% point in the payment period or
period of enrollment have earned 100% of their FSA funds. If the
standard rounding rules were used in this situation, a quotient of .6001
through .6004, which is greater than 60%, would be rounded down to
.600 (60%), and the student would not have earned 100% of his or
her Federal Student Aid. Therefore, for the purpose of determining
whether a student has earned 100% of the Title IV funds for the
term, in order to recognize that students completing more than 60%
of the period (by any amount) earn 100% of their Federal Student
Aid, amounts of .6001 through .6004 are not rounded.

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Funds to include in a Return calculation

The calculation of earned Federal Student Aid includes all Title
IV grant and loan funds that were disbursed or that could have been
disbursed to a student for the period of time for which the
calculation is being performed (payment period or period of
enrollment).

The federal portion of GEAR UP grants to students and SSS

grants to students are included in the calculation. However, Federal
Supplemental Educational Opportunity Grant (FSEOG) program
funds and Leveraging Education Assistance Partnership (LEAP)
program funds, formerly known as the State Student Incentive Grant
(SSIG) program funds, are excluded under certain circumstances.

Federal Work-Study (FWS) funds and Byrd Scholarship program

funds are not included in the calculation.

FSEOG program funds

The nonfederal share of FSEOG program funds is excluded when
a school meets its FSEOG matching share by either the individual
recipient method or the aggregate method. If a school meets its
matching share requirement through the use of a fund-specific
match, 100% of the FSEOG award (both the federal and nonfederal
shares) must be included in the Return calculation. Otherwise, the
nonfederal share of FSEOG awards is excluded from the calculation.
For more information on types of FSEOG matching funds see
Volume 6 – Campus-Based Programs.

LEAP program funds

An institution must consider all or a portion of a state grant, as
specified below, to be Federal LEAP Program funds, including for
LEAP Example purposes of the Return calculation, if prior to the date of the
institution’s determination that a student has withdrawn a state
A student receives a $7,000 grant, and the agency provides information to the institution in writing –
state notifies the school in writing that the
grant includes an indeterminate amount of 1. Stating the dollar amount or percentage of a student’s state grant
LEAP funds. $5,000 of the state grant is that is part of the LEAP program. If the state agency specifies
considered LEAP funds. Another student re-
the exact amount or percentage of LEAP funds included in
ceives a $3,000 grant, but the state does
an individual student’s state grant, only the specified amount
not notify the school of its composition. The
$3,000 grant is not considered to be LEAP
or percentage of the student’s state grant up to $5,000 (the
funds. statutory maximum LEAP award) is considered LEAP funds.
2. Identifying a specific student's state grant as containing an
indeterminate amount of LEAP funds. If the state agency
identifies a specific student’s state grant as containing LEAP
Treatment of LEAP funds when a
student withdraws, cite funds but does not provide an exact amount or percentage,
DCL GEN 04-03, February 2004 the entire amount of the grant up to $5,000 is considered
LEAP funds.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

3. Identifying the percentage of LEAP funds in the entire amount of state

grant funds provided to the institution. If the state agency does not
specify the amount of LEAP funds included in a student's
individual grant but does specify the percentage of LEAP funds
in the entire amount of state grant funds provided to the
institution, the institution must apply this percentage to the
individual student's total state grant to determine the amount
of the grant up to $5,000 to be considered LEAP funds.

Example: A Title IV eligible student receives an $8,000 state

grant, and the state specifies that 25% of the state grant funds
provided to the school are LEAP funds. $2,000 of the student’s
grant is considered LEAP funds.
4. Stating that LEAP funds are included in all students' state grants. If
the state agency states that LEAP funds are included in all
students' state grants but does not provide an exact amount or
percentage, the entire amount of all grants up to $5,000 is
considered LEAP funds.
If the Return calculation results in an institution having to return
unearned LEAP funds, the institution returns the funds in accordance
with the guidance of the state agency. This guidance may include
returning the funds to the state agency or re-awarding the funds to
other eligible students at the institution.

A student owing an overpayment of LEAP funds as a result of the

calculation must repay the overpayment to the institution or to the
Department (34 CFR 668.22(h)(4)(i)). If the student repays the
overpayment to the institution, the institution must return the funds to
the state in accordance with the state agency’s guidance.

If an institution refers a LEAP student overpayment to the

Department, the Department considers the state agency to have
paid to the student any Federal or state-matching funds for
purposes of the LEAP program. For example, the funds would be
reported as expended in the appropriate categories on the state
agency’s performance report. Of course, a state agency would have
the option of considering the entire amount of LEAP funds
referred to the Department to consist solely of funds from the
state’s federal allotment if the state meets the LEAP matching
requirements by disbursements of state-appropriated funds to other
state grant recipients.

These policies also apply to the Special Leveraging Educational

Assistance Partnership (SLEAP) Program except that there is no
$5,000 maximum award.

Note that the Department does not require states to notify

institutions of federal and state matching funds that are part of state
grants.

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GEAR UP Program funds

A GEAR UP grantee has an established percentage of matching
funds for each year of a project. That percentage is specified on the
official grant award document received from the Department. If a
GEAR UP grant is included in the aid awarded to a student who has
ceased attendance, the school should include in Step 1 of the
Return calculation the federal portion of that GEAR UP award. So,
if a grantee has a project that is composed of 50% federal funds and
50% matching funds, then the grant of every student who receives a
GEAR UP grant will be considered to be composed of 50% Title IV
funds and 50% matching funds.

For example, consider a school that in its GEAR UP grant

application stated that 50% of its project would be composed of
matching funds. If a student who received a $800 GEAR UP grant
withdraws from that school, the school must include $400 ($800.00
X 50%) identified as GEAR UP grant funds in Step 1 of the Return
calculation.

If a Return calculation results in GEAR UP funds being

returned (included in Step 6, line 7 or Step 8, line 7 of the
worksheet) so long as time remains in the grantee’s award period,
returned funds should be deposited in the institution’s federal
GEAR UP account and awarded to another eligible student. If a
grantee’s GEAR UP award period has ended, the funds should be
returned to the Department using the Electronic Refund Function
in GAPS.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Student Support Services Grants to Students

A Student Support Services (SSS) grantee that has been
awarded funds to make direct grants to SSS student participants will,
unless the institution receiving the grant is eligible to receive funds
under Title III or Title V of the HEA, have provided a dollar in
matching funds for every two dollars received from the Department.
Unless it has indicated in its application that it will be providing
matching funds, a grantee that is eligible to receive a grant under
Title III or Title V of the HEA, must include 100% of a student’s
SSS grant in Step 1 of the Return calculation. (Note: Because the
matching is only on that portion of the SSS grant that is used for
direct grant aid to students, it is not recorded on the official grant
award notification that the institution receives from the
Department.)

However, if an institution is not eligible to receive funds under

Title III or Title V, a third of its SSS grants to students would be
matching funds. At that institution, if an SSS grant is included in
the aid awarded to a student who has ceased attendance, the school
should include in Step 1 of the Return calculation only the federal
portion (2/3) of that SSS grant.

So, if in its application, a grantee said that SSS grants to

students would be composed of 67% federal funds and 33%
matching funds, then the grant of every student who receives an SSS
grant would be considered to be composed of 67% Title IV funds
and 33% matching funds.

If a Return calculation results in SSS funds being returned

(included in Step 6, line 7 or Step 8, line 7 of the worksheet) so
long as time remains in the grantee’s award period, returned funds
should be deposited in the institution’s federal SSS account and
awarded to another eligible student. If a grantee’s SSS award period
has ended, the funds should be returned to the Department using
the Electronic Refund Function in GAPS.

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SPECIAL TREATMENT OF STUDENTS WHO

Reentry within 180 days cite WITHDRAW AND THEN TRANSFER OR RE-ENTER
34 CFR 668.4(e) A CREDIT-HOUR NONTERM -BASED PROGRAM
OR A PROGRAM THAT MEASURES PROGRESS IN
CLOCK HOURS
Re-entry within 180 days
Consistent with leave of absence
This arrangement is similar to an LOA , and A student who re-enters within 180 days is treated as if he or she
the 180-day time frame is consistent with the did not cease attendance for purposes of determining the student's aid
maximum 180 days allowed for an ap- awards for the period.
proved LOA in the Return regulations. The
difference, of course, is that with an unau- For credit-hour nonterm-based programs or programs that
thorized LOA the institution would not know measure progress in clock hours, a student who withdraws and then
that the student would be returning and re-enters the same program at the same school within 180 days is
would have treated the student as a with-
considered to be in the same payment period he or she was in at the
drawal. Based upon that withdrawal, the in-
time of the withdrawal. The student retains his or her original
stitution would have completed the Return
calculation, which may have required both
eligibility for that payment period, and is treated as though he or she
the institution and the student to return funds did not cease attendance.
to the Title IV programs.
A student who re-enters a credit-hour nonterm-based program or a
If the student returns within 180 days to his or program that measures progress in clock hours within 180 days of his
her original program, while an official leave or her withdrawal is immediately eligible to receive all Title IV funds
was not granted, and the provisions of the that were returned when the student ceased attendance. Thus, upon
Return regulations were applied, upon the the student’s return, the school must restore the types and amount of
student’s return, the student can be treated aid that the student was eligible for before the student ceased
as though he or she had been on an ap- attendance, and schedule the appropriate disbursements. Actions to
proved LOA.
be taken by the school would include:

• re-disbursing aid that had been disbursed and then returned

Costs upon reentry under the Return of Title IV Aid provisions;
The cost of attendance would be the costs
associated with the original period before • disbursing aid the student was otherwise eligible for that had
the student withdrew. Once the student has not yet been disbursed at the time the student withdrew; and
withdrawn and then returned to the same • canceling any overpayments assessed the student as a result
program within a 180-day period, the
of the prior withdrawal.
regulation states that the student remains in
the same payment period. The cost of
attendance for such a student returning to
Once the student completes the payment period for which he or
the same program within 180 days must she has been paid, he or she becomes eligible for subsequent Title IV
reflect the original educational costs student aid payments.
associated with the payment period from
which the student withdrew.

Deferment status for loan funds

If a student re-enrolls in school on at least a
half-time basis before his or her initial grace
period expires, the student regains his or her
in-school status and is entitled to have his or
her grace period made whole again. The
student will have a full initial grace period
when he or she ceases half-time enroll-
ment.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Note: For a student who completed more than 60% of his or her
training before ceasing attendance, the school would not
have returned any Title IV aid. If that student were to
re-enter training within 180 days, because the student had
received 100% of his or her aid for the period, the student
would not be eligible to receive additional Title IV aid until
he or she completed the hours (and weeks for a credit-hour-
without-terms program) in that payment period.

What to do when a student whose overpayment has

been referred to Borrower Services reenters within 180
days
If a student whose overpayment has previously been referred to
When a student re-enters
Borrower Services returns to school within 180 days, the school must within 180 days
send Borrower Services a fax identifying the student overpayment, The return regulations require an institution
and stating that it should be made void. This will allow the Department to return unearned funds for which it is re-
to properly update its records in both the Borrower Services system sponsible as soon as possible, but no later
and NSLDS. than 30 days after the date of the institution's
determination that the student withdrew. If a
This fax numbers are for school use only and only for this purpose student returns to the institution before the
Title IV funds are returned, the institution is
(319) 665-7646 and (319) 665-7647 not required to return the funds.

Note: This process cannot be performed via email. An institution may not delay its Return of
Title IV funds
In the fax, the school must include the – An institution is expected to begin the Return
of funds process immediately upon its deter-
• award year of the overpayment; mination that a student has withdrawn. The
• student’s social security number; institution may not delay returning Title IV
funds because it believes a student might
• student’s last name, first name, and middle initial; return.

• student’s date of birth;

• type of overpayment — Federal Pell Grant or FSEOG;
• the disbursement date the institution used to create the
overpayment record to NSLDS;
• a letter that includes the following:

This student has returned to school. The regulations (34 CFR 668.4(e))
require that the overpayment referenced herein be voided.

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Re-entry within 180 days, example

Consider a student who began attendance in a clock-hour program that
was 1500 hours in length with a defined academic year of 900 hours. For
the first 450 hour payment period the student was awarded and disbursed
$1500 in Pell Grant funds, $500 in FSEOG funds, and $500 in federal
education loan funds, for a total of $2500 in Title IV aid.

Assume that this student withdrew from school after completing 225
hours of the 325 hours he or she was scheduled to complete by that point
in the payment period (50%), and the school uses payment periods to
calculate the Return of Title IV Aid. Under the Return regulations, the school
used actual hours attended (225) to determine that the student earned 50%
of his or her Title IV aid (because the student had not completed at least
70% of the scheduled hours, the school may not use the 325 scheduled
hours). The school returned $500 to the loan program.

The school applied the 50% grant protection, and the student incurred
a Title IV grant overpayment of $375. The student repaid the school $100,
and made satisfactory arrangements with the school to repay the balance.

If the student returns to the same program at the same school within
180 days of the withdrawal, the student would be considered to be in the
same payment period, and the student’s eligibility for Title IV aid should be
the same as if the student had not left. Thus, the school should request that
the lender redisburse the $500 the school had returned, cancel the $275
grant overpayment, and redisburse the $100 that had been repaid by the
student. In addition, the institution would schedule additional Title IV
disbursements for the day on which the student is expected to complete
the remainder of the payment period.

If the student withdraws again before completing the payment period,

the institution would apply the provisions of the Return regulations using
the total number of hours the student completed in the numerator, the full
450 hours in the payment period in the denominator, and then applying
that fraction to the total Title IV aid disbursed for the period.

When a student re-enters in a new award year

A student who was originally enrolled in a payment period that
began, and was scheduled to end in one award year could return after
the end of that award year (June 30). However, the intent of the new
regulations is that such a student is to be considered, upon his or her
return, to be in the same period. Therefore, any Title IV program
funds that will be disbursed to the student should be paid from the
original award year regardless of whether the resumption of the
payment period is in a new award year.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Consider a student who received Pell Grant funds and ceased

attendance in one award year who then re-enters training within 180 Requesting Administrative Relief
days, but in a new award year. If the school returned funds after a by Email
A school can also request administrative
Return calculation, the student might be due Pell funds from an award
relief by sending an Email directly to
year that is over. In order to request these funds, the school will have
to go to the COD web site at [email protected]

https://cod.ed.gov/cod The request must include the

• reason (reentry within 180 days);
log in under the School tab using the school’s user name and pass- • school’s Pell ID number;
word (available from the school’s system administrator), select “Post • name of the person to contact;
Deadline System Processing,” on the left side and request • the contact’s phone number; and
administrative relief with “Re=entry within 180 days” as the reason. • the contact’s Email address.

For the campus-based programs, if funds are not available from the
Generally, a school may request adminis-
year in which the awards were originally made, the school may award
trative relief for a student who re-enters
funds from the current year. Note that doing this does not training during the award year following
increase the annual maximum awards that may be made to an the award year in which the funds were
individual student. originally awarded.

Reentry after 180 days, transfer into a new program at

the same institution, or transfer to a new institution
If a student who previously attended and then withdrew from a Re-entry after 180 days cite
credit-hour nonterm program or a clock-hour program without 34 CFR 668.4(f)
completing the period –

• reenters the same program at the same institution more

than 180 days after withdrawal, receiving credit for hours
previously earned; or
• transfers into another credit-hour nonterm or clock-hour
program at any time (either at the same institution or at a
new institution) and the institution accepts all or some of
the hours earned in the prior program; then
the student starts a new payment period when he or she re-enters or
transfers.

In calculating awards for a student who re-enters after the same

program after 180 days, re-enters in a new program, or transfers to a
new institution, the institution treats the hours remaining in the
program as if they are the student's entire program. The number of
payment periods and length of each payment period are determined
by applying the rules in the appropriate part of the definition of a
payment period to the hours remaining in the program upon transfer
or re-entry.

For students who remain in continuous enrollment at an

institution but change their declared academic goal (e.g., change
programs or change their majors), there is not always a clear
distinction between withdrawing from a program or major without
withdrawing from the institution, and withdrawing from the institution
and then re-entering the institution in a new program. A school has an
option in how it manages program transfers within the institution.
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A school might treat the student as one who withdraws and re-
enters. If so, the school must administratively withdraw the student
from the institution, perform a Return calculation, reenroll the
student in the new program, and start the student at the beginning of
a new payment period for his enrollment in the new program. Or, a
school might treat the student as one who is merely changing
programs without withdrawing from the institution. Under this option,
no withdrawal takes place, no Return calculation is performed, and the
student continues in the same payment period he started in with his
original program.

This second approach might be more appropriate when there is

no break (or a minimal one) in attendance, the periods are
substantially the same in length, and there is little or no change in the
charges to the student. If a student for whom this approach is taken
later withdraws from the institution, the start and end dates used in
Step 2 of the Return calculation will be the start of the first program
and the end of the second. The charges used in Step 5 will be the total
charged the student for the two programs.

