Withdrawals and the

Return of Title IV Funds

CHAPTER
2
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 worksheets.

WITHDRAWALS
This chapter explains how Federal Student Aid (Title IV) funds are Return of Funds cites
handled when a recipient of those funds ceases to be enrolled prior to the HEA, Section 484B
34 CFR 668.22
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 change in enrollment The FSA Assessment module
status not a withdrawal. Therefore, no Return calculation is required. that can assist you in understanding
and assessing your compliance with
The Return of Title IV Funds (Return) regulations do not dictate an the provisions of this chapter is “Return
of Title IV Funds,” at
institutional refund policy. Instead, a school is required to determine the
earned and unearned Title IV aid a student has earned as of the date the http://ifap.ed.gov/qahome/
student ceased attendance based on the amount of time the student spent qaassessments/returntivfunds.html
in attendance or, in the case of a clock-hour program, was scheduled to
be 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 prorata schedule is used to determine the amount of Title
IV 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 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 re-
fund policy will determine the charges a student will owe after withdraw-
ing, those policies will not affect the amount of Title IV Aid the student
has earned under the Return calculation.
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Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2007-2008

General requirements
Important Title IV funds are awarded to a student under the assumption that
the student will attend school for the entire period for which the assis-
When a student withdraws tance is awarded. When a student withdraws, the student may no longer
before a school’s census date be eligible for the full amount of Title IV funds that the student was
originally scheduled to receive.
A student begins earning Title IV funds on
his or her first day of attendance. There-
fore, even if a student withdraws before a If a recipient of Title IV grant or loan funds withdraws from a school
school’s census date, the school must per- after beginning attendance, the amount of Title IV grant or loan as-
form a Return calculation using the num- sistance earned by the student must be determined. If the amount dis-
ber of days or the number of scheduled
clock hours the student attended class as bursed to the student is greater than the amount the student earned, un-
the numerator in STEP 2, Part H. earned 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 dis-
bursement of the earned aid that was not received.

Technical questions Worksheets and software

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

http://ifap.ed.gov
Access to R2T4 Web Product
via CPS Online The Department has developed a Return of Title IV Aid Web prod-
uct. It is accessible via the main menu of the FAA Access at the CPS
Individual staff members must be enrolled
in the SAIG in order to have access to the Online Web site
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 Web Product is
selected staff members via the SAIG
Enrollment Web site at
optional.

http://www.fsawebenroll.ed.gov The Higher Education Reconciliation Act

On February 8, 2006, the president signed The Higher Education
Reconciliation Act of 2005 (HERA). Effective July 1, 2006, HERA es-
tablished two new types of grants for certain Pell Grant-eligible college
students:

1. The Academic Competitiveness Grant (ACG), and

2. The National Science and Mathematics Access to Retain
Talent Grant (National SMART grant).

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

In addition, the HERA made the modifications to the way in which

Consumer information cite
the Return of Title IV funds are calculated that we discuss in this Section 485(a)(1)(F), 34 CFR 668.43
chapter.
For more information see chart on
“Institutional and Financial Assistance
Consumer information Information for Students” in “Volume 1 –
In the consumer information a school must make available upon Student Eligibility.”
request to prospective and enrolled students, the school must include a
statement of – Sample summary provided

• any refund policy with which the school must comply; A sample summary of the requirements of
34 CFR 668.22 is provided at the end of this
• the requirements for the treatment of Title IV funds when a chapter.
student withdraws; and
• the requirements and procedures for officially withdrawing
from the school.
An institution should provide sufficient information for a student 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 fed-
eral 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 in-
stitution 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 des-
ignated to accept notification of official withdrawals.

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General Title IV Principles with special

Applicability in the Return of Title IV Aid
Definition of a Title IV recipient
The requirements for the treatment of Title IV funds when a student
Title IV Recipient
withdraws apply to any recipient of Title IV grant or loan funds who
In determining whether the ceases all attendance. For purposes of these requirements, a recipient
requirements of 34 CFR 668.22
apply, a school must first determine of grant or loan assistance is a student who has actually received Title
whether a student was eligible to IV funds or has met the conditions that entitled the student to a late
receive any Title IV funds. disbursement. These conditions are listed in a chart on Late Disburse-
ments in Volume 4 – Processing Aid and Managing Federal Student Aid
If a student withdraws before Funds.
Title IV funds are disbursed
Even if a student paid all institutional The return requirements apply only to the receipt of or qualification
charges and ceased enrollment for aid that can be included in the calculation. For example, the require-
prior to Title IV funds being ments of 34 CFR 668.22 do not apply to Federal Work-Study funds.
disbursed, if Title IV funds could
have been disbursed, the institution Therefore, the Return requirements do not apply to a student if the only
must determine the Title IV funds Title IV program assistance that the student has received or could have
earned by the student and follow the
procedures for making a post- received was FWS funds.
withdrawal disbursement.
Please note that if the student never actually began attendance for the
payment period or period of enrollment, 34 CFR 668.22 does not ap-
If a student never begins ply. Likewise, if a student began attendance, but was not and could not
attendance cite have been disbursed Title IV grant or loan funds prior to withdrawal,
34 CFR 668.21,
34 CFR 682.604(d)(3) and (4), and
the student is not considered to have been a Title IV recipient and the
34 CFR 685.303(b)(3). 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).

Verification
The Return calculations impose no additional liability for interim
Withdrawals and verification cite
DCL-GEN-04-03 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 verifi-
cation deadline that may be earlier than the date established by ED. The
institution must include its verification deadlines in the consumer materi-
als 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 cal-

culation for a student subject to verification.