Eligibility of transfer students for additional Title IV

funds
Pell Grant scheduled award Generally, at a clock-hour or nonterm credit-hour school, a student
When paying Pell funds to a student who can be paid again for clock hours or credit hours that he or she has
has received Pell disbursements for the already completed at that school only if he or she has completed a
current award year at another institution, the program and re-enrolls to take that program again or to take another
receiving institution, if necessary, must adjust program. In addition, when a student re-enters a clock-hour or credit-
the student’s grant to ensure that the Pell hour nonterm-based program after 180 days, the student may be paid
funds received by the student for the award
for repeated courses.
year do not exceed the student’s scheduled
award. (For more information, see
Calculating a Pell award when a student
For example, a student who withdraws after completing 302
who owes an overpayment returns, in clock hours of a 900 clock-hour program has 148 hours remaining
“Volume 5 – Overawards, Overpayments in the 450-hour payment period. The student reenrolls after 180
and Withdrawal Calculations” and days in the same program and receives credit for 100 hours. The
“Volume 3 – Calculating Awards and program length for purposes of determining the new payment
Packaging.”) periods is 800 clock hours (the remainder of the student's
program), so the new payment periods are 400 hours and 400 hours
(the 302 hours completed and the 148 hours that remained do not
Guarantee agency cooperation apply). Any reduction in the payment would be based on whether
Since the period of attendance for which the student's scheduled award or annual loan limits are exceeded.
School 1 previously certified the transfer (If the student in this example received no credit for previously
student’s loan might have included the completed hours, the student's program length for purposes of
dates for which School 2 is attempting to determining the payment periods would be 900 clock hours.)
certify a loan, some guarantee agencies
might require clarification from one or both However, a transfer student’s eligibility for additional Title IV
schools before they will certify a new loan funds may be subject to a variety of limitations associated with the aid
the student received during the student’s most recent period of
attendance. For example, in the Pell Grant Program, a student may
never receive more than his or her Pell scheduled award for an award
year. In the Federal Family Education Loan Program and the Federal
Direct Loan program, application of the annual loan limits impose
additional limitations on a borrower’s eligibility for FFEL funds when
the borrower transfers (see chart).
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 Chapter 2 — Withdrawals and the Return of Title IV Funds

LOAN PRINCIPLES
APPLICABLE TO TRANSFER AND RE-ENTRY AT NONTERM SCHOOLS

1. In nonterm programs, all loans are made on the basis of a Borrower–Based Academic
Year (BBAY). For a student who transfers or re-enters a program, the loan period
certified must be the lesser of the –
a. academic year,
b. the program, or
c. the remaining balance of a program of study.
2. A school may not certify or originate a loan for a period that exceeds 12 months.
3. When we say balance, we mean the borrower’s annual loan limit, less any amount
previously borrowed for the same academic year, plus any amount returned per 34 CFR
668.22.
4. For a transfer student, when an overlap exists between —
a. the academic years at the original and receiving institutions (If the original
academic year is unknown, a school must assume the previous school had an
academic year of 30 weeks.), or
b. the borrower’s original loan period and the borrower’s new period of
attendance,
the borrower is eligible to receive a loan for an amount no greater than the balance (if
any) remaining on the previous loan. The borrower is not eligible for a new loan until
the academic year at the receiving school is over.
Note: Since the period of attendance for which the original school previously certified
the transfer student’s loan might have included the dates for which the receiving
school is attempting to certify a loan, some guaranty agencies might require
clarification from one or both schools before they will certify the new loan.
If there is no overlap, the borrower is immediately eligible to receive a new loan. The
receiving school can certify the borrower for a loan period that corresponds to its
academic year, or the entire balance of the program (so long as that balance does not
exceed 12 months). If the portion of the program that remained was less than an
academic year, the loan would be subject to proration.
5. When certifying a loan for returning student for a new BBAY, the Cost of Education may
include only those costs associated with the period for which the loan is certified. It
may not include any costs used in certifying the previous loan unless those costs
represent charges for which funds were returned to ED or refunded to the student,
subsequent to the previous withdrawal.
6. When a student re-enters the same program within 180 days and before the end of the
student’s initial loan period, as long as the new End Date of the loan period would not
push the loan period beyond 12 months, a school can ask the lender/GA to establish a
new end date for the loan period and reschedule any second or subsequent
disbursements. Similarly, a Direct Loan school could change the original loan period
end date (as long as the new date does not exceed the 12-month limit) and reschedule
the second disbursement. In this case the student is held to the same disbursement
requirements that applied initially (e.g., for one additional disbursement, they must
complete 1/2 the coursework and 1/2 the time in the loan period before they can
receive the second disbursement).

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Loan Principles, contd.

7. When a student re-enters the same program within 180 days and before
the end of the student’s initial loan period, if the new end date pushes
the loan period beyond 12 months, or the lender or GA declines to
adjust the loan period and reschedule the second disbursement, the
school can ask the GA to approve a loan with a new loan period that
begins on the date the borrower returns to school and extends for
either the balance of the program, an academic year, or 12 months
whichever is shorter. The student is eligible to receive only the balance
of the loan, and it must be made in multiple disbursements.

The borrower would be ineligible for a new loan until the loan period
ended. If some portion of the program remains after the completion of
the new loan period, the school could certify another new loan for that
portion of the program. If the portion of the program that remained was
less than an academic year, the loan would be subject to proration.
8. If a student re-enters a program after the end date of the initial loan
period or BBAY, a school may certify a new loan for either the balance of
the program, an academic year, or 12 months whichever is shorter. If the
portion of the program that remained was less than an academic year,
the loan would be subject to proration.

BREAKS IN ATTENDANCE FOR STUDENTS

ENROLLED IN PROGRAMS MEASURED IN CREDIT
HOURS WITHOUT ACADEMIC TERMS
In order to receive Federal Student Assistance, a student must
be enrolled in an eligible program. That program has required
courses, some of which must be taken in sequence. If no specific
academic plan exists for a particular student, we consider the
program requirements to be the student's academic plan.

A student who completes a course is expected to begin

attending the next available course in the program, until the
Clarification student completes the credits for which he or she has received
Federal Student Assistance. If before a student completes the
credits for which he or she has received Title IV, the student fails to
enroll in the next (appropriate in sequence) course in the program,
the student must be put on an approved LOA or considered
withdrawn.

A student who has completed the credits for which aid was
awarded does not have to be considered a withdrawal or placed on
LOA if he or she takes a break before enrolling in additional
courses.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Transfer student

Example 1

Consider an academic program that consists of 1,500 clock hours, with a

defined academic year of 900 hours and 30 weeks of instructional time. For
students who enter at the beginning of the program, there would be four
payment periods as follows:

1. the first 450 hours of the first academic year;

2. the next 450 hours of the first academic year;
3. the first 300 hours of the 600 hours remaining in the program; and
4. the final 300 hours of the 600 hours remaining in the program.
If the school accepts a transfer student and grants the student 300 hours of
credit toward the completion of its 1,500 hour program, the school would
subtract the 300 hours from the 1,500 hours in the student’s program, and
determine that the student needs to complete 1,200 hours at the new institution
in order to complete the program.

Then, consistent with the regulations in 34 CFR 668.4(b), the school

determines the payment periods in the 1,200 hours that constitute the student’s
program. Since the number of remaining hours in the program is greater than an
academic year, the payment periods for the rest of the program are:

1. the first 450 hours after the student transfers, and comprising the first half
of an academic year;
2. the next 450 hours in the academic year following the student’s transfer;
and
3. the 300 hours remaining in the program (since this balance is one-half of
an academic year or less).
The institution would then award and disburse Title IV aid based upon the
length of the payment period(s) consistent with the awarding rules under each
of the Title IV programs and the Cash Management rules contained in Subpart K
of Part 668 of the regulations.

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Transfer Student, Example 2

On August 1, 2003, David Allen enrolled at Penny’s Hair Academy (PHA). After
completing 400 of the 900 clock hours in his program, David had to relocate, and
he withdrew from school.

On February 1, 2004, having settled into his new home, David enrolled at
Marion’s Esthetics Institute (MEI) as a transfer student. David was awarded 400
clock hours of transfer credit in MEI’s 1000 clock-hour program (the program
definition of an academic year is 900 clock hours).

When the financial aid officer (FAO) at MEI examined David’s 2003-2004 ISIR,
he found the following entry:

%Sch. Used: 50.0 As Of: 01/28/2004 Pell Verification EFC: 0

The FAO subtracted the 50% used previously from 100% and found that the
percentage of David’s scheduled award that remained unused was 50%.
Therefore, David was eligible to receive 50% of his scheduled Pell award of
$4,050 during the balance of the award year. In addition, the FAO used the 600
hours remaining in David’s program to establish the appropriate payment
periods (per 34 CFR 668.4(b)) of 300 clock hours each.

The aid officer performed the required multiplication and determined that
David could receive as much as $2,025 (.50 X $4,050 = $2,025) if he remained
enrolled at MEI for the balance of the year.

During the first payment period, David received $1,350

$4050 X 300 (hours in the period) ÷ 900 (hours in the academic year)= $1,350

in Pell funds. However, in the second payment period, David could only receive
funds until his total Pell at EIA reached $2,025 (his total for the year reached
$4,050). Therefore, for the second payment period at MEI, David could only
receive $675 ($2,025 — $1,350 = $675).

On February 5, 2004, David came to the FAO at MEI and inquired about a loan
like the one I had at PHA. The FAO examined David’s ISIR and his record in NSLDS
and determined that David had received $1,313 in loan funds (from his first-year
loan of $2,625) while attending PHA.

The FAO tells David that because there is an overlap of the two school’s
academic years, David is only eligible to receive a loan for the balance of his
eligibility as a first-year student — $1,312. In addition, the FAO tells David that
the one-half of his loan will be disbursed within a few days, and the balance
when David has completed 300 clock hours (half of the hours in the remainder
of his program) and reached the midpoint of the loan period).

In the next section, we will discuss the data elements in the order in which they occur on the
worksheets. The discussion that follows is not a set of instructions. It is an explanation of the cri-
teria a school must consider as it enters data in the steps of the calculation.
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 Chapter 2 — Withdrawals and the Return of Title IV Funds

STEP 1: STUDENT’S TITLE IV AID INFORMATION

Title IV aid disbursed
A school must calculate the amount of earned Title IV funds by When a school makes a single
applying a percentage to the total amount of Title IV program disbursement of an FSEOG
assistance that was disbursed and that could have been disbursed.
Under Step 1 of the worksheet, a school fills in the amount of each If a student is receiving an FSEOG of less
type of Title IV aid that was disbursed and that could have been than $501 a school may pay the student the
entire grant in one disbursement. However, if
disbursed. When entering the amount of loan funds, a school should
a student who received or was scheduled
enter the net amount disbursed and that could have been disbursed.
to receive his or her entire FSEOG award in
one disbursement subsequently withdraws,
Generally, a student’s Title IV funds are disbursed when a school the school must attribute the FSEOG over all
credits a student’s account with the funds or pays a student or parent periods for which the FSEOG was awarded.
directly with If the disbursement has already been
made, the school must immediately return
• Title IV funds received from the Department, or amounts intended for periods in which the
student did not begin attendance. In the
• FFEL funds received from a lender, or institutional funds Return calculation the school should include
used in advance of receiving Title IV program funds. only that portion of the FSEOG
There are a couple of exceptions to this definition. For a attributed to the period from which the stu-
complete discussion of the definition of disbursed Title IV funds, see dent withdrew.
Volume 4 – Processing Aid and Managing Federal Student Aid Funds.
For example, if Preflight Community College
(PCC) awards and disburses to Bob an
A student’s aid is counted as aid disbursed in the calculation if it is FSEOG of $500 for an award year consisting
disbursed as of the date of the institution’s determination that the of two semesters, and Bob withdraws
student withdrew (see the discussion under Date of the institution’s during the first semester, PCC must
determination that the student withdrew). immediately return the $250 that was
attributed to the second semester. In the
A school may not alter the amounts of Title IV grant and loan Return calculation, PCC includes as Aid that
funds that were disbursed prior to the school’s determination that the was disbursed only the $250 attributed to
student withdrew. For example, a school may not replace a withdrawn the first semester.
student’s loan funds with grant funds that the student was otherwise
eligible to receive before performing the Return calculation.

Title IV aid that could have been disbursed

In addition to aid disbursed, aid that could have been disbursed is
PLUS loan denied
also used in the calculation. There are two principles that govern the If a PLUS loan is included in a Return
treatment of disbursements of Title IV funds in Return calculations. calculation and later the loan is denied by
The first principle provides that, for purposes of determining the lender, the school should revise its
earned Title IV aid, so long as the conditions for late disbursements Return calculation. If there has been a
in 34 CFR 668.164(g)(2) (described below) were met prior to the change in the amount the student or school
date the student became ineligible, any undisbursed Title IV aid for must return, the school must make the
the period for which the return calculation is performed is counted appropriate adjustments to its records and
as aid that could have been disbursed (regardless of whether the the COD systems. If the denied PLUS loan
institution was prohibited from making the disbursement on or was the only Title IV assistance for which the
before the day the student withdrew because of the limitations in student was eligible, no Return calculation
would have been required.
34 CFR 668.164(g)(4) or elsewhere).

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Any undisbursed Title IV aid for the period that the school uses
Conditions for late disbursement
as the basis for the Return calculation is counted as aid that could
cite
34 CFR 668.164(g)(2)
have been disbursed as long as the following conditions were met
before the date the student became ineligible –
Limitations on making a late disbursement
1. the Department processed a Student Aid Report (SAR) or
cite
34 CFR 668.164(g)(4)
Institutional Student Information Record (ISIR) with an
official Expected Family Contribution (EFC) for the student
(except in the case of a PLUS loan);
An “official EFC” is an EFC calculated by the
Department and provided on a SAR or ISIR. 2. for a FSEOG award, the institution made the award to the
It may or may not be a valid EFC (defined student;
as an EFC based on information that is cor-
rect and complete). 3. for an FFEL loan or a Direct Loan, the institution certified
or originated the loan, as applicable; and
4. for a Federal Perkins Loan, the institution made the award
to the student.

As described in DCL GEN-05-16, and effective with its

publication on October 27, 2005, a promissory note must be signed
New for a loan to be included as Aid that could have been disbursed in a Return
calculation. The signature may be obtained after the student
withdraws, however the promissory note must be signed before the
school performs the Return calculation.

Of course, a school can only include aid (e.g., the loan funds) for
the period for which the institution does the Return calculation. If the
calculation is being done on a payment period basis, the loan funds
counted are those for the payment period; if the calculation is being
If a student who is otherwise eligible for a
done on the period of enrollment basis (e.g., the academic year basis),
late first disbursement drops below half- the loan funds counted are those for the entire period of enrollment.
time enrollment and then withdraws, the
institution would include any undisbursed The second principle provides that a student can never receive
Stafford loan funds in the Return calculation as a post-withdrawal disbursement any funds from a disbursement
as “aid that could have been disbursed.” that the institution was prohibited from making on or before the
However, an institution may never make a date the student withdrew. Therefore, although the following
post-withdrawal disbursement of Stafford potential disbursements can be counted as Aid that could have been
funds a student could not have received if disbursed (if intended for the period for which the Return
he or she had remained in school. calculation is being performed) an institution is prohibited from
disbursing –

1. for nonstandard term credit-hour programs where the terms

are not substantially equal in length, credit-hour nonterm
programs, and clock-hour programs, a second disbursement
of FFEL or Direct Loan funds where the student has not
reached the later of the calendar midpoint of the loan
period, or the date that the student completes half of the
academic coursework or clock hours (as applicable) in the
loan period (34 CFR 682.604(c)(7) or (8), or 34 CFR
685.301(b)(5), or (6));
2. a second or subsequent disbursement of FFEL or Direct
Loan funds unless the student has graduated or successfully
completed the loan period (34 CFR 668.164(g)(4)(ii));

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

3. a disbursement of FFEL, Direct, or Perkins loan funds for

which the borrower has not signed a promissory note;
4. for clock-hour or credit-hour nonterm programs, a
disbursement of a Federal Pell Grant for a subsequent
payment period when the student has not completed the
earlier payment period (34 CFR 690.75(a)(3));
5. a disbursement of an FFEL or Direct Loan to a first-year,
first-time borrower who withdraws before the 30th day of the
student's program of study (34 CFR 668.164(g)(4)(iii)); and
6. a disbursement of a Federal Pell Grant to a student for
whom the institution did not have a valid SAR/ISIR by the
deadline established by ED (34 CFR 668.164(g)(4)(iv))
annually in the public deadline notice.

Some schools can use the 50% point as the withdrawal date for a
student who unofficially withdraws in determining earned Title IV aid.
However, in order to determine whether the funds can be disbursed
as a post-withdrawal disbursement, the school must make a separate Important
determination of the date the student lost eligibility.

Treatment of inadvertent overpayments

An inadvertent overpayment occurs when an institution disburses
When a student who is receiving a loan
funds to a student who is no longer in attendance, for example, when
for a single term unofficially withdraws
an institution makes a scheduled disbursement on Monday to a
and the school uses the midpoint of the
student who dropped out on the previous Friday. Inadvertent term as the withdrawal date, the student
overpayments are now included in Return calculations as Aid that is not eligible to receive the second dis-
could have been disbursed rather than Aid that was disbursed. bursement of the loan.

Previously, the Department agreed to permit an institution to

include inadvertent overpayments in the calculation of total aid Discussion of inadvertent
disbursed only for the administrative ease of the institution. overpayments cite
Specifically, the Department permitted the inclusion of inadvertent Federal Register Volume 64, Number 151,
overpayments in total aid disbursed in a very limited number of August 6, 1999, Proposed Rules, page
circumstances, and only to prevent the burden of an institution having 43026
to return Title IV, HEA program funds, only to have to disburse them Federal Register Volume 64, Number 210,
November 1, 1999, Rules and Regulations,
again if a post-withdrawal disbursement was due.
page 59018
DCL GEN 04-03, February 2004
The decision to permit a school to hold an inadvertent
overpayment while determining if the student was owed a post-
withdrawal disbursement was not intended to affect the amount of aid
a student would receive under a Return calculation. Only a student
who meets the criteria for a late disbursement is entitled to keep funds
disbursed as an inadvertent overpayment.

However, including those amounts in the Return calculation as

Aid that could have been disbursed may result in a student being
able to keep more grant funds.

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An inadvertent overpayment does not create a separate basis for

permitting funds to be paid to a student’s account. So, if an
inadvertent overpayment does not meet the criteria for a late
disbursement, the second principle above under Title IV aid that
could have been disbursed applies and neither the institution nor the
student may retain any portion of the overpayment.

In order to be consistent with the aforementioned second

principle, an institution must now treat inadvertent overpayments as
aid that could have been disbursed, rather than aid that was disbursed.
If the inadvertent overpayment could not have been made as a late
disbursement under the regulations, the institution must return the
entire amount of the overpayment. If the overpayment could have
been made as a late disbursement, the institution must return only the
unearned portion of the inadvertent overpayment.

An institution is not required to return the inadvertent

overpayment immediately, but must return it within 30 days of the date
of the institution's determination that the student withdrew (the time
frame for an institution’s return of Title IV funds under 34 CFR
668.22(j)(1)). An institution must return an inadvertent overpayment
in accordance with the applicable regulations for returning
overpayments.

For example, if a late disbursement would have been prohibited

because the student had withdrawn and the disbursement would have
been a late second or subsequent disbursement of an FFEL or Direct
Loan, the inadvertent overpayment must be returned because the
student had not successfully completed the period of enrollment for
which the loan was intended (34 CFR 668.164(g)(4)(ii)).

Important: Institutions are expected to have the administrative

capability to prevent inadvertent overpayments on a
routine basis. Specifically, an institution is expected to
have in place a mechanism for making the necessary
eligibility determinations prior to the disbursement of
any Title IV, HEA program funds — for example, a
process by which withdrawals are reported immediately
to those individuals at the institution who are responsible
for making Title IV, HEA program disbursements.
During a program review we would question a pattern or
practice of making these inadvertent overpayments.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Examples of second or subsequent FFEL/DL disbursements

and an example of a second payment period Pell
disbursement

Example 1

Consider a student who withdrew after completing 400 clock hours in a 900
clock-hour program and before passing the midpoint in calendar time of the
loan period. The loan period is the 900 clock-hour academic year. The payment
periods are 450 hours each. The Return calculation is done on a period of
enrollment basis. Half of the FFEL or Direct Stafford loan and half of a Federal
Pell Grant were disbursed at the beginning of the first payment period and the
student was scheduled to receive the other half in the second payment period.
Because the student had not completed half of the clock hours and, for the loan,
half of the time in the loan period, the student was not eligible to receive the
second installment of the loan and the Federal Pell Grant. Therefore, the second
disbursements were not made before the student withdrew.

Under current guidance, the second disbursements of both the Pell Grant
and the loan are included as aid that could have been disbursed in the
calculation of earned Title IV aid so that the amount of Title IV aid used in the
calculation (and earned by the student) will be larger.

Please note, however, the institution still may not make a post-withdrawal
disbursement from the second scheduled disbursements of the FFEL or Pell funds
because of the prohibition on making these disbursements.

Example 2

Consider a student who completed 500 clock hours in a 900 clock-hour

program and passed the midpoint in calendar time of the loan period at an
institution that uses the period of enrollment as the basis for its Return
calculations. The loan period is the 900 clock-hour academic year. The payment
periods are 450 hours each. Half of the Stafford loan was disbursed at the
beginning of the first payment period and the student was scheduled to receive
the second half in the second payment period. Although the student completed
half of the clock hours and passed the midpoint in calendar time of the loan
period, and was otherwise eligible to receive the second installment of the loan,
the second disbursement of the loan was not disbursed before the student
withdrew. Because the Department had processed a SAR/ISIR, and the institution
previously had certified or originated the loan before the student lost eligibility,
the second disbursement of the loan is included as aid that could have been
disbursed in the calculation of earned Title IV aid.

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Example 2, contd.

However, the late disbursement regulations prohibit an institution from

making a second or subsequent disbursement of a FFEL or Direct Stafford Loan
unless the student has graduated or successfully completed the period of
enrollment for which the loan was intended. The Return requirements, including
the post-withdrawal disbursement requirements, do not supersede this provision.
Therefore, although in some circumstances, a second or subsequent FFEL or
Direct Loan disbursement is counted as aid that could have been disbursed
for purposes of determining earned Title IV aid, the funds may not be
disbursed as part of a post-withdrawal disbursement.

Example 3

Consider a student who withdraws after completing 350 clock hours in a 900
clock-hour program at an institution that uses the period of enrollment as the
basis for its Return calculations. The loan period is the 900 clock-hour academic
year. The payment periods are 450 hours each. The institution chooses to disburse
the loan in four disbursements. The first quarter of the Stafford loan for the first
quarter (225 hours) of the period of enrollment has been disbursed. The student is
scheduled to receive the second quarter of the loan in the second half of the first
450-hour payment period. The student withdraws during the first payment period
after receiving only the first disbursement of the loan. The second, third, and
fourth scheduled disbursements of the loan are included in the calculation as Aid
that could have been disbursed, because the school has chosen to perform the
Return calculation on the period of enrollment basis for all students in this
program. However, the institution may not make a post-withdrawal disbursement
from the second (or subsequent) scheduled disbursement of the loan because of
the prohibition on making second or subsequent disbursements of FFEL or Direct
Stafford loans when a student has not completed the period for which the loan
was intended.

Late arriving aid

If a school is determining the treatment of Title IV funds on a
payment period basis, the student's Title IV program assistance used in
the calculation is the aid that is disbursed or that could have been
disbursed for the payment period during which the student withdrew.
(Also, the institutional charges used in the calculation would have to
reflect the charges for the payment period.)

If aid that could have been disbursed during a previous payment

period (completed by the student) is received in a subsequent period
during which the student withdrew, the aid is not considered Aid
Disbursed or Aid That Could Have Been Disbursed in the period during
which the student withdrew. This late-arriving assistance, while it can
be disbursed in the current term, is disbursed for attendance in the
previous term. Therefore, it is not included in the Return calculation
for the period in which the student withdrew.

For a student who has withdrawn, a school cannot disburse aid

received for a previous semester unless the student qualifies for a late
disbursement.
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 Chapter 2 — Withdrawals and the Return of Title IV Funds

STEP 2: PERCENTAGE OF TITLE IV AID EARNED

The percentage of Title IV aid earned is determined differently for
credit-hour program withdrawals and clock-hour program withdrawals.
The requirements for determining a student’s withdrawal date,
however, differ based on whether a school is required to take
attendance or not. The withdrawal date is used to determine the point
in time that the student is considered to have withdrawn so the
percentage of the payment period or period of enrollment completed
by the student can be determined. The percentage of Title IV aid
earned is equal to the percentage of the payment period or period of
enrollment completed.

If the day the student withdrew occurs on or before the student

completed 60% of the payment period or period of enrollment, the
percentage earned is equal to the percentage of the payment period
or period of enrollment that was completed. If the day the student
withdrew occurs after the student has completed more than 60% of
the payment period or period of enrollment, the percentage earned is
100%.

Part 1 – Withdrawal date

The definition of a withdrawal date as outlined here is required for
Title IV program purposes only—including the withdrawal date that a
school must report to a lender if FFEL program funds were received
or to the Department if Direct Loan program funds were received. A
school may, but is not required to, use these withdrawal dates for its
own institutional refund policies.

The definition of a withdrawal date is used in determining the

amount of aid a student has earned. Do not confuse it with the date of
the institution’s determination that the student withdrew, discussed
previously and used for other purposes in the Return of funds
process.

Withdrawal date for a student who withdraws from

a school that is required to take attendance
Withdrawal date at schools
The goal of the Return provisions is to identify the date that most required to take attendance cite
accurately reflects the point when a student ceases academic 34 CFR 668.22(b)
attendance, not the date that will maximize Federal Student Aid to the
institution or to the student. Generally, the most precise determination
of a student's withdrawal date is one that is made from institutional
attendance records.

If a school is required to take attendance, a student’s withdrawal

date is the last date of academic attendance as determined by the
school from its attendance records. This date is used for all students
who cease attendance, including those who do not return from an
approved LOA or who take an unapproved LOA.

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Documenting a student’s
Documentation
withdrawal date cite A school must document a student’s withdrawal date and maintain
34 CFR 668.22(b)(2) that documentation as of the date of the institution’s determination
34 CFR 668.22(c)(4) that the student withdrew. If a school is required to take attendance, it
is up to the school to ensure that accurate attendance records are kept
for purposes of identifying a student’s last date of academic
attendance. A school must also determine the attendance records that
most accurately support its determination of a student’s withdrawal
date and the school’s use of one date over another if the school has
conflicting information.

Determining a student’s withdrawal date at a

school that is not required to take attendance
Determining a student’s If a school is not required to take attendance, the determination of
withdrawal date at a school a withdrawal date varies with the type of withdrawal. The chart on
that is not required to take Withdrawal Dates at the end of this chapter lists the withdrawal date
attendance cite for the various types of withdrawals, as well as the date of the
34 CFR 668.22(c) institution’s determination that the student withdrew for each type of
withdrawal.

Official notification
Official notification cite A student may provide official notification of his or her intent
34 CFR 668.22(c)(1)(i) and (ii) to withdraw by following the school’s withdrawal process. In this
case, the withdrawal date is the date the student begins the school’s
withdrawal process. A student may also provide official notification
Official notification defined in other ways. If a student otherwise provides official notification
A notice of intent to withdraw that a student (as explained below), the withdrawal date is the date notification
provides to an office designated by the insti- was provided.
tution.
34 CFR 668.22(c)(5)(i) These withdrawal dates apply even if a student begins the
school’s withdrawal process or otherwise notifies the school of his
Notification example or her intent to withdraw and projects a future last date of
For example, if on May 5, a student pro- attendance. However, a school that is not required to take
vided notification of his or her intent to attendance may always use a last date of attendance at an
cease attending the school beginning on academically related activity as a student’s withdrawal date (this is
May 10, the withdrawal date is May 5. discussed in detail below). Therefore, a school could use a later
However, the school may use May 10 as last documented date of attendance at an academically related
the student’s withdrawal date if the institu- activity if this date more accurately reflects the student’s withdrawal
tion documents May 10 as the student’s
date than the date the student begins the school’s withdrawal
last date of attendance at an academically
process or notifies the school of his or her intent to withdraw.
related activity.

School’s withdrawal process

Again, for a student who provides official notification of his or
A school is expected to identify the her intent to withdraw by following the school’s withdrawal
beginning of its process as a part of the process, the withdrawal date is the date the student begins the
school’s consumer information regarding school’s withdrawal process (unless the school chooses to use a
withdrawal (see “Volume 2 – School
last date of attendance at an academically related activity). The
Eligibility and Operations”). A school
beginning of the school’s withdrawal process must be defined. The
should be able to demonstrate consistent
application of its withdrawal process,
individual definition is left up to the school. Schools are required
including its determination of the beginning to make available to students a statement specifying the
of that process. requirements for officially withdrawing from the school.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

The distinction is that while the institution’s officially

defined withdrawal process might include a number of required
steps, and though the institution might not recognize the
student’s withdrawal (for purposes of determining an
institutional refund) until the student has completed all the
required steps, for the purpose of calculating the Return of Title
IV funds, the date the student began the institution’s withdrawal
process is the withdrawal date for Title IV purposes.

Otherwise provides official notification

Official notification to the school occurs when a student Otherwise provides official
notification cite
notifies an office designated by the school of his or her intent to
34 CFR 668.22(c)(5)
withdraw. In its written description of its withdrawal procedures a
school must designate at least one office for this purpose. For If the student provides notification to an
example, a school could designate a dean’s, registrar’s, or financial employee of a designated office while that
aid office. If a student provides notification to an employee of that person is not acting in his or her official
office while that person is acting in his or her official capacity, the capacity (for example, the student runs into
student has provided official notification. her financial aid officer at the grocery store)
we would expect the employee to inform the
Official notification from the student is any official notification student of the appropriate means for provid-
that is provided in writing or orally to a designated campus ing official notification of his or her intent to
official acting in his or her official capacity in the withdrawal withdraw.
process. Acceptable official notification includes notification by a
student via telephone, through a designated Web site, or orally in
person. The responsibility for documenting oral notifications is the
school’s; however, the school may request, but not require, the
student to confirm his or her oral notification in writing. If a
student provides official notification of withdrawal to the
institution by sending a letter to the designated office stating his
or her intent to withdraw, the withdrawal date is the date that
the institution receives the letter. Notification is not provided to
an institution until the institution receives the notification. Note
that an institution always has the option of using the date of a
student’s last participation in an academically related activity as
long as that participation is documented by a campus official.

Intent to withdraw means that the student indicates he or she

has either ceased to attend the school and does not plan to resume
academic attendance, or believes at the time he or she provides
notification that he or she will cease to attend the school. A
student who contacts a school and only requests information on
aspects of the withdrawal process, such as the potential
consequences of withdrawal, would not be considered a student
who is indicating that he or she plans to withdraw. However, if the
student indicates that he or she is requesting the information
because he or she plans to cease attendance, the student would be
considered to have provided official notification of his or her
intent to withdraw.

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When a student triggers both dates

When a student triggers both A student might both begin the school’s withdrawal process
dates cite and otherwise provide official notification to the school of his or
34 CFR 668.22(c)(2)(ii) her intent to withdraw. For example, on November 1, a student
calls the school’s designated office and states his or her intent to
withdraw. Later, on December 1, the student begins the school’s
withdrawal process by submitting a withdrawal form. If both dates
are triggered, the earlier date, November 1 in this case, is the
student’s withdrawal date.

Remember that a school that is not required to take attendance

is always permitted to use the last date of an academically related
activity that the student participated in as the student’s withdrawal
date. So, if a student continues to attend class past the date the
student provides notification, and the school chooses to do so,
the school may document and use the student’s last day of
attendance at an academically related activity as the student’s
withdrawal date in the Return calculation.

Official notification not provided by the student

Attendance Records A student who leaves a school does not always notify the school
Only an institution that is required to take of his or her withdrawal. There are two categories of these
attendance by an outside entity is required to unofficial withdrawals for purposes of this calculation. First, if the
use its attendance records to determine a school determines that a student did not begin the withdrawal
student’s withdrawal date. However, an process or otherwise notify the school of the intent to withdraw
institution that is not required to take due to illness, accident, grievous personal loss, or other
attendance by an outside entity but does
circumstances beyond the student's control, the withdrawal date is
take attendance may, in order to use the
the date the school determines that the student ceased
most accurate date of last attendance, use
its attendance records to determine a
attendance because of the aforementioned applicable event.
student’s withdrawal date.
The second category of unofficial withdrawals encompasses all
other withdrawals where official notification is not provided to the
school. This rule applies only to schools that are not required to
take attendance. For these withdrawals, commonly known as
dropouts, the withdrawal date is the midpoint of the payment
period or period of enrollment, as applicable, or the last date of
The use of the midpoint may change the
an academically related activity that the student participated in.
scheduled hours that are used. For
example, say a student completed 200
hours at the point where she was Unofficial withdrawals from clock-hour programs
scheduled to complete 200 hours of a The “completed hours” used in the Return of Aid calculation
450-hour payment period. The student refers to hours actually completed by the student. Although a
withdraws without providing notification.
student’s withdrawal date is the midpoint, the hours the student
The institution uses the midpoint as the
actually completed will not vary. For example, say a student
withdrawal date. To determine whether
hours scheduled to be completed are used
completed 150 hours in a 450-hour payment period and then
to determine earned aid, the institution withdrew without providing notification. The institution chooses to
divides the hours completed (200) by the use the midpoint of the payment period as the student’s
hours scheduled to be completed as of the withdrawal date. To determine earned aid, the institution must use
student’s withdrawal date (225 instead of the hours completed as of the student’s withdrawal date. In this
200). This equals 88.8%, which is greater case, the student has completed 150 hours. So, the percentage
than the 70% threshold, so scheduled earned is 150/450.
hours are used instead of actual hours.
So, the percentage earned is 225/450.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Time frame for the determination of a withdrawal

date for an unofficial withdrawal
A school may not know that a student has dropped out Time frame for the determination
(unofficially withdrawn) until the school checks its records at the cite
34 CFR 668.22(j)(2)
end of an academic period. However, to ensure that Title IV funds
are returned within a reasonable period of time, a school must
determine the withdrawal date (for a student who withdrew
without providing notification) within 30 calendar days from the
earlier of (1) the end of the payment period or period of
enrollment, as applicable, (2) the end of the academic year, or (3)
the end of the student’s educational program.