1. A school must always return any unearned Title IV funds it

is responsible for returning within 45 days of the date the
school determined the student withdrew, and offer any post-
withdrawal disbursement within 30 days of the date the school
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 Return deadlines, the school includes as Aid Disbursed or
Aid That Could Have Been Disbursed in the Return calcula-
tion 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 Return deadline
later provides those documents prior to the applicable verifica-
tion deadline, the school must perform a new Return calcula-
tion 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

A school must return any unearned funds within 45 days or offer
any post-withdrawal disbursement within 30 days of the date of the in-
stitution’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 deadline, the institution performs the Return calcu-
lation 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 docu-
ments in time for the school to complete the verification process and
meet the 30-day Return deadline 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 and unsubsidized Stafford loan funds
(verification is not required for receipt of these funds) for which the con-
ditions 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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Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2007-2008

If a school 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 45-day Return deadline, at that point in time
the student has failed to establish eligibility for those Title IV funds af-
fected 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, before the verification deadline but after the institution has com-
Verification and the 30-day
deadline pleted the Return calculation, a student provides all the documentation
required for verification, the institution must perform a new Return
If an institution is unable to meet the calculation including as Aid that could have been disbursed all Federal
requirement to offer any amount of a
Student Aid for which the student has established eligibility based upon
post-withdrawal disbursement that is not
credited to a student’s account to the verification and for which the conditions of a late disbursement have
student (or parent for a PLUS loan) within been met prior to the student’s loss of eligibility due to withdrawal. If,
30 days from the date of the institution’s as a result of verification, the student’s eligibility for Federal Pell Grant,
determination that the student withdrew,
once verification is complete the institution
FSEOG, and Federal Perkins funds has been reduced, only the reduced
must offer the funds as soon as possible amount is included in the new Return calculation.
and should provide the student or parent
with the minimum 14-day (or longer as a For additional information on Verification, please consult
result of HERA) response period whenever
possible.
The Application and Verification Guide.

An institution must make any post- Approved leave of absence

withdrawal disbursement that results from
the subsequent Return calculation as soon A leave of absence (LOA) is a temporary interruption in a student’s
as possible but no later than the applicable program of study. LOA refers to the specific time period during a pro-
120-day late disbursement deadline.
gram 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.
Disbursement rules for students However, a scheduled break may occur during an LOA.
on leave of absence (LOA)
An LOA must meet certain conditions to be counted as a tempo-
You may NOT make a disbursement of the rary interruption in a student’s education instead of being counted as
proceeds of a FFEL or Direct Loan to a
student on an LOA (34 CFR 682.604(c)(4)) .
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
You may disburse Pell Grant, FSEOG, and considered to have ceased attendance and to have withdrawn from the
Perkins funds to a student on an LOA. school, and the school is required to perform a Return calculation.
You may pay any funds that are part of a
Title IV credit balance (and therefore are
funds that have already been disbursed) to
a student on an LOA.

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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 –

1. the school must have a formal written policy regarding leaves Maximum Timeframe or LOA
of absence requiring that all requests for leaves of absence be
When calculating the maximum time
submitted in writing and include the reason for the student’s frame for a student’s approved LOA,
request; the school must ensure that it ac-
counts for all periods of nonattendance
2. the student must follow the school’s policy in requesting the (including weekends and scheduled
LOA; breaks).

3. there must be a reasonable expectation that the student will Thus, since an approved LOA may not
return from the LOA; be more than 180 days, a school might
have to reduce the length of a students
4. the school must approve the student’s request for an LOA in LOA if the 180th day is scheduled to fall
accordance with the school’s policy; on a day the school would be closed.

5. the institution may not assess the student any additional in-
stitutional 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 stu-
dent returning from an LOA must resume training at the same
point in the academic program that he or she began the LOA;
and Full tuition credit
8. if the student is a Title IV loan recipient, the school must An institution may grant a full tuition
explain to the student, prior to granting the LOA, the effects credit toward the course the
student chooses to reenter as a way
that the student’s failure to return from an LOA may have on to comply with the requirement that
the student’s loan repayment terms, including the expiration the institution not assess the student
any additional charges upon return
of the student’s grace period. from an approved leave of absence.
A student granted an LOA that meets the criteria in this section is
not considered to have withdrawn, and no Return calculation is required.
Upon the student’s return from the leave, he or she continues to earn the
Federal Student Aid previously awarded for the period.

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Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2007-2008

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 ex-
pectation that the student will return from the leave. In order for the in-
stitution 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 institu-
tion 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, a student returning
from an LOA must complete the term in order to 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 pay-
ment 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 stu-
dent 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 course-
work 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 dis-
bursement of Title IV program funds.

A student may return early

A school may permit a student to return to class before the expira-
tion 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.

If a student returns early, 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. That is, 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 pro-
gram 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 begin-
ning 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 re-
quirements of an individual course are often assigned the grade of incom-
plete (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 un-
less 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 pos-
sibility of granting an LOA that meets the criteria specified in 34 CFR
668.22(d), should call its Case Management Team for additional infor-
mation.