Withdrawal without student notification due to

circumstances beyond the student’s control
There are two circumstances in which a special rule applies Withdrawal due to circumstances
that defines a withdrawal date for a student who withdraws due to beyond the student’s control cite
34 CFR 668.22(c)(1)(iv)
circumstances beyond the student's control. They apply when
(1) a student who would have provided official notification to the
school was prevented from doing so due to those circumstances;
and (2) a student withdrew due to circumstances beyond the
student's control and a second party provided notification of the
student’s withdrawal on the student’s behalf.

A school may determine the withdrawal date that most

accurately reflects when the student ceased academic attendance
due to the circumstances beyond the student’s control. This date
would not necessarily have to be the date of the occurrence of the
circumstance. For example, if a student is assaulted, he or she may
continue to attend school, but ultimately not be able to complete
the period because of the trauma experienced. Because the
student's withdrawal was the result of the assault, the withdrawal
date would be the date the student actually left the school, not the
date of the assault. A school should document that the student left
at the later date because of issues related to the assault.

If a school administratively withdraws a student (e.g., expels,

suspends, or cancels the student’s registration) who has not
notified the school of his or her intent to withdraw, the last
possible date of withdrawal for the student is the date the school
terminates the student’s enrollment. However, an institution may
not artificially create a withdrawal date for such a student that is
beyond the midpoint of the period by simply choosing to withdraw
the student after the midpoint. Of course, if the school can
document that the student continued his or her attendance past
the midpoint, the school may use a later date.

If an institution administratively withdraws a student because

all of the student’s instructors report that the student has ceased
attendance as of a certain date (e.g., a census date), the last
possible date of withdrawal for that student is the census date.

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All other withdrawals without student notification

All other withdrawals cite For all other withdrawals without notification, the withdrawal
34 CFR 668.22(c)(1)(iii)
date is the midpoint of the payment period or the period of
enrollment, as applicable.

A school must develop a mechanism for determining whether

a student who began attendance and received or could have
received an initial disbursement of Title IV funds unofficially
withdrew (ceased attendance without providing official notification
or expressed intent to withdraw) during a payment period or
period of enrollment, as applicable. Section 34 CFR 668.22(j)(2)
requires that a school have a mechanism in place for identifying
and resolving instances where a student’s attendance through the
end of the period cannot be confirmed. That is, institutions are
expected to have procedures for determining when a student's
absence is a withdrawal. The school must make that determination
as soon as possible, but no later than 30 days after the end of the
earlier of –

1. the payment period or period of enrollment, as

applicable;
2. the academic year; or
3. the program.
When students fail to earn a passing grade
in any of their classes
When a student fails to earn a An institution must have a procedure for determining whether a
passing grade, cite FSA recipient who began attendance during a period completed the
DCL GEN-04-03, February 2004
period or should be treated as a withdrawal. We do not require an
institution to use a specific procedure for making this determination.

If a student earns a passing grade in one or more of his or her

If a school uses its grading policy to classes offered over an entire period, for that class, an institution is
determine whether students with failing permitted to make the presumption that the student completed the
grades have unofficially withdrawn, during
course and thus completed the period. If a student who began
compliance audits and program reviews
attendance and has not officially withdrawn fails to earn a passing
student records might be examined to
determine whether the grades assigned
grade in at least one course offered over an entire period, the
accurately represent the students’ institution must assume, for Title IV purposes, that the student has
attendance. unofficially withdrawn, unless the institution can document that the
student completed the period.

In some cases, a school may use its policy for awarding or

reporting final grades to determine whether a student who failed to
earn a passing grade in any of his or her classes completed the
period. For example, a school might have an official grading policy
that provides instructors with the ability to differentiate between

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those students who complete the course but failed to achieve the
course objectives, and those students who did not complete the
course. If so, the institution may use its academic policy for
awarding final grades to determine that a student who did not
receive at least one passing grade nevertheless completed the
period. Another school might require instructors to report, for all
students awarded a non-passing grade, the student’s last day of
attendance (LDA). The school may use this information to
determine whether a student who received all “F” grades withdrew.
If one instructor reports that the student attended through the end
of the period, then the student is not a withdrawal.

Example of a grading policy that could be used to determine

whether a student unofficially withdrew
F (Failing) Awarded to students who complete the course but fail to achieve the
course objectives.

U (Unauthorized Incomplete) Awarded to students who did not officially

withdraw from the course, but who failed to participate in course activities through
the end of the period. It is used when, in the opinion of the instructor, completed
assignments or course activities or both were insufficient to make normal
evaluation of academic performance possible.

To serve as documentation that a student who received all “F” grades had not
withdrawn, such a grading policy would have to require instructors to award the “F”’
(or equivalent grade) only to students who completed the course (but who failed to
achieve the course objectives). In addition, the policy would have to require that
instructors award an alternative grade, such as the “U” grade (in the example above),
to students who failed to complete the course. If the system allows an instructor to
indicate the date the student last participated in course activities, this date would
be helpful if an institution chose to use attendance at an academically related
activity as a student's withdrawal date.

At a school using such a grading policy, if a student received at least one grade
of “F” the student would be considered to have completed the course and, like a
student who received at least one passing grade, would not be treated as a
withdrawal. A student who did not officially withdraw and did not receive either a
passing grade or an “F” in at least one course must be considered to have
unofficially withdrawn. As noted above, when a student unofficially withdraws from
an institution that is not required to take attendance, the institution may use either
the student’s last date of attendance at an academically related activity or the
midpoint of the period as the student's withdrawal date.

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Last date of attendance at an academically related

activity
Last date of attendance at an A school that is not required to take attendance may always use a
academically related activity cite student’s last date of attendance at an academically related activity, as
34 CFR 668.22(c)(3) documented by the school, as the student’s withdrawal date, in lieu of
the withdrawal dates listed above. So, if a student begins the school’s
withdrawal process or otherwise provides official notification of his or
her intent to withdraw and then attends an academically related
activity after that date, the school would have the option of using that
last actual attendance date as the student’s withdrawal date, provided
the school documents the student’s attendance at the activity. Similarly,
Documentation a school could choose to use an earlier date if it believes the last
Documentation of a student’s attendance at documented date of attendance at an academically related activity
an academically related activity must always
more accurately reflects the student’s withdrawal date than the date
be provided by an official of the institution. A
the student began the school’s withdrawal process or otherwise
student’s self-certification of attendance at an
academically related activity is never
provided official notification of his or her intent to withdraw.
sufficient documentation. However a school
is not required to take class attendance in The school (not the student) must document –
order to demonstrate academic attendance
for this purpose. • that the activity is academically related, and
• the student’s attendance at the activity.
Examples of activities that are not
Please note that a school is not required to take class attendance in
academically related include living in
institutional housing and participating in
order to demonstrate academic attendance for this purpose.
the school's meal plan.
Examples of academically related activities are –

• examinations or quizzes,
• tutorials,
• computer-assisted instruction,
• academic advising or counseling,
• academic conferences,
• completing an academic assignment, paper, or project, and
• attending a study group required by the institution where
attendance is taken.

The determination of a student’s withdrawal date is the

responsibility of the school. Therefore, if a school is using a last date of
attendance at an academically related activity as the withdrawal date,
(see the discussion under When students fail to earn a passing grade in any
of their classes) the school, not the student, must document the
student’s attendance. A student’s certification of attendance that is not
supported by school documentation would not be acceptable
documentation of the student’s last date of attendance at an
academically related activity.

In the absence of evidence of a last day of attendance at an

academically related activity, a school must consider a student who
failed to earn a passing grade to be an unofficial withdrawal.

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Withdrawals after rescission of official notification

A student may provide official notification to the school of the Withdrawals after rescission of
intent to withdraw and then change his or her mind. To allow a official notification cite
student to rescind his or her intent to withdraw for purposes of this 34 CFR 668.22(c)(2)(i)
calculation, the school must obtain a written statement from the
student stating his or her intent to remain in academic attendance
through the end of the payment period or period of enrollment. If the
student subsequently withdraws after rescinding an intent to withdraw,
the withdrawal date is the date the student first provided notification
to the school or began the school’s withdrawal process, unless the
school chooses to document a last date of attendance at an
academically related activity.

For example, Dave notifies his school of his intent to withdraw on

January 5. On January 6, Dave notifies the school that he has changed
his mind and has decided to continue to attend the school, and
provides the required written statement to that effect. On February 15,
Dave notifies the school that he is withdrawing and actually does. The
school has a record of an exam that Dave took on February 9. The
school may use February 9 as Dave’s withdrawal date.

If the school could not or did not choose to document a last date
of attendance at an academically related activity for Dave (in this case,
the record of the exam), his withdrawal date would be January 5, the
date of Dave’s original notification of his intent to withdraw, not
February 15.

Withdrawals from standard term-based programs

using modules
When a student withdraws from a standard term-based program Withdrawal from program
comprised of a series of modules, the school must determine whether offered in modules cite
a Return of Title IV Funds calculation is required and if so, the length DCL-GEN-00-24
of the period of enrollment or payment period, as applicable. Among
the variables a school must consider are whether the student has
completed at least one course and if not, whether the student intends
to return for another module within the term. The principles for
determining the appropriate values to use in a Return of Title IV
Funds calculation are applicable only when the courses and modules
have the following characteristics:

• Some or all of the courses in the program are offered in

modules that are scheduled sequentially rather than
concurrently. (The modules may overlap.)
• The institution has chosen to have two or more modules
make up the standard term (semester, trimester, or quarter).
For example, in each 15-week semester, courses are offered
in three 5-week modules.

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• Students can begin attending at the beginning of any one of

Recalculation required
If a student withdraws after completing one
the modules in a term. For example, a student enrolling in a
module the student is not considered to three module per semester program can start in module two
have withdrawn. However, because the or three as well as in module one.
student failed to begin attendance in the • Students may skip one or more modules within the term.
number of credit hours for which the Federal
For example, a student enrolling in a three module per
Pell Grant was awarded, the institution
semester program can attend module one, skip module two,
must recalculate the student’s eligibility for
Pell and campus-based funds based on a
and return for module three.
revised cost of education and enrollment • Students enroll up-front for courses in all of the modules
status (34 CFR 690.80(b)(2)(ii)). they plan to attend for the entire term; however, some
students may subsequently add or drop a course in a later
For such a student, a change in enrollment
module.
status to less than half time as a result of the
failure to begin attendance in all subsequent
modules would not affect a student's
Regarding those determinations, the following principles apply to
eligibility for any federal education loan the application of the Return provisions:
funds previously received because at the
time the previous disbursements were 1. If a student withdraws from an institution after completing
made, the student was still scheduled to at least one course in one module within the term, the
attend on at least a half-time basis. (Of student is not considered to have withdrawn and the
course, a student may not receive as a late requirements of 34 CFR 668.22 for the Return of Title IV aid
disbursement any second or subsequent do not apply. Note, however, other regulatory provisions
disbursement of the loan.) concerning recalculation may apply.
If a student withdraws without completing at 2. If a student withdraws from the institution before
least one module, the student is considered completing at least one course in one module, the student is
to have withdrawn. Because the student considered to have withdrawn and the requirements for the
failed to begin attendance in the number of Return of Title IV aid apply unless the institution has
credit hours for which the Federal Pell Grant obtained a confirmation from the student that the student
was awarded, before performing the intends to continue in the program by attending a module
required Return calculation, the institution later in the term.
must recalculate the student’s eligibility for
Pell and campus-based funds based on a 3. When a student withdraws without completing at least one
revised cost of education and enrollment course in one module, the number of completed days used
status. The institution then performs a in the numerator in Step 2 of the Return calculation begins
Return calculation using the student’s on the first day of the first module the student attended in
revised award. the term, and includes only the student’s actual days of
attendance. The payment period (the denominator in Step 2
An institution may not disburse the pro-
of the Return calculation) includes all of the modules the
ceeds of an FFEL or Direct Loan to an ineli-
. student was scheduled to attend in the term.
gible borrower. Therefore, if a student who
was enrolled in a series of modules with- 4. A student who has not completed at least one course in the
draws before beginning attendance as a payment period does not have to be considered to have
half-time student, and the student had not withdrawn if the institution has obtained a confirmation
received the first disbursement of an from the student that the student intends to continue in the
education loan before withdrawing, the
program and attend a module later in the term.
institution may not make the first
disbursement because the institution
knows the student was never enrolled on
at least a half-time basis.

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For confirmation, a school may not rely upon the student’s 34 CFR 668.164(g)(3)(iii), which permits an
previous registration. Rather, the confirmation from the institution to make a late disbursement of
student must be obtained at the time of or after the an FFEL or Direct Loan for costs incurred to
student’s withdrawal. If a student indicates an intention to a student who did not withdraw, but
continue in a subsequent module in the term but does not ceased to be enrolled as at least a half-
return for that module, the student would be considered to time student, does not apply because the
student never really was a half-time
have withdrawn and withdrawal date would be the
student.
withdrawal date that would have applied if the student had
not indicated an intention to attend a module later in the
term.

For further treatment of withdrawals from standard term-

based programs using modules, please see DCL-GEN-00-24,
December 2000.

Withdrawal date when a student dies

If an institution that is not required to take attendance is informed
that a student has died, it must determine the withdrawal date for the
student under 34 CFR 668.22(c)(1)(iv). This section provides that, if
the institution determines that a student did not begin its withdrawal
process or otherwise provide official notification of his or her intent to
withdraw because of illness, accident, grievous personal loss, or other
such circumstances beyond the student's control, the withdrawal date
is the date that the institution determines is related to that
circumstance.

The withdrawal date can be no later than the date of the

student’s death. For an institution that is required to take
attendance, the withdrawal date for a student who has died is the
last date of attendance as determined from the institution’s
attendance records. In all cases, the institution should maintain the
documentation it received that the student has died and determine
an appropriate withdrawal date.

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Part 2 – Percentage of Aid Earned

Percentage of payment period or period of
enrollment completed
Percentage of payment period or Once a student's withdrawal date is determined, a school needs to
period of enrollment completed calculate the percentage of the payment period or period of
cite enrollment completed. The percentage of the payment period or
34 CFR (f) period of enrollment completed represents the percentage of aid
earned by the student. This percentage is determined differently for
students who withdraw from credit-hour programs and students who
withdraw from clock-hour programs.

Scheduled breaks
Scheduled breaks cite Institutionally scheduled breaks of five or more consecutive
34 CFR 668.22(f)(2)(i) days are excluded from the Return calculation as periods of
nonattendance and therefore do not affect the calculation of the
Determining the length of a scheduled amount of Federal Student Aid earned. This provides for more
break: equitable treatment of students who officially withdraw near either
1. Determine the last day that class is held end of a scheduled break. In those instances, a student who
before a scheduled break – the next
withdrew after the break would not be given credit for earning an
day is the first day of the scheduled
additional week of funds during the scheduled break, but would
break.
2. The last day of the scheduled break is
instead earn funds only for the day or two of training the student
the day before the next class is held. completed after the break. All days between the last scheduled
day of classes before a scheduled break and the first day classes
Where classes end on a Friday and do not resume are excluded from both the numerator and denominator
resume until Monday following a one-week in calculating the percentage of the term completed.
break, both weekends (four days) and the
five weekdays would be excluded from the If a student officially withdraws while on a scheduled break of
Return calculation. (The first Saturday, the less than five days, the actual date of the student’s notification to
day after the last class, is the first day of the institution is the student’s withdrawal date.
the break. The following Sunday, the day
before classes resume, is the last day of
Please note that the beginning date of a scheduled break is
the break.) If classes were taught on either
defined by the school’s calendar for the student’s program. In a
weekend for the programs that were subject
to the scheduled break, those days would
program where classes only meet on Saturday and/or Sunday, if a
be included rather than excluded. scheduled break starts on Monday and ends on Friday, the five
weekdays do not count as a scheduled break because the break
does not include any days on which classes are scheduled.
If a community college offers regular
Therefore, the five days would not be excluded from the
classes on Saturday and Sunday and its
academic calendar says that a scheduled
numerator or denominator in Step 2 of a Return calculation.
break starts on a Monday and resumes
with classes the following Monday, that
break is seven days long.

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Example of Withdrawal Date When a Student Withdraws

on a Scheduled Break of Five or More Days
If a student officially withdraws while on a scheduled break of five
consecutive days or more, the withdrawal date is the last date of scheduled
class attendance prior to the start of the scheduled break. For example, the
institution's last date of scheduled class attendance prior to spring break is
Friday, March 7. Spring break at the institution runs from Saturday, March 8
to Sunday, March 16. If the student contacts the institution's designated
office on Wednesday, March 12 to inform the institution that he will not be
returning from the institution's Spring break, the student's withdrawal date
is Friday, March 7, which was the institution's last day of scheduled class
attendance.

However, the date of the institution's determination that the student

withdrew is March 12, the date the student actually informed the institution
that he would not be returning. The date of the institution’s determination
that the student withdrew is used as the starting date for institutional action,
such as the requirement that an institution Return Title IV funds for which it
is responsible no later than 30 days after this date.

Credit-hour programs
For a credit-hour program, the percentage of the period Credit-hour programs cite
completed is determined by dividing the number of calendar days 34 CFR 668.22(f)(1)(i)
completed in the payment period or period of enrollment, as of
the day the student withdrew, by the total number of calendar days
in the same period.

The number of calendar days in the numerator or

denominator includes all days within the period, except for
institutionally scheduled breaks of five or more consecutive days.
Days in which the student was on an approved leave of absence
would also be excluded. The day the student withdrew is counted
as a completed day.

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Percentage of Title IV aid earned for withdrawal

from a credit-hour nonterm program
Percentage of Title IV aid earned The regulations provide that the percentage of Title IV aid
for withdrawal from a credit-hour earned by a student is equal to the period completed by the
nonterm program student (except that if that percentage is more than 60%, the
DCL GEN-04-03, February 2004 student is considered to have earned 100% of the Title IV aid). For
any credit-hour program, term-based or nonterm-based, the
percentage of the period completed is calculated as follows

number of calendar days completed in the period

total number of calendar days in the period

Scheduled breaks of at least five consecutive days and days in
which the student was on an approved LOA are excluded from
this calculation (34 CFR 668.22(f)(1)(i) and (2)).

In a credit-hour nonterm program, the ending date for a

period and, therefore, the total number of calendar days in the
period, may be dependent on the pace at which an individual
student progresses through the program. Therefore, for a student
who withdraws from a credit-hour nonterm program in which the
completion date of the period is dependent on an individual
student's progress, an institution must project the completion date
based on the student's progress as of his or her withdrawal date to
determine the total number of calendar days in the period. (See
the example that follows.)

If a student withdraws from a self-paced non-term credit-

hour program before earning any credits, the institution must
have a reasonable procedure for projecting the completion date
of the period. To the extent that any measure of progress is
available, the institution should base its determination on that
progress (see examples 2 and 3).

For a school that offers credit-hour nonterm programs in

which the student does not earn credits or complete lessons as
he or she progresses through the program, the institution must
have a reasonable procedure for projecting the completion date of
the period based on the student's progress before withdrawal. If
the total number of calendar days in the period is not dependent
on the pace at which a student progresses through a program (the
completion date is the same for all students), the total number of
calendar days in the period will be the same for all students.

Consider a nonterm credit-hour program offered in modules

where some or all courses are offered sequentially and all students
begin and end the modules at the same time. For a student who
successfully completed all modules attempted up to the time the

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student withdrew, the completion date (and the corresponding

number of days in the Return calculation) will be the number of
days between the start of the first module and the originally
scheduled end of the last module.

However, an institution must take into consideration any

credits that a student has attempted, but not successfully
completed before withdrawing. (Those credits must be
successfully completed before the student is considered to have
completed the period.)

Calculating a completion date for a student who

withdraws from a credit-hour nonterm program –
Example 1, percentage completed
Barbara, is enrolled in a 24 credit-hour nonterm program at an
institution that calculates Returns on a payment period basis.
Students in the program are expected to complete 12 credit hours
each payment period, in 15 weeks (105 days).

When Barbara began classes she received a Federal Pell Grant

and a Stafford Loan. She completed the 12 credit hours in the first
payment period (the first half of the program) in 120 days (past the
calendar midpoint of the original program length of 210 days).
When Barbara completed the first half of her program she became
eligible for the second disbursements of both her Federal Pell Grant
and Stafford Loan.

Barbara withdrew from school on day 53 of the second payment

period. At the time she withdrew Barbara had completed only one-
third of the work (4 credits) in the payment period. If Barbara had
continued to progress at her current pace of 4 credits earned every
53 days, Barbara would not complete the additional 8 credit hours
for another 106 days. She would not complete the 12 credit hours in
the second payment period until day 159.

For this student, therefore, the total number of days in the

payment period (and the number used in the denominator of the
Return calculation) is 159. The percentage of the payment period
Barbara completed before withdrawing is 33.3% (53 days completed
divided by 159 total days in the payment period).

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Calculating a completion date for a student who withdraws

from a credit-hour nonterm program – Example 2, lessons
completed
David enrolled in a program offered in a credit-hour nonterm format and withdrew
before earning any credits, but has completed two lessons. The institution uses David's
completed assignments as an interim measures of his progress and compares it to
information from its records about other students who have completed the same
program to determine an end date.

Looking at the records of students who have completed the same program, the
institution identifies other students who complete the two lessons in approximately the
same amount of time as David. The school determines the number of days it took those
students to complete the period. The institution uses the same number of days in the
denominator of the Return calculation for David.

Example 3, nothing completed

Danny enrolls in a program offered in a credit-hour nonterm format. Danny
withdraws before earning any credits, completing any lessons, or providing any
other measure of progress toward the course or program goals at the time he
withdrew. The institution uses its records to identify the student who took the
longest to complete the period to determine the number of days it took that
student to complete the period. The institution uses the same number of days in
the denominator of the Return calculation for Danny.

To do this, the school must modify the denominator used in

the Return calculation. The school must add to the number of
days between the start of the first module and the scheduled end
of the last module, the number of days the student spent in the
failed courses/module(s) the student did not successfully
complete.

Clock-hour programs
Clock-hour programs cite Calculation 1 on the clock-hour worksheet determines whether
34 CFR. 668.22(f)(ii) the student withdrew after the student has actually completed
more than 60% of the payment period or period of enrollment. If
the student withdrew after actually completing more than 60% of
the payment period or period of enrollment, the student has
earned 100% of his or her aid so it is not necessary to determine
whether scheduled hours may be used. A school must complete
the rest of the worksheet to determine if a post-withdrawal
disbursement is due.

If a student withdrew on or before the 60% point, the school

must proceed to Calculation 2 to determine if scheduled hours are
to be used in calculating the Percentage of Title IV Aid Earned.

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Use of scheduled hours

If the clock hours completed by the student as of his or her Using portions of a clock hour
withdrawal are equal to at least 70% of the hours that were If an institution tracks the completion of clock
scheduled to be completed by the student, the school uses the hours in portions of an hour, it might be able
scheduled hours in calculating the Percentage of Title IV Aid to use portions of an hour to determine the
percentage of Title IV aid earned when a
Earned. Put another way, students who complete at least 70% of
student withdraws.
their scheduled hours before they withdraw earn Title IV funds
based upon their total scheduled hours for the time they were An institution that tracks the completion of
enrolled, rather than the hours the student completed. Calculation clock hours in portions of an hour (for
2 first determines the percentage of scheduled hours completed. If example, in 15-minute intervals) may use
the result of the ratio of completed to scheduled hours is equal those portions of an hour to determine the
to or greater than 70%, scheduled hours are used and the school percentage of Title IV aid earned when a
must proceed to the second part of Calculation 2. If the student withdraws if the institution counts
percentage of scheduled hours completed is less than 70%, attended portions of an hour toward
completed hours must be used in the calculation of the percentage completion of the program for all students
of the period completed. Calculation 1 determines the percentage in the program. If an institution counts only
of the period completed using completed hours. Therefore, the whole hours with no credit for partially
completed hours toward completion of the
result of that calculation is always used as the percentage of the
program, only whole hours may be used in
period completed.
the Return calculation.

The second part of Calculation 2, which uses scheduled

hours to determine the percentage of the period completed, notes
that using scheduled hours, the percentage of the period
completed may be greater than 60%. This is because the ratio of
completed hours to scheduled hours is being calculated only in
order to determine if the threshold of 70% has been met. It
does not mean that the student earned 100% of his or her aid.

If a student who withdraws has completed more hours than

he or she was scheduled to complete as of his or her withdrawal
date, completed hours are used rather than scheduled hours in
Step 2, Calculation 1, of the Return calculation, (e.g., as when a
student accelerates attendance).

When a student unofficially withdraws from a clock-hour

program, at an institution that is not required to take attendance,
although the withdrawal date may be the midpoint, the hours the
student actually completed will not vary. The Return calculation
for students who withdraw from clock-hour programs always uses
clock hours actually completed as of the last day of attendance, in
Step 2 of the Return calculation when the school is to enter
completed hours. However, for that student, the scheduled hours
(entered in scheduled to complete) in the denominator in Step 2,
Calculation 2 are the scheduled hours as of the midpoint.

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Example of Using Scheduled Hours to Determine the

Amount of Title IV Aid Earned by the Student
Consider a student who withdraws after completing 230 hours in a 450 clock-
hour payment period.

The student was scheduled to have completed 280 hours of the program at
the time he or she withdrew. The student has completed 82% of the scheduled
hours (230/280) in the time he or she was enrolled. Since the scheduled hours
completed (82%) exceeded the attendance threshold of 70%, the school would use
the 280 scheduled hours, rather than the 230 hours that were actually completed,
in calculating the Percentage of Title IV Aid Earned. (If the same student had
completed 230 clock hours while he or she was scheduled to have completed 335
hours at the point of withdrawal, the student’s attendance rate would have been
less than 70% (230 ÷ 335 = 68.7%) and only the 230 completed hours would be
used in the calculation. )

Since the school determined that the student is paid for 280 scheduled hours
of the 450 clock-hour payment period, the percentage used in Box C of Step 3,
would be 62.2% (280/450), even though the student actually completed only
51.1% of the total hours (230/450). Remember, even though the percentage used
in Step 3 is more than 60% (62.2%) the student would not earn 100% of the Title IV
funds because the student did not actually complete 60% of the period, as
determined in Step 2, Calculation 1 (see worksheet).

Excused absences
Excused absences cite Excused absences do not count as completed hours in
34 CFR 668.164(b)(3) and (4) calculating the treatment of Title IV funds when a student
withdraws. For students who withdraw from their programs, the
absences must be counted as scheduled hours that were not
completed. In order to be paid for those hours, the student must
satisfy the 70% attendance measure. Remember that a school may
grant a student a leave of absence if he or she is unable to attend
the school for a period of time but is planning to return to
academic attendance (see the discussion of leaves of absence
earlier in this chapter). For students who do not withdraw from
their programs, the existing policy of not requiring clock hours to
be completed for excused absences of up to 10% of the program
remains (unless the school’s state or accrediting agency policy is
more limited).

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STEP 3: AMOUNT OF TITLE IV AID EARNED

BY THE STUDENT

The amount of Title IV aid earned by the student is determined by Amount of Title IV aid earned
multiplying the percentage of Title IV aid earned (Box C on the by the student cite
worksheet) by the total of Title IV program aid disbursed plus the Title 34 CFR 668.22(e)(1)
IV aid that could have been disbursed to the student or on the
student's behalf (Box B on the worksheet).

Effects of a post-withdrawal reduction in charges

If a student withdraws and as a result of applying an institutional Determining charges cites
refund policy the school reverses, reduces, or cancels a student’s 34 CFR 668.22(a),
charges, the Return requirements still apply. The statute mandates 34 CFR 668.22(g)(2)(ii), and
that an otherwise eligible student who begins attendance at a school DCL-GEN-00-24
and is disbursed or could have been disbursed Title IV grant or loan
funds prior to a withdrawal earns a portion of those Title IV funds.
If after a student withdraws, an institution adjusts or eliminates a
student’s institutional charges, or changes a student’s enrollment
status, the changes made by the institution have no bearing on the
applicability of the requirements in 34 CFR 668.22. Moreover, the
charges used in the Return calculation are always the charges on the
student’s account prior to withdrawal.

STEP 4: TOTAL TITLE IV AID TO BE DISBURSED OR

RETURNED

If the student receives less Federal Student Aid than the amount Title IV aid to be
earned, the school must offer a disbursement of the earned aid that disbursed or returned cite
was not received. This is called a post-withdrawal disbursement. If the 34 CFR 668.22(a)(2) or (3)
student receives more Federal Student Aid than the amount earned,
the school, the student, or both, must return the unearned funds in a
specified order.

Part 1 – Post-withdrawal disbursements

If a post-withdrawal disbursement is due, a school stops at Post-withdrawal disbursements
Step 4, Box E on the worksheet. A school may use the Post-Withdrawal cite
Disbursement Tracking Sheet to track the handling of the post-withdrawal 34 CFR 668.22(a)(3) & (4)
disbursement, or it may use a form developed by someone other
than ED. A school must track post-withdrawal disbursements.
Return calculation required
For a student who withdraws after the 60%
The requirements for a post-withdrawal disbursement are similar
point-in-time, even though a return is not
in many areas to the requirements under Subpart K – Cash required, a school must still complete a
Management of the Student Assistance General Provisions regulations. Return calculation in order to determine
However, in some cases, the post-withdrawal disbursement whether the student is eligible for a post-
requirements differ from the cash management requirements. withdrawal disbursement.

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Any post-withdrawal disbursement due must meet the current

required conditions for late disbursements. For example, ED must
have processed a Student Aid Report (SAR) or Institutional Student
Information Record (ISIR) with an official expected family
contribution (EFC) prior to the student’s loss of eligibility. These
conditions are listed in a chart on Late Disbursements in Volume 4 –
Processing Aid and Managing Federal Student Aid Funds. A school is
required to make (or offer as appropriate) post-withdrawal
disbursements. A late disbursement must be made within 120 days of
the date the institution determines that the student withdrew. The
amount of a post-withdrawal disbursement is determined by following
the requirements for calculating earned Federal Student Aid, and has
no relationship to incurred educational costs.

Crediting a student’s account

An institution should not request Title IV funds for a post-
withdrawal disbursement unless and until it has determined that it can
disburse any post-withdrawal disbursement within three business days
of receiving the funds.

A post-withdrawal disbursement must be made from available

grant funds before available loan funds are used. However, if the
student is due a post-withdrawal disbursement of a federal education
loan, in the information a school provides to a student when the
school informs the student that he or she is due a post-withdrawal
disbursement, the school should include information about the
advantages of keeping loan debt to a minimum. If a post-withdrawal
disbursement is entirely comprised of the loan proceeds, unless the
recipient needs the funds to pay educational costs, the school might
Cash management requirements want to suggest that the student cancel the loan. With a student’s
for student and parent permission, funds due a student in a post-withdrawal disbursement can
authorizations cite be used to pay down a Title IV education loan thereby reducing any
34 CFR 668.165(b) post-withdrawal disbursement made directly to the student.

The requirements for the treatment of Title IV funds when a

student withdraws reflect the cash management requirements for
disbursing Title IV funds. Specifically, a school is permitted to credit a
student’s account with a post-withdrawal disbursement without the
student’s (or parent’s, in the case of a PLUS loan) permission for
current charges for tuition, fees, and room and board (if the student
contracts with the school) up to the amount of outstanding charges.
An institution must obtain a student’s or parent’s authorization to
credit a student’s account for charges other than current charges for
tuition, fees, room and board (if the student contracts with the school)
(see Volume 4 – Processing Aid and Managing Federal Student Aid Funds
and chart on Institutional and Financial Assistance Information for Students
in Volume 2 – School Eligibility and Operations for more information).

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Outstanding charges on a student’s account are charges for which

Outstanding charges example
the institution will hold the student liable after the application of any For example, consider a student who is
applicable refund policy. These are the institutional charges, after any due a post-withdrawal disbursement of
adjustment, that reflect what the student will owe for the current term $800. The institutional charges that the
after his or her withdrawal, any other current charges, plus any student was originally assessed by the
permitted minor prior year charges. institution totaled $2,300. However, under
the institution’s refund policy, the institution
A school is permitted to use a student’s or parent’s authorization may only keep $600 of those institutional
for crediting the student’s account for educationally related expenses, charges. No funds had been paid toward
that the school obtained prior to the student’s withdrawal date so long the institutional charges at the time the
as that authorization meets the cash management requirements for student withdrew. In addition, the student
owes $150 for a bus pass. The outstanding
student or parent authorizations. If the school did not obtain
charges on the student's account that
authorization prior to the student’s withdrawal, the school would have
would be entered in Box B of the Post-
to obtain authorization in accordance with the cash management Withdrawal Disbursement Tracking Sheet
requirements before the school could credit the student’s account for are $750 (the $600 in institutional charges
other current charges for educationally related activities. (See Volume 4 plus the $150 owed for the bus pass).
– Processing Aid and Managing Federal Student Aid Funds for more
information on student and parent authorizations.) The school’s A portion of the $800 the institution must
request for the student’s or parent’s authorization must make clear disburse under the post-withdrawal
that if the student or parent does not give permission for the school to disbursement provisions may be used to
credit the student’s account with the Title IV funds, these funds will be satisfy the outstanding balance. If the
disbursed directly to the student or parent, if the student or parent student has provided written
accepts the funds. If a school does not have authorization from the authorization to credit Title IV funds to his
account and use them for non-
student (or parent for a PLUS loan) prior to the student’s withdrawal
educational charges, the school may
and does not obtain that authorization after the student’s withdrawal,
credit $750 to institutional charges and
the undisbursed earned funds must be offered to the student (or offer $50 to the student. If the student has
parent for a PLUS loan) and cannot be used by the school to pay not provided (and does not provide)
remaining institutional charges other than for tuition, fees, and room written authorization, the school may only
and board (if the student contracts with the school). credit $600 to institutional charges, and
must offer $200 to the student.
A school may credit a student’s account for minor prior
award year charges in accordance with the cash management
requirements (see Volume 4 – Processing Aid and Managing Federal
Student Aid Funds). Schools should make every effort to explain to a
student that all or a portion of his or her post-withdrawal disbursement
has been used to satisfy any charges from prior award years.