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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 re-
quired, 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 in-
stitution 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 stu-
dent 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, may grant a student multiple leaves
of absence as long as the total number of days for all leaves does not ex-
ceed 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 at-
tendance, 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
Deferment or Forbearance
in an in-school status for Title IV loan repayment purposes. If a student
on an approved LOA fails to return, the school must report to the loan A student who has exhausted his or her
holder the student’s change in enrollment status as of the withdrawal grace period and is unable to begin repay-
ment of a loan may apply for a deferment
date. 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 grant-
ing 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 con-
ditions 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 no-
tice 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 that all appropriate fees as well as applicable charges for books,
supplies, materials and equipment are included in Step 5, Part G of the
Return calculation (see Example of Determining Institutional Charges). In-
stitutional 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
Institutional charges cite The institutional charges used in the calculation usually are the
34 CFR 668.22(g)(1)(ii) charges that were initially assessed the student for the entire payment
34 CFR 668.22(g)(2)
DCL-GEN-00-24
period or period of enrollment as applicable. Initial charges may only
be adjusted by those changes the institution made prior to the student’s
withdrawal (for example, for a change in enrollment status unrelated to
Fees as noninstitutional charges cite the withdrawal). If, after a student withdraws, the institution changes
Application fees are excluded from
institutional charges because they are not an
the amount of institutional charges it is assessing a student, or decides to
educational cost. (Federal Register, Vol. 59, eliminate all institutional charges, those changes affect neither the charges
No. 82, April 29, 1994, page 22356). nor aid earned in the calculation. (Please see Step 3 — Amount of Title
IV aid earned by the student, for a further discussion of aid earned and
institutional charges.)

The return regulations presume that 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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 Chapter 2 — Withdrawals and the Return of Title IV Funds

When to prorate charges

For students who withdraw from a non term-based educational Prorated charges example
program, the school has the choice of performing the Return calculation
on either a payment period basis or a period of enrollment basis. If a Institutional charges are $8,000 for a
nonterm-based program that spans two
school with a nonterm program chooses to base the Return calculation payment periods of 450 clock hours each.
on a payment period, but the school charges for a period longer than the The school chooses to calculate the
payment period (most likely the period of enrollment), there may not be treatment of Title IV funds on a payment
a specific amount that reflects the actual institutional charges incurred period basis. A student withdraws in
the first payment period. The prorated
by the student for the payment period. In this situation, the student’s amount of institutional charges for each
institutional charges for the payment period are the prorated amount of payment period is $4,000. However,
institutional charges for the longer period. However, if the school has re- because of the $1,000 in fees charged at
tained Title IV funds in excess of the prorated amount, the institutional the beginning of the period, the school has
retained $5,000 of the Title IV funds for in-
charges for the payment period are equal to the amount retained. stitutional charges for the payment period.
Therefore, the institutional charges for the
Effects of waivers on institutional charges payment period are $5,000.

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 Waiver Example
estimated financial assistance, and the full amount of the tuition and fees An institution charges state residents $900
must be included in Step 5, Part L of the Return calculation. On the per semester. Out-of-state students are
other hand, if the student is never assessed the full charges, the waiver is charged an additional $2,000 for a total
not considered to be financial aid, and only the actual charges would be of $2,900. However, the institution grants
waivers of the out-of-state charges to out-
included in the Return calculation (see DCL GEN 00-24, January 2000 of-state athletes. The waiver is considered
for a further discussion of waivers and the Return calculation). a payment to those charges (estimated
financial assistance) and the full $2,900
Institutional versus noninstitutional charges 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. 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, the institution Reminder
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 re-
quired 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 docu-

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mented cost of unreturnable equipment, and documented cost

of returnable equipment if not returned in good condition
Three principles associated within 20 days of withdrawal.
with institutional charges

Published in a January 7, 1999 policy

Noninstitutional charges include –
bulletin, these principles are applicable to
determining institutional charges. • charges for any required course materials that a school can
document a student had a real and reasonable opportunity to
Principle 1: Most costs charged by the
school are institutional charges
purchase elsewhere (see the discussion that follows);
• charges to a student’s account for group health insurance fees,
The most important principle to keep in
mind is that all tuition, fees, room and if the insurance is required for all students and the coverage re-
board, and other educationally related mains in effect for the entire period for which the student was
charges a school assesses a student are charged, despite the student’s withdrawal; and
institutional charges, unless demonstrated
otherwise. If you want to exclude specific • charges to a student’s account for discretionary educationally
charges or costs from a calculation, you related expenses (e.g., parking or library fines, the cost of ath-
must document that the charges are not
institutional charges.
letic or concert tickets, etc.).

Principle 2: An institutional charge does Demonstrating a real and reasonable opportunity

not need to be assessed to all students
A school may treat charges for books, supplies, equipment, and ma-
A charge assessed to all students enrolled terials as noninstitutional charges if the school can substantiate that its
in a course or program is an students have the option of obtaining the required course materials from
institutional charge whether or not it is
assessed to all students at the school.
an alternative source. The school must be able to document that: (1) the
Moreover, a charge does not have to be required course materials were available for purchase at a relatively con-
specified in a student’s enrollment venient location unaffiliated with the school; and (2) the school provided
agreement to be considered an financial aid funds in a way and at a time that made it possible for the
institutional charge.
student to purchase the materials in a timely manner. A signed statement
Principle 3: Charges on a student’s by a student that he or she had the option to purchase the materials from
account are not always school charges; an alternative source is not sufficient documentation.
school charges do not always
appear on a student’s account
Book vouchers and institutional charges in
With the student’s authorization, a school the return of Title IV funds calculations
may credit a student’s account with Title IV
funds to pay for noninstitutional charges. If
If a book voucher issued by a school cannot be used to purchase
a student withdraws from the school with course materials from a convenient unaffiliated source, the student does
debits for noninstitutional charges on his not have a real and reasonable opportunity to purchase his or her course
or her account, the school should exclude materials elsewhere. In that case the school must include the cost of
those charges from the Return calculation.
books and materials purchased with the voucher as institutional charges
Conversely, there may be institutional in Step 5, Part L 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
from another source, those costs must be of those policies when they enroll, the school may exclude documented
classified as institutional charges. costs for nonreturnable equipment, and returnable 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 pur-
chase the tools from Aerospace or a vendor affiliated with Aerospace. As it hap-
pens, the required tools are available for purchase from Aerospace and from a
retailer across the street. As a routine practice, Aerospace gets written authori-
zation 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 ev-
eryone 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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Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2007-2008

Treatment of Title IV credit balances when a student with-

draws
Treatment of Credit balance This treatment applies only to the handling of Title IV credit bal-
when a student withdraws, cite ances when a student withdraws. For a discussion of credit balances in
DCL GEN 04-03, February 2004
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 pro-
grams prior to performing the Return calculation. The institu-
tion 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 per-
forms the Return calculation.

Although not included in a Return calculation, any

Title IV credit balance from a prior period that re-
mains on a student’s account when the student with-
draws is included as Title IV funds when you deter-
mine 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 per-

New 14-day deadline
forms the Return calculation, an institution must pay
any remaining Title IV credit balance funds in one or In most cases, the cash management regu-
more of the following ways — lations require a school to refund a Title IV
credit balance to a student within 14 days.
• in accordance with the cash management However, when a student withdraws, a
regulations to pay authorized charges at the school is required to perform a Return
calculation to determine, among other
institution (including previously paid charges things, whether adjustments to the credit
that now are unpaid due to a return of Title IV balance will occur.
funds by the institution);
For this reason, the existing 14-day
payment requirement is placed on hold in
A school may not use a Title IV credit balance order to determine the final amount of any
to return funds for which it is responsible as a Title IV credit balance. Your school does
result of a Return calculation (Step 5, item O). not need to obtain a student’s or parent’s
authorization to hold a Title IV credit
• with the student’s authorization, to reduce balance that existed prior to the Return
the student’s Title IV loan debt (not limited to calculation (beyond the original 14-day
deadline) while you determine the final
loan debt for the period of withdrawal); or amount of the credit balance.
• to the student (or parent for a PLUS loan).
In order to allow an institution time to
c) If the institution cannot locate the student (or par- appropriately apply any credit balance
ent) to whom a Title IV credit balance must be paid, after it has been recalculated, a new
14-day deadline is triggered when a school
it must return the credit balance to the Title IV pro- performs a Return calculation. The new
grams. The Department does not specify the order of 14-day deadline begins on the date the
return to the Title IV programs for a credit balance. school performs the Return
calculation, not the date the school
We encourage institutions to make determinations performs any calculations required by its
that are in the best interest of the individual student. institutional refund policy.

You must apply your school refund policy before allocating a Title Of course, in order to determine the correct
Title IV credit balance, the school must take
IV credit balance. However, you are not required to actually complete into account both the results of the Return
the refund process (for example, by making a refund to a student) before calculation and any applicable
completing the steps for allocating the Title IV credit balance. refund policy.

In order to accommodate differences in institutional accounting and

administrative processes, you are not required to actually apply 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 class-
es on September 1. His account was credited with a Pell Grant of $2,000 and debited with insti-
tutional 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 un-
earned funds due from the student is $1,125. Since the $1,125 is composed entirely of grant
funds, after applying the 50 % grant protection, the Amount for the student to return is a grant
overpayment of $125.00.

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 an 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 $125.00
grant overpayment, the Title IV credit balance of the student’s account is $1,400 ($1,525.00
– $125.00). 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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 Chapter 2 — Withdrawals and the Return of Title IV Funds

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 stu-
dent withdraws.

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

untarily 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 take Verifying an agency’s position
continuous attendance for a limited period, including for census pur-
poses, then the institution is considered to be one that is required to take Unless an outside entity has determined
that an institution is required to take
attendance for that period of time only. However, if an outside entity attendance, the institution would be
requires attendance taking only for a single day of census activity, ED considered to be one that is not required
would not consider the institution to meet the definition of an institu- to take attendance. If a school is unsure
whether an outside entity requires a school
tion required to take attendance for that one day.
to take attendance, the school should
inquire of the outside entity, and
Institutions that are required to take attendance for a limited period document the agency’s response.
must document a student’s attendance through that period. If an institu-
tion 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.
Example of taking attendance
If the institution demonstrates that the student attended past the end For example, ten students at Peabody
of the limited period, the student’s withdrawal date is determined in ac- University receive assistance from the state.
cordance with the requirements for an institution that is not required to The state requires the school to take at-
tendance for the recipients of the state’s
take attendance. 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 stu- students. Seven of the ten students who
receive state benefits are also Title IV
dents, the school is required to use those attendance records for only the program recipients. If any of those seven
cohort of students under the outside agency’s jurisdiction to determine students withdraw from the school, the
the student’s withdrawal date (the last date of academic attendance). The school must use the state required
school would not be required to take attendance for any of its other stu- attendance records for them to determine
the withdrawal date as required for
dents, or to use attendance records to determine any of its other students’ institutions required to take attendance.
withdrawal dates, unless the school is required to take attendance for For all other Title IV program recipients
those students by another outside entity. 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 withdrew
student has withdrawn varies depending on the type of withdrawal. For example, if a student
34 CFR 668.22(l)(3) 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 noti-
fication, whichever is later. If a student did not begin the official with-
drawal 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.