These requirements also mirror the current cash management

provisions that require a school to provide notice to a student, or
parent in the case of a PLUS loan, when the school credits a student’s
account with Direct Loan, FFEL or Federal Perkins Loan Program
funds.

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Notice to a student offering a

post-withdrawal disbursement
Earned funds in excess of those credited to a student’s account
must be provided to the student. The Department recognizes the
difficulty a school may have in locating a withdrawn student; however,
a school is required to offer in writing to the student (or parent for
PLUS loan funds) any amount of a post-withdrawal disbursement that
is not credited to a student’s account. The written notification must
include the information necessary for the student or parent to make
an informed decision as to whether the student or parent would like to
accept any of the disbursement. This notification would have to be
provided for post-withdrawal disbursements of both Title IV grant and
loan funds that are available for direct disbursement.

A school must send the notification as soon as possible, but no

later than 30 calendar days after the date that the school determines
the student withdrew. The notice must identify the type and amount of
the Title IV funds that make up the post-withdrawal disbursement, and
explain that the student or parent may decline all or a portion of those
funds. This information must be provided to permit a student or
parent to determine which funds, if any, he or she wishes to decline.

In the notification, the school must advise the student or parent

that he or she has 14 calendar days from the date the school sent the
notification to accept a post-withdrawal disbursement. The notification
must make it clear that if the student or parent does not respond to
the notification within the time frame, the school is not required to
make the post-withdrawal disbursement. However, a school may choose
to make a post-withdrawal disbursement based on acceptance by a
student or parent after the 14 calendar days. If a response is not
received from the student or parent within the permitted time frame,
or the student declines the funds, the school would return any earned
funds that the school was holding to the Title IV programs.

If a student or parent submits a timely response accepting all or a

portion of a post-withdrawal disbursement, per the student’s or
parent’s instructions, the school must disburse the funds within 120
days of the date of the institution’s determination that the student
withdrew. (For additional information, see the discussion under Date
of the institution’s determination that the student withdrew earlier in this
chapter.) Note that the date of the institution’s determination that the
student withdrew is the same date that triggers the 30-day period that
the school has for notifying the student or parent of any post-
withdrawal disbursement available for direct disbursement.
Consequently, the sooner a school sends the notification to a student
or parent, the more time the school has to make any accepted post-
withdrawal disbursement.

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A school may use one notification to

• inform the student or parent that loan funds were credited

to the student’s account for tuition, fees, (contracted) room
and board and other educational expenses for which
authorization has been granted;
• request permission to credit the student’s account for other
current charges for educationally related activities, if prior
authorization was not obtained; and
• notify the student or parent of the availability of any
remaining earned Title IV program assistance.

If authorization from a student (or parent for a PLUS loan) is

received after the 14-day deadline and the school chooses not to make
a post-withdrawal disbursement, the school must notify the student (or
parent) that the post-withdrawal disbursement will not be made and
why. This notification must be made in writing or electronically. It is
required because a student or parent may assume incorrectly that his
or her acceptance of a post-withdrawal disbursement has been received
within the time frame and that the post-withdrawal disbursement will
be made. If an authorization from the student (or parent for a PLUS
loan) is never received, or if the school chooses to make a post-
withdrawal disbursement per the recipient’s instructions on an
authorization received after the 14-day deadline, the school does not
need to notify the student.

Disburse grant before loan

A post-withdrawal disbursement, whether credited to the student’s Disburse grant before loan
account or disbursed to the student or parent directly, must be made example
from available grant funds before available loan funds since it is in the If a student is due a post-withdrawal
student's best interest to minimize loan debt. Available grant or loan disbursement of $500, and the student
funds refers to Title IV program assistance that could have been has received $400 of $1,000 in Federal Pell
disbursed to the student but was not disbursed as of the date of the Grant funds that could have been dis-
bursed, and $1,200 of the $2,000 in Fed-
institution’s determination that the student withdrew.
eral Stafford Loan funds that could have
been disbursed, the available undis-
The regulations do not address how a school should ensure that bursed funds are $600 in Federal Pell
Title IV funds are disbursed to the proper individual. However, a Grant funds, and $800 in Federal Stafford
school may not require a student who has withdrawn from a school (or loan funds. Any portion of the $500 post-
a parent of such a student, for PLUS loan funds) to pick up a post- withdrawal disbursement that the school
withdrawal disbursement in person. Because the student is no longer makes must be from the $600 in available
attending the school, he or she may have moved out of the area and Federal Pell Grant funds.
may be unable to return to the school to pick up a post-withdrawal
disbursement.

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Example of the post-withdrawal

disbursement requirements
Michael drops out of school on November 5. On November 10, the school
becomes aware that Michael has ceased attending. The school determines that
because Michael has earned $900 in Title IV Program assistance that he has not
received, he is due a post-withdrawal disbursement of $900. When Michael
withdrew, only $600 of the $1,000 in Federal Pell Grant funds that could have been
disbursed had been disbursed. Of the $500 in Federal Stafford Loan funds that
could have been disbursed, none had been disbursed. The school determines that
Michael has $50 in outstanding tuition charges and $100 in outstanding parking
fines for the payment period. The school credits Michael’s account with $50 of
Michael’s Federal Pell Grant funds. The school wants to use another $100 of his
post-withdrawal disbursement to cover the outstanding parking fines. However,
the school has not received permission from Michael prior to his withdrawal to
credit his account for educationally related charges other than tuition, fees, and
room and board.

On November 12, (the last date school could have sent the notification was
December 10th) – 30 days after the date of the institution’s determination that the
student withdrew) the school sends a notification to Michael stating that:

1. He is due a post-withdrawal disbursement of $900 that is made up of $400

in Federal Pell Grant funds and $500 in Federal Stafford Loan funds.
2. $50 of the Federal Pell Grant funds were credited to his account for tuition
charges, so Michael has a remaining potential post-withdrawal
disbursement of $850.
3. Michael may accept all, a portion, or none of the $850.
4. The school is obligated to make a post-withdrawal disbursement of funds
only if Michael accepts the funds by November 26, 14 days after the school
sent the notification.
5. The school is requesting his permission to credit his account with an
additional $100 of the Federal Pell Grant funds to cover his unpaid parking
fines (a discretionary educationally related expense).
6. If Michael does not authorize the school to credit his account with the $100
of Federal Pell Grant funds, those funds will be disbursed to him if he
chooses to accept them.
Michael responds on November 19. He authorizes the school to apply $100 of
the Federal Pell Grant funds to his outstanding parking fines. Michael accepts the
remaining $250 in Federal Pell Grant funds, but declines the $500 in Federal
Stafford Loan funds to minimize his overall loan debt.

The school has until March 10, 120 days from the date of the institution’s
determination that the student withdrew, to disburse the $250 in Federal Pell
Grant funds to Michael and to credit his account with the $100 of Federal Pell
Grant funds to cover his outstanding parking fines. The school sends Michael a
check for the $250 in Federal Pell Grant funds and a letter confirming that $100 of
the Federal Pell Grant funds will be credited to his account and no loan funds will
be disbursed.

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Death of a student
A school may not make a post-withdrawal disbursement of Title A school may not disburse the proceeds of
IV funds to the account or estate of a student who has died. a Title IV loan when it knows that the
repayment of the loan will devolve or pass
If an institution is informed that a student has died during a to the Department. Therefore, a school
period, it must perform a Return calculation. If the Return may not disburse the proceeds of a PLUS
calculation indicates that an institution is required to return Title IV loan taken out by a parent who has died,
even though the student for whose benefit
funds, the institution must return the Title IV funds for which it is
the loan was intended remains alive and
responsible.
otherwise eligible.

The student’s estate is not required to return any Title IV funds. If a school receives the proceeds of a
Therefore, an institution should neither report a grant overpayment PLUS loan made to a parent who has
for a deceased student to NSLDS, nor refer a grant overpayment for died, it must return the funds to the
a deceased student to Borrower Services. If an institution had lender together with a letter explaining
previously reported a grant overpayment for a student who is the reason it is returning the funds.
deceased to Borrower Services, it should inform Borrower Services
that it has received notification that the student is deceased.

The regulations governing the FFEL, Direct, and Federal Perkins

loan programs provide for a discharge of a borrower's obligation to
repay an FFEL, Federal Direct, or Federal Perkins loan if the borrower
dies (including a PLUS loan borrower's obligation to repay an FFEL
or Direct PLUS loan if the student on whose behalf the parent
borrowed dies). If a school is aware that a student who has died has
any outstanding Title IV loan debt, the school should contact the
student’s estate and inform it of the actions it can take to have the
student’s Title IV loan debt cancelled.

If a Title IV credit balance created from funds disbursed before

the death of the student exists after the completion of the Return
calculation and the institutional refund calculations, the institution
must resolve the Title IV credit balance as follows:

1. in accordance with the cash management regulations,

paying authorized charges at the institution (including
previously paid charges that are now unpaid due to the
Return of Title IV funds by the institution);
2. retiring any Title IV grant overpayments owed by the student
for previous withdrawals from the present school (the
institution may deposit the funds in its federal funds account
and make the appropriate entry in GAPS);

If the institution has previously referred the grant

overpayment to Borrower Services, Collections (Collections),
the institution should provide Collections with
documentation that the student has died so that Collections
can delete the overpayment from its records.
3. returning any remaining credit balance to the Title IV
Programs.

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Title IV aid to be returned cite Part 2 – Title IV aid to be returned

34 CFR 668.22(a)(2) If the student receives more Federal Student Aid than the amount
earned, the school, the student, or both must return the unearned
The amount of aid that was actually
funds in a specified order. The amount of Federal Student Aid to be
disbursed, rather than the total amount of
returned is determined by subtracting the amount of earned Title IV
aid that was disbursed and that could
have been disbursed, is used because the
aid (Box D) from the amount of Title IV aid that was actually
only amount of Title IV aid that needs to be disbursed to the student, not including aid that could have been disbursed
returned is the amount of disbursed aid (Box A).
that exceeds the amount of earned aid.

STEP 5: AMOUNT OF UNEARNED TITLE IV AID

DUE FROM THE SCHOOL
When a Return of Title IV funds is due, the school and the student
Step 5: Amount of unearned
may both have a responsibility for returning funds. Funds that are not
Title IV aid due from the school
34 CFR 668.22(g)
the responsibility of the school to return, must be returned by the
student. Although these requirements talk in terms of returning funds,
a school is not required to actually return its share before the student.
Rather, it is the Return calculation of the amount of assistance the
school is responsible for returning to the Title IV accounts that must
be calculated first. Thus, the student’s repayment obligation is
determined after the school’s share is calculated.

The school must return the lesser of –

• the amount of Title IV funds that the student does not earn;
or
• the amount of institutional charges that the student
incurred for the payment period or period of enrollment
multiplied by the percentage of funds that was not earned.

The percentage not earned is determined by subtracting the

percentage of Title IV aid earned (Box C) from 100%.

Aid disbursed to the student before

institutional charges are paid
A school’s policy and the Return Consider a case in which, in order to assist a student with living
requirements expenses, a school elects to disburse an anticipated credit balance to
Title IV funds are provided under the a student rather than pay itself for institutional charges from the
assumption that they are used to pay first Title IV funds the school receives. Then, the student withdraws
institutional charges ahead of all other aid. before the school receives anticipated aid from all the Title IV
Institutions may establish their own policies
programs. The Return calculations indicate the school must return
for distributing Title IV aid. However, if a
funds, but the school had passed through all funds to the student. The
school’s policies allow a school to disburse
directly to a student Title IV funds to which
school still must return the funds it is responsible for returning as a
the institution is entitled, the institution must result of the Return calculation.
bear the consequences of those policies in
the event the student withdraws.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Institutional charges
Institutional charges are used to determine the portion of Institutional charges cite
unearned Federal Student Aid that the school is responsible for 34 CFR 668.22(g)(1)(ii)
returning. Schools must ensure the inclusion of all appropriate fees 34 CFR 668.22(g)(2)
as well as applicable charges for books, supplies, materials and DCL-GEN-00-24
equipment in Step 5, Part G of the Return calculation. (See
Institutional versus noninstitutional charges earlier in this chapter.)
Institutional charges do not affect the amount of Federal Student Aid
that a student earns when he or she withdraws.

If an institution enters into a contract with a third party to provide

institutional housing, the institution must include the cost of housing
as an institutional charge in a Return calculation if a student living in
the third-party housing withdraws.

Use of institutional charges in determining

the school's responsibility for return Fees as noninstitutional charges
Application fees are excluded from
The institutional charges used in the calculation are always the institutional charges because they are not an
charges that were assessed the student for the entire payment period educational cost. (Federal Register, Vol. 59,
or period of enrollment, as applicable, prior to the student’s No. 82, April 29, 1994, page 22356).
withdrawal. Initial charges may only be adjusted by those changes the
institution made prior to the student’s withdrawal (e.g., for dropping Treatment of Work-Study funds
or adding a class or changing enrollment status). If after a student Federal Work-Study funds are not included in
withdraws the institution changes the amount of institutional charges it the calculation of earned Title IV funds when
assessed a student, or decides to eliminate all institutional charges, a student withdraws. This remains the case
those changes affect neither the charges nor aid earned in the even if a student has granted permission
calculation. (Please see Step 3 — Amount of Title IV Aid Earned by for a percentage of the student’s Federal
the Student, for a further discussion of aid earned and institutional Work-Study earnings to be credited to his or
her account to pay educational charges.
charges.)

Institutional charges may not be reduced even if other sources of Effect of other assistance cite
aid are used to pay those charges. For example, a school may not Federal Register/Vol. 64, No. 210,
11/1/99, page 59032
reduce institutional charges when an outside agency supplying aid
requires that aid to be used for tuition. The Return regulations
presume Title IV program funds are used to pay institutional charges Administrative fees
ahead of all other sources of aid. The $100 or 5% administrative fee (whichever
is less) that was excludable under the former
Refund and Repayment regulations is not
When an institution that offers courses in a nonterm, credit-
excluded in Return of Title IV Funds
hour format calculates the aid for which the student is eligible, it calculations.
does so using costs associated with the number of courses it expects
the student to complete in the period for which aid is awarded. If
the student later withdraws, the charges entered in Step 5 of the Reminder
Return calculation must include the charges for all the courses the
student was initially expected to complete.

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When to prorate charges

Prorated charges example As stated previously, for students who withdraw from a nonterm-
Institutional charges are $8,000 for a based educational program, the school has the choice of performing
nonterm-based program that spans two the Return calculation on either a payment period basis or a period of
payment periods of 450 clock hours each. enrollment basis. If a school with a nonterm program chooses to base
The school chooses to calculate the the Return calculation on a payment period, but the school charges
treatment of Title IV funds on a payment for a period longer than the payment period (most likely the period of
period basis. A student withdraws in the enrollment), there may not be a specific amount that reflects the
first payment period. The prorated amount actual institutional charges incurred by the student for the payment
of institutional charges for each payment
period. In this situation, the student's institutional charges for the
period is $4,000. However, because of the
payment period are the prorated amount of institutional charges for
$1,000 in fees charged at the beginning of
the period, the school has retained $5,000
the longer period. However, if a school has retained Title IV funds in
of the Title IV funds for institutional charges excess of the institutional charges prorated amount, including
for the payment period. Therefore, the allocating costs for equipment and supplies to the beginning of the
institutional charges for the payment pe- program, the funds retained by the school are attributed to that
riod are $5,000 — the greater of the two payment period because they are a better measure of the student's
elements from the proration calculation. institutional charges for that period.

Effects of waivers on institutional charges

Waiver Example If your school treats a waiver as a payment of tuition and fees that
An institution charges state residents $900 have actually been charged to a student, then the waiver is considered
per semester. Out-of-state students are a financial aid resource, and the full amount of the tuition and fees
charged an additional $2,000 for a total of must be included in Step 5, Part G of the Return calculation. On the
$2,900. However, the institution grants other hand, if the student is never assessed the full charges, the waiver
waivers of the out-of-state charges to out- is not considered to be financial aid, and only the actual charges would
of-state athletes. The waiver is considered be included in the Return calculation. (See DCL GEN 00-24, January
a payment to those charges and the full 2000 for a further discussion of waivers and the Return calculation.)
$2,900 would need to be included in any
Return calculation.

STEP 6: RETURN OF FUNDS BY THE SCHOOL

Order of return of Title IV funds
Order of return of Title IV funds A school must return Title IV funds to the programs from which
cite the student received aid during the payment period or period of
34 CFR 668.22(i) enrollment as applicable, in the following order, up to the net
amount disbursed from each source:

1. Unsubsidized Federal Stafford loans.

2. Subsidized Federal Stafford loans.
3. Unsubsidized Direct Stafford loans (other than PLUS loans).
4. Subsidized Direct Stafford loans.
5. Federal Perkins loans.
6. Federal PLUS loans.
7. Direct PLUS loans.

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8. Federal Pell Grants for which a return of funds is required.