Date of determination at institutions that are

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

• withdraw the student and, if the student returns, treat the stu-
dent as a reentry if permitted under the regulations.

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

excused absences that can occur after which a student will be adminis-
tratively 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 student’s withdrawal remains 14 days from
the student’s last day of attendance. If the number of days in the school’s
policy is less than 14 days, then the 45-day time frame for completing
a Return calculation and returning Title IV funds starts on the date the
school’s policy indicates that the student will be administratively with-
drawn.

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

is responsible as soon as possible, but no later than 45 days after it deter-
mines 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 circum-
stances:

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

bursement 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 in-
structs the school to make all or a portion of the post-with-
drawal disbursement, the school must normally 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 repay-
ment 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 45 days after the date of returned, cite
34 CFR 668.22(j)
determination.
• 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 calculation
Changing the basis of the is being done on the basis of a payment period or a period of enroll-
calculation ment. For students who withdraw from semester, trimester, or quarter
A school may change the basis for its programs, a school must perform the Return calculation on a payment
Return calculations for new students as period basis. For students who withdraw from a nonstandard term-based
they begin classes. However, for or nonterm-based educational program, the school has the choice of per-
continuing students, since the institution’s
forming the Return calculation on either basis. The institution must use
Return policy must be included in the
published materials the school provides to the same basis (payment period or period of enrollment) in its calcula-
students as part of the consumer tions for all students within a program who cease attendance.
information requirement, the school would
have to change its catalogue, its written
An exception is allowed for students who transfer to or reenter a
policies and procedures, and its enrollment
agreements (if any), and allow sufficient school that offers nonterm-based or nonstandard term-based educational
time for those continuing students who programs. For students who transfer to or reenter a nonterm-based or
would be governed by the new policy to nonstandard term-based educational program a school may make a sepa-
receive and review the materials.
rate selection of payment period or period of enrollment to use in calcu-
lating their Return of Title IV funds.

The periods used for transfer and reentry 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 calcula-
tions 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 (not to exceed 12
months).

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 de-
termining 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 generally
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 enroll-
ment as the basis for the Return to Title IV funds calculation. An institu-
tion must prorate the charges for the period of enrollment to correspond
to a payment period if the institution has elected to use the payment pe-
riod 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 with-
draw at any point after the 60% point in the payment period or period
of enrollment have earned 100% of their Title IV 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 Fed-
eral 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

Funds to include in a Return The calculation of earned Title IV funds includes certain Title IV
calculation cite grant and loan funds if they were disbursed or could have been disbursed
34 CFR 668.22(a)(2) to a student for the period of time for which the calculation is being per-
formed (payment period or period of enrollment).

The regulations have been revised to reflect the more limited appli-
cability of the Return of Title IV Funds rules as provided in the Higher
Education Reconciliation Act of 2005 (HERA). For students whose
withdrawal date is on or after July 1, 2006, schools should only include
funds from the following programs in their Return calculations:

• Pell Grant,
• ACG,

New • National SMART Grant

• FSEOG,
• FFEL,
• Direct Loan, and
• Perkins Loan.

The Return of Title IV Funds requirements no longer apply to

funds from the GEAR UP, SSS, or LEAP programs.

Also, Federal Supplemental Educational Opportunity Grant

(FSEOG) Program funds continue to be excluded under certain
circumstances. As in the past, 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 re-
cipient 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.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Special Treatment of students who Reentry within 180 days cite

withdraw and then transfer or reenter 34 CFR 668.4(e)
a credit-hour nonterm-based program
or a program that measures progress in Consistent with
clock hours leave of absence

Reentry within 180 days This arrangement is similar to an LOA , and

the 180-day time frame is consistent with
A student who reenters within 180 days is treated as if he or she did the maximum 180 days allowed for an
approved LOA in the Return regulations.
not cease attendance for purposes of determining the student’s aid awards The difference, of course, is that with an
for the period. unauthorized LOA the institution would
not know that the student would be
For credit-hour nonterm-based programs or programs that measure returning and would have treated the
student as a withdrawal. Based upon that
progress in clock hours, a student who withdraws and then reenters the withdrawal, the institution would have
same program at the same school within 180 days is considered to be in completed the Return calculation, which
the same payment period he or she was in at the time of the withdrawal. may have required both the institution and
The student retains his or her original eligibility for that payment period, the student to return funds to the Title IV
programs.
and is treated as though he or she did not cease attendance.
If the student returns within 180 days to his
A student who reenters a credit-hour nonterm-based program or a or her original program, while an official
program that measures progress in clock hours within 180 days of his leave was not granted, and the provisions
of the Return regulations were applied,
or her withdrawal is immediately eligible to receive all Title IV funds upon the student’s return, the student can
that were returned when the student ceased attendance. Thus, upon the be treated as though he or she had been
student’s return, the school must restore the types and amount of aid on an approved LOA.
that the student was eligible for before the student ceased attendance,
and schedule the appropriate disbursements. Actions to be taken by the
school would include: Costs upon reentry

The cost of attendance would be the costs

• re-disbursing aid that had been disbursed and then returned associated with the original period before
under the Return of Title IV Aid provisions; the student withdrew. Once the student
has withdrawn and then returned to the
• disbursing aid the student was otherwise eligible for that had same program within a 180-day period, the
not yet been disbursed at the time the student withdrew; and regulation states that the student remains
in the same payment period. The cost of
• canceling any overpayments assessed the student as a result of attendance for such a student returning to
the prior withdrawal. the same program within 180 days must
reflect the original educational costs
associated with the payment period from
Once the student completes the payment period for which he or she
which the student withdrew.
has been paid, he or she becomes eligible for subsequent Title IV student
aid payments.
Deferment status for loan
There are limitations on redisbursing and making second disburse-
funds
ments of FFEL and Direct Loan funds when a student reenters. If the
date of a student’s return is more than 12 months from the start of the If a student re-enrolls in school on at least
period for which the loan was certified, the funds cannot be redisbursed. a half-time basis before his or her initial
grace period expires, the student regains
Likewise, if the date scheduled for a second disbursement is more than
his or her in-school status and is entitled to
12 months from the start of the period for which the loan was certified, have his or her grace period made whole
the second disbursement may not be made. For more information on again. The student will have a full initial
this topic please see the chart Loan Principles Applicable to Transfer and grace period when he or she ceases half-
time enrollment.
Reentry at Nonterm Schools later in this chapter.

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Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2007-2008

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 reenter train-
ing 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 com-
pleted 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
When a student reenters If a student whose overpayment has previously been referred to Bor-
within 180 days rower Services returns to school within 180 days, the school must send
Borrower Services a fax identifying the student overpayment, and stating
The return regulations require a school
to return unearned funds for which it is
that it should be made void. This will allow the Department to properly
responsible as soon as possible, but no update its records in both the Borrower Services system and NSLDS.
later than 45 days after the date of the
institution’s determination that the This fax number is for school use only and only for this purpose
student withdrew. If a student returns to
the institution before the Title IV funds are
returned, the institution is not required to Fax Number: (319) 665-7646
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 determination that a student has
• award year of the overpayment;
withdrawn. The institution may not delay • student’s social security number;
returning Title IV funds because it believes
a student might return. • student’s last name, first name, and middle initial;
• student’s date of birth;
• type of overpayment — Federal Pell Grant or FSEOG;
• the disbursement date the institution used to create the over-
payment record in 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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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Reentry within 180 days, example

Consider a student who began attendance in a clock-hour program that
was 1,500 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 Title IV loan funds, for a
total of $2500 in Title IV aid.

Assume that this student withdrew from school after completing 200 of the
225 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 scheduled hours
(225) to determine that the student earned 50% of his or her Title IV aid. The
school returned $500 to the loan program. The $750 the student was initially
scheduled to return (Step”S”) was eliminated by the application of grant pro-
tection in Step “U.”

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, assuming that not more than 12 months
has elapsed since the start of the original loan period, the school should re-
quest that the lender redisburse the $500 the school had returned. In addition,
the institution would schedule additional Title IV disbursements for the day af-
ter 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 reenters in a new award year

A student who was originally enrolled in a payment period that be- Requesting Administrative
gan, and was scheduled to end in one award year could return after the Relief by Email
end of that award year (June 30). However, the intent of the new regula-
A school can also request administrative
tions is that such a student is to be considered, upon his or her return, to relief by sending an email directly 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 [email protected]
regardless of whether the resumption of the payment period is in a new
The request must include the
award year. • reason (reentry within 180 days);
• school’s Pell ID number;
Consider a student who received Pell Grant funds and ceased at- • name of the person to contact;
tendance in one award year who then reenters training within 180 days, • the contact’s phone number; and
• the contact’s email address.
but in a new award year. If the school returned funds after a Return cal-
culation, the student might be due Pell funds from an award year that is
over.

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Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2007-2008

In order to request these funds, the school will have to go to the

COD web site at

https://cod.ed.gov/cod

Limits on requesting log in under the School tab using the school’s user name and password
administrative relief (available from the school’s system administrator), select “Post Deadline
System Processing” on the left side, and request administrative relief
Generally, a school may request with “Reentry within 180 days” as the reason.
administrative relief for a student who
reenters training during the award year
following the award year in which the
For the campus-based programs, if funds are not available from the
funds were originally awarded. year in which the awards were originally made, the school may award
funds from the current year. Note that doing this does not increase the
annual maximum awards that may be made to an individual student.

Reentry after 180 days, transfer into a new program at the

same institution, or transfer to a new institution
Reentry after 180 days cite If a student withdraws from a credit-hour nonterm program or a
34 CFR 668.4(f) clock-hour program without completing the period and –

• reenters the same program at the same institution more than

180 days after withdrawal, receiving credit for hours previ-
ously earned; or
• transfers into another credit-hour nonterm or clock-hour pro-
gram at any time (either at the same institution or at a new in-
stitution) 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 reenters or

transfers.

In calculating awards for a student who reenters the same program

after 180 days, reenters in a new program, or transfers to a new institu-
tion, 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 reentry.

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 reentering the institution in a
new program. A school has an option in how it manages program trans-
fers within the institution.

A school might treat the student as one who withdraws and reenters.
If so, the school must administratively withdraw the student from the
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 Chapter 2 — Withdrawals and the Return of Title IV Funds

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 stu-
dent 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 stu-
dent. 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 cal-
culation 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

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

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Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2007-2008

LOAN PRINCIPLES
APPLICABLE TO TRANSFER AND REENTRY 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 reenters a program, the loan period certified must
be the lesser of the –
• academic year,
• program, or
• 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 —
• the academic years at the original and receiving institutions (If the original aca-
demic year is unknown, a school must assume the previous school had an academic
year of 30 weeks.),
• or 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 at-
tempting 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 receiv-
ing 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 reenters the same program within 180 days and before the end of the stu-
dent’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

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Loan Principles

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).