9. Federal Supplemental Educational Opportunity Grants
(FSEOG) for which a Return of funds is required.
10. Other assistance under this Title for which a Return of funds
is required (e.g., LEAP).

Time frame for the return of Title IV funds

A school has 30 days from the date the institution determines that Time frame for return of Title IV
the student withdrew to return all unearned funds for which it is funds cite
responsible. 34 CFR 668.22(j)(1)

STEP 7: INITIAL AMOUNT OF UNEARNED

TITLE IV AID DUE FROM THE STUDENT

The statute specifies that a student is responsible for all unearned Initial amount due from student
Title IV Program assistance that the school is not required to return. cite
The initial amount of unearned Federal Student Aid due from the 34 CFR 668.22(h)
student (or parent, for PLUS loan funds) is determined by subtracting
the amount returned by the school from the total amount of unearned
Title IV funds to be returned. This is called the initial amount due
from the student because a student does not have to return the full
amount of any grant repayment due. Therefore, the student may not
have to return the full initial amount due.

STEP 8: RETURN OF FUNDS BY THE STUDENT

The initial Title IV grant overpayment owed by the student is Return of funds by the student
reduced by 50%. The student is obligated to return Title IV in the cite
same order that is required for schools. 34 CFR 668.22(h)(3)(i) and (ii)

The student (or parent, if a Federal PLUS loan) returns funds to

the loan programs in accordance with the terms of the loan, and to
grant programs as an overpayment. In other words, the student will
repay any unearned loan funds in the same manner that he or she will
be repaying earned loan funds.

Grant overpayments are subject to –

⇒ full and immediate repayment to the institution;

⇒ repayment arrangements satisfactory to the school; or
⇒ overpayment collection procedures negotiated with
Borrower Services.

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A school has responsibilities that continue beyond completing

the Return calculation and returning the funds for which it
is responsible. Here we discuss the institution’s participation
in the return of funds by the student.

A SCHOOL’S RESPONSIBILITIES IN THE

RETURN OF FUNDS BY THE STUDENT

Grant Overpayments
The applicable regulations require that students repay only 50% of
Grant overpayments cite the initial amount of any Title IV grant overpayments. The
34 CFR 668.22(h)(4)
overpayments are reduced by half of the initial repayment amount, not
by half of the total grants the students received.

Repayment terms for students who owe Title IV grant

overpayments were established to ensure that students who could not
immediately repay their debt in full had the opportunity to continue
their eligibility for Title IV funds. Students who owe overpayments as a
result of withdrawals initially will retain their eligibility for Title IV
funds for a maximum of 45 days from the earlier of the –

• date the school sends the student notice of the overpayment,

or
• date the school was required to notify the student of the
overpayment.
Within 30 days of determining that a student who withdrew must
repay all or part of a Title IV grant, a school must notify the student
that he or she must repay the overpayment or make satisfactory
arrangements to repay it. In its notification a school must inform the
student that:

1. The student owes an overpayment of Title IV funds.

2. The student’s eligibility for additional Title IV funds will end
if the student fails to take positive action by the 45th day
following the date the school sent or was required to send
notification to the student.
3. There are three positive actions a student can take to extend
his or her eligibility for Title IV funds beyond 45 days:
a. The student may repay the overpayment in full to the
school.
b. The student may sign a repayment agreement with the
school.

Reminder Note: Two years is the maximum time a school may allow
for repayment.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

c. The student may sign a repayment agreement with the

Department.

If the student takes no positive action during the 45-day

period, the school should report the overpayment to
NSLDS immediately after the 45-day period has
elapsed. (Because making this change in the NSLDS
system is a simple process, we expect an institution will
complete making the change within a few days of the
end of the 45-day period.)
4. If the student fails to take one of the positive actions during
the 45-day period, the student’s overpayment immediately
must be reported to the NSLDS and referred to the
Borrower Services for collection.
5. The student should contact the school to discuss his or her
options.
When a student receives additional funds during the
45-day period of extended eligibility
Students who owe overpayments as a result of withdrawals 45-Day period example
generally will retain their eligibility for Title IV funds for a maximum On October 30th during the fall semester a
of 45 days from the earlier of (a) the date the school sends the student student withdraws and owes a grant over-
notice of the overpayment, or (b) the date the school was required to payment. On November 29th the institution
notify the student of the overpayment. notifies the student of the overpayment.
The student has 45 days (until January 13)
A student who receives Title IV funds within that period of to repay the overpayment in full or to make
extended eligibility and then fails to return the overpayment or make arrangements with the institution or the
repayment arrangements becomes ineligible for additional Title IV Department to repay.
program funds on the day following the 45-day period. However, any
The spring semester begins on January 7,
Title IV program funds received by the student during the 45-day
before the 45-day period ends, and the
period were received while the student was eligible. Therefore, those
student receives Title IV aid for the spring
Title IV funds do not have to be returned (unless the student semester on January 10. The student then
withdraws a second time). A student who loses his or her eligibility for fails to repay the overpayment in full or
Title IV funds at the expiration of the 45-day period will remain sign a repayment agreement by the end of
ineligible for additional Title IV funds until the student enters into a the 45-day period - January 13. The
repayment agreement with the Department. student is not required to return the Title IV
funds received on January 10. However,
If at any time a student who previously negotiated a repayment the student becomes ineligible for
arrangement fails to comply with the terms of his or her agreement to additional Title IV funds on January 14 and
repay, that student immediately becomes ineligible for additional Title remains ineligible until he or she enters
IV funds. Any Title IV program funds received by the student between into a repayment agreement with the
Department.
the time the student negotiated the repayment arrangement and the
time the student violated the agreement were received while the
student was eligible. Therefore, those Title IV funds do not have to be
returned (unless the student withdraws a second time). A student who
violates the terms of a repayment agreement and loses eligibility
remains ineligible for Title IV funds until the student has made
satisfactory repayment arrangements with the Department.

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If, in either of the two aforementioned cases the student withdraws

a second time, any unearned funds from the disbursements that were
made while the student was still eligible would have to be returned in
accordance with the Return requirements.

Examples of the relationship between the date of notification

and the expiration of the 45-day period

Example 1 – A school sends notification to a student within the 30 days

allowed.

If a school sends notification to a student within the 30 days allowed, the 45-day
period begins on the day after the school sends the notification to the student. If a
school determines on August 20 that a student withdrew and owes a repayment
and the school sends notification to the student on September 1 (within the 30
days allowed), then the first day of the 45-day period is September 2. Unless the
student takes positive action to resolve the overpayment before the end of the
45-day period, the student loses his or her eligibility on the 45th day. Thus, in this
case the last day of the student’s eligibility for Title IV funds is October 16.

Example 2 – A school fails to notify the student or notifies the student after the
30 days allowed.

If the school fails to notify the student or notifies the student after the 30 days
allowed, the 45-day period begins on the day after the end of the 30-day period
(the date by which the school should have sent the notification to the student).
Consider a school that determines on August 1 that a student withdrew on June 15.
The school should have sent the student a letter by July 15. Because it failed to do
so, the first day of the 45-day period is the day after the end of the 30-day period
(July 16). Unless the student takes action to resolve the overpayment, the last day
of the student’s eligibility for Title IV funds, is August 29, the end of the 45-day
period that began on July 16.

Note that if a student agrees to a repayment arrangement and then fails to

meet the terms of that arrangement, the student’s eligibility ends as of the date
the student fails to comply with the terms of the repayment arrangement.

Student overpayments less than $25

If a student owes a Title IV grant overpayment as a result of a
withdrawal, the student does not have to repay the grant overpayment
if the original amount that the student is responsible for repaying
(after the 50% reduction) is less than $25. An institution should
neither report to NSLDS nor refer to Federal Student Aid's Borrower
Services an Amount for Student to Return (Step 8, line 5 or 6, in the
Return to Title IV funds calculation) that is less than $25.

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These de minimus amounts are program specific. That is, if a

Student overpayments less than
Return calculation resulted in a student having to return $150 in $25 cite
Pell funds and $20 in FSEOG funds, the student would have to DCL-GEN-00-24 December, 2000
return the Pell funds, but the FSEOG funds would be treated as
described above.

If an institution is currently holding an overpayment resulting

from a withdrawal for which the original amount (after the 50% Reminder
reduction) was less than $25, the school should delete the
overpayment in NSLDS by:

1. from the Overpayment History Page, selecting the

overpayment by clicking on the blue number icon;
2. on the Overpayment Display Page, verifying that this is the
overpayment you want to delete, and then clicking the
Delete Button;
3. on the Overpayments Delete Confirmation page, clicking
the Confirm Button.

Please note that this provision applies only when the original
overpayment amount (Step 8, line 5 or 6) is less than $25. An
overpayment for which the original amount was $25 or more that
has a current balance of less than $25 may not be written off.

Note: Borrower Services will not accept referrals for which the
original amount was less than $25.00.

This provision does not apply to funds that a school is required

to return. A school must return the full amount owed to any Title
IV program that the school is responsible for returning. However, a
school does not have to return amounts of less than $1.00.

Payments on a student’s behalf

The 50% reduction always applies to the repayment of grant funds When a school makes a payment
for which the student is responsible, regardless of who actually returns and student refuses to repay the
the funds. Therefore, if an institution chooses to return all or a school
portion of a grant overpayment that otherwise would be the Consider an example in which a school
chooses to pay a grant overpayment on
responsibility of the student to return, the 50% grant protection still
behalf of a student who withdrew and
applies. If an institution returns a grant overpayment for a student, the
create a debit on the student’s school
student would no longer be considered to have a Title IV grant account. Once the overpayment has been
overpayment and as such no reporting to either NSLDS or to repaid by the institution there is no Title IV
Borrower Services is required. This would be true whether the grant overpayment due from the student. If
institution simply returned the overpayment for the student or the student refuses to repay the institution,
returned the overpayment and created a debit on the student’s school the debt cannot be referred to the
account. Department for collection.

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Recording student payments and

reductions in the Pell Grant Program
Through the 2004-2005 award year schools that were full
participants in COD recorded reductions and payments in a different
way than phase-in participants. For reductions and payments to
awards in the 2005-2006 award year and forward, all schools are
recording reductions and payments in the same way (by entering a
replacement value).

Schools reporting changes should pay close attention to the details

that follow.
Schools can report current-year reductions
to awards/disbursements either through
If through its Return calculation a school determines that a
the software they use for Pell transactions student has received an overpayment of Pell Grant funds, the school
or by using the COD Web site at should reduce the student’s award/disbursements as follows:

https://cod.ed.gov • When reducing a student’s award or recording a student’s

payment for award years through 2004-2005 award years, a
school that participated as a phase-in school may continue to
reduce a student’s award/disbursements by entering a
negative disbursement for the school’s portion of the
Returning Pell funds by check
Only in exceptional circumstances (and
overpayment in the COD system using the same software the
never for a current Pell award) should a school used to create the awards. Full-participant schools will
school return funds from a Return reduce a student’s award/disbursements by entering a
calculation by sending a check instead replacement value in the COD system. The replacement
of using the electronic refund function in value will be the original values less only the amount the
GAPS. If you must send a check, school (not the student) must return.

The GAPS lockbox address for Pell and If a school receives a payment for a current-year
campus-based funds is: overpayment that has not been referred to Borrower
Services, the school should NOT send the payment to
U.S. Department of Education
Borrower Services.
P.O. Box 979053
St. Louis, Missouri 63197-9000 • If a school that has made repayment arrangements with a
student receives a payment on a current year overpayment,
Reminder the school should deposit the funds in its Pell account and
make the appropriate entry in the COD system.
The school must note the student’s name,
and SSN, the school’s DUNS number and • If a student makes a payment on any previous year’s Pell
the appropriate Document/Program Award overpayment, a school makes the aforementioned COD
Number and award year on the check. A system entry using the same software the school used to
school must use a separate check for each create the award. The school then returns the funds to the
award year. Department using the Electronic Refund function in GAPS
following the same procedures the school follows when
making other GAPS refunds/returns.

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If through its Return calculation a school determines that a

student has received an overpayment of FSEOG funds, the school
must adjust its institutional ledgers, financial aid records, and the
student’s account by subtracting the amount the school must return
(the FISAP filed for the year will reflect the net award to the student).
If a student makes a payment on an FSEOG overpayment made in the
current award year, the school should deposit the payment in its
federal funds account, and award the funds to other needy students. If
the school collects an overpayment of an FSEOG for an award made in
a prior award year, the funds recovered should be returned to the
Department using the Electronic Refund function in GAPS.
Payments should be applied to the award year in which the recovered
funds were awarded.

Recording student payments and

reductions in the Direct Loan Program
If through its Return calculation a school determines that a
student has received an overpayment of Direct Loan funds, the school
should reduce the student’s award/disbursements by making a
downward adjustment in COD.

The school then returns the funds to the Department using the
Electronic Refund function in GAPS following the same procedures
the school follows when making other GAPS refunds/returns.

Only in exceptional circumstances should a school return funds

due as a result of compliance with 34 CFR 668.22 by sending a check
instead of using the electronic refund function in GAPS.

If a school has to return funds by check, the school must –

1. use a separate check for each award year;

2. note the school’s DUNS number, school code, and award
year on each check;
3. include a completed Direct Loans Return of Cash form; and
4. include a memorandum that specifies the name and social
security number for each student for whom funds are being
returned and how much is being returned for each student.

The address for returning Direct Loan funds by check is:

U.S. Department of Education

Attention Refunds of Cash
P.O. Box 9001
Niagra Falls, New York 14302

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Notifying the Department

NSLDS cites A school is never required to enter into a repayment agreement
DCL-GEN-98-14 July 1998 with a student; rather a school may refer an overpayment to the
Department at any time after the student has had the opportunity to
https://ifap.ed.gov pay off the overpayment in full to the school or indicate his or her
intent to negotiate repayment arrangements with Borrower Services.
The Email address for NSLDS Customer Ser- However, if a school reports a student overpayment (for which a
vice is – student has not negotiated repayment arrangements) to NSLDS
[email protected] before the 45-day period has elapsed, the student will appear to be
ineligible for Title IV aid. Since students retain their eligibility for 45
days, schools should provide students with every opportunity to repay
their debt or negotiate repayment arrangements before reporting it to
NSLDS and referring it to Borrower Services.

Important: Borrower Services is unable to respond to a student-

initiated request to negotiate a repayment arrangement
until a school has referred the student’s account for
collection. In addition, Borrower Services uses the
information about the student in the NSLDS while
conversing with a student.

In order to ensure a student overpayment has been

reported and referred to ED, when the school is
communicating with a student about making
repayment arrangements with ED, the school should
make it clear that the student should contact the school
before contacting the Department. Repayment
agreements with the Department will include terms
that permit students to repay overpayments while
maintaining their eligibility for Title IV funds. Schools
are encouraged to negotiate similar repayment
agreements with students. However, schools’ repayment
arrangements with students must provide for complete
repayment of the overpayments within two years of the
date of the institutions’ determination that the students
withdrew.

There are exceptions to the recommendation that a school wait

the full 45 days before reporting a student overpayment through
NSLDS. If during the 45-day period a student indicates that he or she
cannot repay his or her debt in full and wishes to negotiate
a repayment agreement with the Department, the school should
immediately report the overpayment to NSLDS and refer the
overpayment to Borrower Services. Likewise, if a student contacts a
school that will not be offering institutional repayment agreements
and indicates that he or she cannot pay the overpayment within the
45 days, the school should immediately report the overpayment to
NSLDS and refer the overpayment to Borrower Services. So that
Borrower Services will have time to receive and record an
overpayment before a student contacts Borrower Services, a school
should tell a student to wait 10 days before contacting Borrower
Services.

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After a school has reported and referred a student’s overpayment,

the school should provide the student with the phone number and
postal address for Borrower Services. A student can contact Borrower
Services by calling 800-621-3115 or by writing Borrower Services at
the following address:

U.S. Department of Education

Borrower Services – Collections
P.O. Box 5609
Greenville, Texas 75403

Reporting and referring overpayments

Referring overpayments for collection is a separate process from
reporting overpayments to NSLDS. Reporting is the process of creating
within NSLDS a record of a student’s overpayment. Referring is the
process of turning over a student’s debt to Borrower Services.
Students who pay their debts in full during the 45-day period should
neither be reported to NSLDS nor referred for collection.

A school reports overpayments to the NSLDS via the NSLDS Web

site. A school sends referrals to Borrower Services through the U.S.
Mail to the

Student Loan Processing Center-Overpayments

P.O. Box 4157
Greenville, Texas 75403

If a student who owes a repayment of a Title IV grant calls

Borrower Services before Borrower Services has received and
recorded the student’s overpayment, Borrower Services will examine
the student’s record in the NSLDS. If a school has reported the
overpayment to NSLDS correctly, Borrower Services will inform the
student that the overpayment is being processed and that the student
should call back in ten days for further information. If a student calls
Borrower Services before a school has reported the student’s
overpayment to the NSLDS, Borrower Services will find no record of
the overpayment and will tell the student to contact the school to
resolve the discrepancy.