7. When a student reenters 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 sec-
ond 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 eli-
gible to receive only the balance of the loan, and it must be made in multiple disburse-
ments.

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 pro-
gram that remained was less than an academic year, the loan would be subject to prora-
tion.
8. If a student reenters 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 Title IV aid, a student must be enrolled in an eli-
gible 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 aca-
demic plan.

A student who completes a course is expected to begin attending

the next available course in the program, until the student completes the
credits for which he or she has received Title IV aid. If before a student
completes the credits for which he or she has received Title IV aid, 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 consid-
ered withdrawn.

A student who has completed the credits for which aid was awarded Clarification
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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Transfer Students

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 pay-
ment 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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 Chapter 2 — Withdrawals and the Return of Title IV Funds

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 Esthet-
ics 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 ad-
dition, 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 re-
ceive 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 sec-
ond 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
he 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 criteria a school must consider as it enters data in the
steps of the calculation.

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Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2007-2008

Step 1: Student’s Title IV aid information

Title IV aid disbursed
A school must calculate the amount of earned Title IV funds by ap-
When a school makes a single plying a percentage to the total amount of Title IV program assistance
disbursement of an FSEOG
that was disbursed and that could have been disbursed. Under Step 1 of
If a student is receiving an FSEOG of less the worksheet, a school fills in the amount of each type of Title IV aid
than $501 a school may pay the student that was disbursed and that could have been disbursed. When entering
the entire grant in one disbursement. the amount of loan funds, a school should enter the net amount dis-
However, if a student who received or
was scheduled to receive his or her en- bursed and that could have been disbursed.
tire FSEOG award in one disbursement
subsequently withdraws, the school must Generally, a student’s Title IV funds are disbursed when a school
attribute the FSEOG over all periods for credits a student’s account with the funds or pays a student or parent di-
which the FSEOG was awarded. If the
disbursement has already been made, the rectly with
school must immediately return amounts
intended for periods in which the student • Title IV funds received from the Department, or
did not begin attendance. In the
Return calculation the school should in- • FFEL funds received from a lender, or institutional funds used
clude only that portion of the FSEOG in advance of receiving Title IV program funds.
attributed to the period from which the
student withdrew.
There are a couple of exceptions to this definition. For a complete
For example, if Preflight Community Col- discussion of the definition of disbursed Title IV funds, see Volume 4
lege (PCC) awards and disburses to Bob an – Processing Aid and Managing Federal Student Aid Funds.
FSEOG of $500 for an award year consist-
ing of two semesters, and Bob withdraws
during the first semester, PCC must A student’s aid is counted as aid disbursed in the calculation if it
immediately return the $250 that was is disbursed as of the date of the institution’s determination that the
attributed to the second semester. In the student withdrew (see the discussion under Date of the institution’s de-
Return calculation, PCC includes as Aid that
was disbursed only the $250 attributed to
termination that the student withdrew).
the first semester.
A school may not alter the amounts of Title IV grant and loan funds
that were disbursed prior to the school’s determination that the student
withdrew. For example, a school may not replace a withdrawn student’s
loan funds with grant funds that the student was otherwise eligible to re-
ceive 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. The
calculation and later the loan is denied by first principle provides that, for purposes of determining earned Title IV
the lender, the school should revise its aid, generally, so long as the conditions for late disbursements in 34 CFR
Return calculation. If there has been a
change in the amount the student or
668.164(g)(2) (described below) were met prior to the date the student
school must return, the school must make became ineligible, any undisbursed Title IV aid for the period for which
the appropriate adjustments to its records the return calculation is performed is counted as aid that could have
and the COD systems. If the denied PLUS been disbursed (regardless of whether the institution was prohibited from
loan was the only Title IV assistance for
which the student was eligible, no Return making the disbursement on or before the day the student withdrew be-
calculation would have been required. cause of the limitations in 34 CFR 668.164(g)(4) or elsewhere).

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Any undisbursed Title IV aid for the period that the school uses as
the basis for the Return calculation is counted as aid that could have Conditions for late disbursement
cite
been disbursed as long as the following conditions were met before the 34 CFR 668.164(g)(2)
date the student became ineligible –
Limitations on making a late disburse-
1. for all programs except PLUS, the Department processed a ment cite
34 CFR 668.164(g)(4)
Student Aid Report (SAR) or Institutional Student Informa-
tion Record (ISIR) with an official Expected Family Contri-
bution (EFC) for the student (except in the case of a PLUS Official EFC
loan);
An “official EFC” is an EFC calculated by the
2. for a FSEOG award, the institution made the award to the Department and provided on a SAR or ISIR.
student; It may or may not be a valid EFC (defined
as an EFC based on information that is
3. for an FFEL loan or a Direct Loan, the institution certified or correct and complete).
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 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 in
order for the loan to be included as aid that could have been disbursed
the promissory note must be signed before the school performs the Re-
turn calculation.

Similarly, both the ACG and National SMART Grant programs

require that students fulfill academic year and GPA requirements in or-
der to continue receiving these grants (See Volume 1 – Student Eligibil-
ity.). A student who had completed the required number of credits for New
the previous academic year, but for whom no GPA had been calculated
at the beginning of the first semester of the subsequent year is eligible
to receive an ACG or National SMART grant if the required GPA be-
comes available during the semester. In order for an ACG or National
SMART grant to be included as aid that could have been disbursed, the
eligible GPA must be available before the school performs the Return
calculation. If a school has made an interim disbursement of an ACG
or National SMART Grant and the grades, when they become available
indicate that the student does not have the required GPA, the disburse-
ment becomes an overpayment, must be returned by the school, and is
not included in 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 cal-
culation is performed on a payment period basis, the loan funds counted
are those for the payment period; if the calculation is performed on the
period of enrollment basis (e.g., the academic year basis), the loan funds
counted are those for the entire period of enrollment.