A student who does not take positive action during the 45-day
period becomes ineligible for Title IV funds on the 46th day from the
earlier of (1) the date the school sends a notification to the student of
the overpayment; or (2) the date the school was required to notify the
student of the overpayment. The student will remain ineligible until
the student enters into a satisfactory repayment agreement with the
Department. An overpayment resulting from a student’s withdrawal
remains an overpayment until it is repaid in full. Though a student
may regain Title IV eligibility by negotiating and satisfying the
requirements of a satisfactory repayment arrangement, the
information on the student’s NSLDS account will continue to reflect
the status of the overpayment until the debt is repaid in full.

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If a school enters into a repayment arrangement with a student

who owes an overpayment, the school should immediately report the
Reminder repayment arrangement using the online NSLDS screens. The school
should report the status (Indicator field) of an overpayment for which
it has entered a repayment agreement as “Satisfactory Arrangement
Made.” After the information is reported to the NSLDS, any future
output from the CPS (SARs and ISIRs) will show that the student owes
Anytime a school receives a payment a repayment of a Title IV grant and that the student has negotiated a
(including the application of a Title IV credit satisfactory repayment arrangement with the school.
balance) that will repay an overpayment in
full, the school must also update its original As long as the student fulfills his or her commitment repayment
submission to NSLDS by changing the entry
under the repayment arrangement, the NSLDS overpayment status of
on the “Overpayment Update Screen” for
“Satisfactory Arrangement Made” will indicate that, though the
the Indicator Field to “Repaid.”
student owes an overpayment, the student remains eligible for Title IV
funds. If at any time a student fails to comply with the terms of the
student’s agreement to repay, or if the student fails to complete
repayment in the two years allowed, immediately the school must
update the student’s overpayment status (Indicator field) to
“Overpayment.” From that point on the NSLDS will inform schools
that the student is not eligible for Title IV funds.

Required referrals
A school must refer to the Department:

REMINDER
1. a student who does not satisfy the requirements of a
All referrals to Borrower Services repayment agreement with the school;
must be made on institutional 2. a student who fails to contact the school during the 45-day
letterhead. period; and
3. a student who fails, during the 45-day period, to pay his or
her overpayment in full or enter into a repayment
arrangement.

If a school is referring to Borrower Services a student

overpayment previously reported to NSLDS, the school must also
update the information previously reported to NSLDS by changing the
source field from “School” to “Transfer.” If a school is referring a
student who has failed to satisfy the terms of his or her repayment
agreement, the school should also change the status code (Indicator
field) from “Satisfactory Arrangement Made” to “Overpayment.” If a
school is referring for collection a student not previously reported to
NSLDS, the school must report the account to NSLDS as a referred
overpayment, enter “Transfer” as the initial source and
Tip “Overpayment” as the status (Indicator field).
Remember to include your school’s
Reporting Pell Identification number on the To refer student overpayments for collection, schools should use a
referral. format similar to the one found at the end of this chapter and send
the form to the address at the bottom of that page. Each referral must
be typed or printed and must be submitted on school letterhead.

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In order to avoid creating a double record for a single

overpayment, the school must populate its Overpayment Referral
Form, Dates of Disbursements, with the exact same dates the school Important
used when it created the NSLDS record. In addition, a school must
ensure that it enters for award year, the year the disbursement was
made.

Once Borrower Services has accepted a referred student

overpayment, Borrower Services will transmit the information to
NSLDS and “ED Region” will replace “School” as the appropriate
contact source for information about the overpayment.

During the 2006-2007 award year, on its Overpayment Referral,

schools must continue to provide their School’s Pell Identification
Number. During the 2006-2007 award year, schools should not enter
their Routing Identifier.

Summary Return of Title IV funds when a school

does not maintain a separate federal
♦ If during the 45-day period a student repays his or her debt
bank account
in full to the institution, the institution should neither
The Department considers a school that
report the overpayment in NSLDS nor refer the student to maintains Title IV funds and general
Borrower Services. operating funds in the same bank account
♦ If during the 45-day period a student signs a repayment (commingles) to satisfy the requirement
agreement with the institution, the institution should that it return unearned funds on a timely
basis if:
immediately (within a few days) make the appropriate
• the school maintains subsidiary
entries in NSLDS.
ledgers for each type of funds
♦ If during the 45-day period a student indicates that he or she commingled in that account that clearly
will not or cannot repay the overpayment and wishes to show how and when those funds were
negotiate a repayment agreement with the Department, the used and reconciled to its general
institution should immediately (within a few days) report the ledger,
overpayment in NSLDS and refer the overpayment to • the subsidiary ledger for each Title IV
program provides a detailed audit trail
Borrower Services.
on a student-by-student basis that
♦ If the institution will not be offering institutional repayment reconciles to the amount of Title IV
arrangements to students and during the 45-day period a program funds received and disbursed
student indicates that he or she cannot repay the debt in by the school, and
full, the institution should immediately (within a few days) • the school updates the relevant
subsidiary ledger accounts in its
report the overpayment in NSLDS and refer the
general ledger no later than 30 days
overpayment to Borrower Services.
after it determines that the student
♦ If a student fails to take any positive action during the 45-day withdrew.
period, upon the expiration of that period the institution More specifically, the return of an
should immediately (within a few days) report the unearned funds transaction should be
overpayment in NSLDS and refer the overpayment to recorded as a debit to a Title IV program
fund subsidiary ledger account and a
Borrower Services.
credit to the school's operating fund
♦ If a student signs a repayment agreement with an institution subsidiary ledger account. The date of the
and at any time then fails to fulfill the terms of that return is the date this transaction is posted
agreement, the institution should immediately (within a few to the school's general ledger.
days) report the overpayment in NSLDS and refer the
overpayment to Borrower Services.

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Accepting payments on referred overpayments

A school may continue to accept payment on a Title IV grant
overpayment after the overpayment has been referred to the
Department. A school that accepts a check made out to the
Department on an overpayment that has been referred to
Collections must –

1. note the student’s name and SSN on the check;

2. indicate that the payment is for an overpayment of a
Title IV grant; and
3. forward the payment to Borrower Services at

U.S. Department of Education

National Payment Center
P.O. Box 4169
Greenville, Texas 75403-4169
If a school accepts a cash payment from one or more students who
owe overpayments and who have been referred to Collections, the
school should write its own check to the Department and attach a
letter indicating that the check is for a Title IV grant overpayment.
The school must include in its letter a roster that includes, for each
student who made a payment, the student’s name, social security
number, and amount paid.

If a school receives a payment for an overpayment previously

referred to Borrower Services and if –

• the overpayment was made in the current award year, and

• the payment will retire the student’s debt in full,
the institution must:
a. deposit the payment in its appropriate institutionally
maintained federal funds account;
b. for a Federal Pell Grant overpayment, make the appropriate
entry in the COD system (for a phase-in participant — a
negative disbursement, for a full participant — the
replacement value); and
c. send a letter or fax to Borrower Services identifying the
student and indicating that the student’s overpayment has
been completely repaid. This will allow the Department to
properly update its records in both the Borrower Services
system and NSLDS.
The fax numbers for this purpose and school use only are
(319) 665-7646 and (903) 454-5398

Note: This process cannot be performed via email.

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In the fax or letter, a school must include the:

• award year of the overpayment;
• student’s social security number;
• student’s last name, first name, and middle initial;
• student’s date of birth;
• type of overpayment — Federal Pell Grant or FSEOG; and
• the disbursement date the institution used to create the
overpayment record in NSLDS.

Corrections or recalls of referred overpayments

If you determine that a student who you have referred to
Collections does not owe an overpayment or that the amount you
referred was incorrect, you should fax or mail a letter explaining
the situation to Collections.

Important: You should not send a revised referral form when

making changes or corrections.

The letter, must include the –

• student’s last name, first name, and middle initial;
• student’s social security number;
• award year of the overpayment;
• disbursement date the institution used to create the
overpayment record in NSLDS;
• amount originally referred; and
• description of the issue, and the requested action.

When a student loses eligibility at a former school

while receiving aid at a second school
If a student who owes a Title IV overpayment due to a withdrawal
from one school receives additional Title IV aid at another school
(based upon the student's having entered into an agreement with
either Borrower Services or the first school) and then fails to meet the
requirements of the agreement, Borrower Services or the school, as
appropriate, will update NSLDS to show that the student is no longer
eligible due to his or her violation of the agreement. The NSLDS
postscreening process will then cause a new ISIR record to be created
and sent to all schools listed in the CPS record.

As noted above under When a student receives additional funds during

the 45-day period of extended eligibility, the student loses eligibility as soon
as he or she fails to meet the terms of the repayment agreement. The
second school is not liable for any aid it disbursed after the student
became ineligible but prior to being notified of the ineligibility via the
NSLDS postscreening process.

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As provided for in previous guidance (GEN-96-13, Q&A 13

and 15), once the school receives a record from NSLDS showing that a
student is not eligible, it may no longer disburse Title IV aid to the
student and must assist the Department in requiring the student to
repay any funds he or she was not eligible to receive.

If a student who is receiving Title IV aid at an institution with

which he or she has entered into a repayment agreement for a
previous overpayment resulting from a withdrawal violates the terms
of that agreement, the institution must immediately cease disbursing
Title IV aid to the student. The school must immediately update the
NSLDS record and refer the overpayment to Borrower Services.

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Chapter 2 — Withdrawals and the Return of Title IV Funds

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SAMPLE SUMMARY OF THE REQUIREMENTS OF 34 CFR 668.22

(TO PROVIDE TO STUDENTS AS PART OF CONSUMER INFORMATION)
Treatment of Title IV Aid When a Student Withdraws
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, Stafford Loans, PLUS Loans, Federal
Supplemental Educational Opportunity Grants (FSEOGs), Federal Perkins Loans and in
some cases, certain state grant aid (LEAP/SLEAP), GEAR UP grants, and SSS grants to
students.

When 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 the post-withdrawal disbursement includes loan funds,
you may choose to decline 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 (including loan funds, if you accept them) for tuition, fees, and room
and board charges (as contracted with the school). For all other school charges, the
school needs your permission to use the post-withdrawal disbursement. If you do not
give your permission (which some schools ask for 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 you cannot
earn 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 earn any FFEL or 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:

1. your institutional charges multiplied by the unearned percentage of your

funds, or
2. the entire amount of excess funds.

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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. Any loan funds that you must return, you (or your parent for a
PLUS Loan) repay in accordance with the terms of the promissory note. That is, you
make scheduled payments to the holder of the loan over a period of time.

Any amount of unearned grant funds that you must return is called an
overpayment. The amount of a grant overpayment that you must repay is half of the
unearned amount. You must make arrangements with your school or the Department
of Education to return the unearned grant funds.

The requirements for Title IV program funds when you withdraw are separate from
any refund policy that your school may have. Therefore, you may still owe funds to the
school to cover unpaid institutional charges. Your school may also charge you for any
Title IV program funds that the school was required to return. If you don't already
know what your school's refund policy is, you can ask your school for a copy. Your
school can also provide you with the requirements and procedures for officially
withdrawing from school.

If you have questions about your Title IV program funds, you can call the Federal
Student Aid Information Center at 1-800-4-FEDAID (1-800-433-3243). TTY users may
call 1-800-730-8913. Information is also available on Student Aid on the Web at
www.studentaid.ed.gov.

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Student Overpayment due to Withdrawal

Referral to ED/FSA Collections
SEND INFORMATION TO ➾ Student Loan Processing Center-Overpayments
➾ P.O. Box 4157
(903) 408-4595 FAX Greenville, TX 75403

Student Information Parent/Spouse Information

Name (Last, First, MI): Name (Last, First, MI):

Address: Address:

Telephone Numbers: Telephone Numbers:

Social Security Number:

School Information
Date of Birth:
Name of Contact:

If your Pell Reporting ID is different than your Pell

Attended ID, please report both. Otherwise, just Telephone Numbers:
report the Pell Attended ID.

Reporting School’s Pell Identification Number Attended School’s Pell Identification Number

Disbursements and Repayments

Federal Pell Federal SEOG

Award year in which overpayment was disbursed:

Total grant disbursement:

Dates of disbursement
(must match NSLDS overpayment record):

Date overpayment notice was required to be mailed:

Amount of grant for student to return

(50% of initial calculation):

Total grant amount repaid by student to school:

Date of last payment to school, if any:

Total being referred for collection: *

* If using individual or aggregate matching, report federal share only. Otherwise report total FSEOG.

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Withdrawal Dates for a School That Is Not Required to Take Attendance

Withdrawal Type Circumstance Student’s Date of the Institution’s

Withdrawal Date1 Determination that the
Student has Withdrawn

Official Notification The student begins the

school’s withdrawal ➽ The date the student
begins the school’s
The student’s withdrawal
date, or the date of
process, or withdrawal process, or notification, whichever is
later.
The student otherwise
provides official ➽ The date that the student
otherwise provides the
notification to the school notification.
of intent to withdraw.
(If both circumstances
occur, use the earlier
withdrawal date.)

Official Notification Not

Provided
Official notification not
provided by the student
➽ The date that the school
determines is related to the
The date that the school
becomes aware that the
because of circumstances circumstance beyond the student has ceased
beyond the student’s student’s control. attendance.2
control.

All other instances

where student withdraws
➽ The midpoint of the
payment period or period
without providing official of enrollment, as
notification. applicable.

Leave of Absence The student does not The date that the student The earliest of the dates of
Related return from an approved began the leave of absence. the end of the leave of
leave of absence, or absence or the date the
student notifies the school
The student takes an he or she will not be
unapproved leave of returning to that school.
absence. (In the case of an
unapproved absence, the
date that the student began
the leave of absence.)

Withdrawal After The student withdraws The student’s original The date the school
Rescission of Official after rescinding a previous withdrawal date from the becomes aware that the
Notification official notification of previous official student did not, or will not,
withdrawal. notification. complete the payment
period or period of
enrollment.

1.
In place of the dates listed, a school may always use as a student’s withdrawal date the student’s last date of attendance at an
academically related activity, if the school documents that the activity is academically related and that the student attended the
activity.
2.
For a student who withdraws without providing notification to the school, the school must determine the withdrawal date no later
than 30 days after the end of the earlier of the (1) payment period or period of enrollment (as appropriate), (2) academic year, or
(3) educational program.

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 Return of Title IV Funds Requirements and Deadlines
Party Responsible Requirement Deadline

School Determining withdrawal date 30 days after the end of the earlier of:
for student who withdraws without providing • Payment or enrollment period
notification • Academic year in which student
withdrew
• Educational program from which
student withdrew

School Return of unearned Title IV funds As soon as possible, but no later than
30 days after date school determined
student withdrew

School Post-withdrawal disbursement to As soon as possible, but no later than

student’s account for: 120 days of date school determined
• Outstanding current (allowable) charges student withdrew, in accordance with
(tuition and fees, room and requirements for disbursing Title IV
board, etc.) funds 34 CFR 668.164
• Minor (e.g., under $100) prior year charges
that the school has authorization to retain

School Written notification providing student (or parent) Within 30 days of disbursement of
providing opportunity to cancel all/part of loan, loan funds, in accordance with
for post-withdrawal disbursements of loan funds requirements for notifications and
(Perkins, FFEL, Direct Loan, or PLUS) to student’s authorizations 34 CFR 668.165
account

School Written notification of student’s eligibility Within 30 days of date school

for post-withdrawal disbursement in excess determined student withdrew
of outstanding current (educationally related)
charges

School Post-withdrawal disbursement to student As soon as possible, but no later than

for earned Title IV funds in excess of 120 days of date school determined
outstanding current (educationally related) student withdrew
charges

School Notification to student (or parent) Not specified, but as soon as possible
of outcome of late request for a post-
withdrawal disbursement to student (request
received by school after the 14-day period and
school chooses not to make disbursement)

School Notification to student of grant Within 30 days of date school

overpayment determined student withdrew

School Referral of student to Collections, if student does Not specified, but as soon as possible
not pay overpayment in full, does not enter into
repayment agreement, or fails to meet terms of
repayment agreement

Student (or parent) Submit response instructing school to Within 14 days of date school sent
make post-withdrawal disbursement notification

Student Return of unearned Title IV funds Loans - according to terms of the loan
Grants - within 45 days of earlier of
date school sent, or was required to
send notice
 Return of Title IV Funds Requirements for Notification

Party Responsible Notification Requirements

School Report of student to NSLDS if student No later than 45 days from the date
does not pay overpayment in full, does not student is notified of overpayment
enter into repayment agreement, or fails
to meet terms of repayment agreement

School Consumer Information • School’s withdrawal policy

• School’s refund policy
• Office(s) designated to receive
official notifications of intent to
withdraw
• Requirements regarding return
of Title IV funds

School Written notification of student’s • Identify type and amount of Title IV

eligibility for post-withdrawal funds that make up post-withdrawal
disbursement of funds in excess of disbursement not credited to student’s
outstanding current educationally account
related charges • Explain that student or parent may
accept all or part of disbursement
• Advise student or parent that no post-
withdrawal disbursement will be made
unless school receives response within
14 days of date school sent notice

School Response (written or electronic) to • Outcome of request

late request for post-withdrawal
disbursement (that school chooses
not to make)

School Repayment Agreement • Terms permitting student to repay

overpayment while maintaining
eligibility for Title IV funds
• Repayment in full within 2 years
of date school determined
student withdrew
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