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When a student drops below The second principle provides that a student can never receive as a
half time before withdrawing post-withdrawal disbursement any funds from a disbursement that the
institution was prohibited from making on or before the date the student
If a student who is otherwise eligible for withdrew. Therefore, although the following potential disbursements can
a late first disbursement drops below
be counted as Aid that could have been disbursed (if intended for the pe-
half-time enrollment and then withdraws,
the institution would include any undis- riod for which the Return calculation is being performed) an institution
bursed Stafford loan funds in the Return is prohibited from disbursing –
calculation as “aid that could have been
disbursed.” However, an institution may
1. for nonstandard term credit-hour programs where the terms
never make a post-withdrawal disburse-
ment of Stafford funds a student could not are not substantially equal in length, credit-hour nonterm
have received if he or she had remained in programs, and clock-hour programs, a second disbursement of
school. 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 course-
Making a separate work or clock hours (as applicable) in the loan period (34
determination of eligibility for a CFR 682.604(c)(7) or (8), or 34 CFR 685.301(b)(5), or (6));
post-withdrawal disbursement 2. a second or subsequent disbursement of FFEL or Direct Loan
Consider a student enrolled at a school
funds unless the student has graduated or successfully com-
that is not required to take attendance by pleted the loan period (34 CFR 668.164(g)(4)(ii));
an outside entity. The student registers for,
and on September 1, begins attendance in 3. a disbursement of FFEL, Direct, or Perkins loan funds for
12 credits. On September 15 the student which the borrower has not signed a promissory note;
drops classes worth 7 credits and his
enrollment status changes to less than half 4. for clock-hour or credit-hour nonterm programs, a disburse-
time. On December 1, the school receives ment of a Federal Pell Grant, ACG, or National SMART
$2,000 in Stafford loan funds for the Grant for a subsequent payment period when the student has
student.
not completed the earlier payment period for which the stu-
In reviewing it’s records the school dent has already been paid (34 CFR 690.75(a)(3) and 34 CFR
determines that the student is an 691.75(a)(3)&(4));
unofficial withdrawal. Though the school
can use the 50% point (November 1) as the 5. a disbursement of an FFEL or Direct Loan to a first-year,
withdrawal date, it must make a separate first-time borrower who withdraws before the 30th day of
determination of the student’s eligibility
the student’s program of study (34 CFR 668.164(g)(4)(iii))
for a post-withdrawal disbursement. In this
case, because the student lost eligibility for (except when this delay does not apply because of low default
Stafford funds on September 15 (the day rates); and
the student ceased to be enrolled at least
half time), the student may not receive a 6. a disbursement of a Federal Pell Grant, ACG or National
post-withdrawal disbursement of Stafford SMART Grant to a student for whom the institution did not
loan funds have a valid SAR/ISIR by the deadline established by ED (34
CFR 668.164(g)(4)(iv)) annually in the public deadline no-
tice.
Some schools can use the 50% point as the withdrawal date for a
student who unofficially withdraws in determining earned Title IV aid.
Important However, in order to determine whether the funds can be disbursed as
a post-withdrawal disbursement, the school must make a separate de-
termination of the date the student lost eligibility.

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Treatment of inadvertent overpayments

An inadvertent overpayment occurs when an institution disburses Discussion of inadvertent
funds to a student who is no longer in attendance, for example, when overpayments cite
an institution makes a scheduled disbursement on Monday to a student Federal Register Volume 64, Number 151,
August 6, 1999, Proposed Rules, page 43026
who dropped out on the previous Friday. Inadvertent overpayments Federal Register Volume 64, Number 210,
are included in Return calculations as Aid that could have been disbursed November 1, 1999, Rules and Regulations,
rather than Aid that was disbursed. page 59018
DCL GEN 04-03, February 2004
A school is allowed to hold an inadvertent overpayment while deter-
mining if the student is owed a post-withdrawal disbursement. However,
this is not intended to affect the amount of aid a student would receive
under a Return calculation. Rather, it is permitted only to avoid a school
having to return funds only to have to later request and disburse them if
a student is eligible for a post-withdrawal disbursement.

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 sec-
ond principle above under Title IV aid that could have been disbursed
applies, and neither the institution nor the student may retain any por-
tion of the overpayment. However, the funds are included as Aid that
could have been disbursed and may result in a student being able to re-
tain more grant funds.

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 inad-
vertent 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 dis-
bursement, the institution must return only the unearned portion of the
inadvertent overpayment.

An institution is not required to return the inadvertent overpay-

ment immediately, but must return it within 45 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 be-

cause the student had withdrawn and the disbursement would have been
a late second or subsequent disbursement of an FFEL or Direct Loan, the

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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)).

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 nec-
Important essary 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 pro-
gram 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 sched-
uled to receive the other half in the second payment period. Because the student had not com-
pleted 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 enroll-
ment 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 begin-
ning 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 in-
stallment 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.

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 re-
quirements, including the post-withdrawal disbursement requirements, do not supersede this pro-
vision. Therefore, although in this case, 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.

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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 pay-
ment 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 pay-
ment 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 generally 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 dur-
ing 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 stu-
dent is considered to have withdrawn so the percentage of the payment
period or period of enrollment completed by the student can be deter-
mined. 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 when or before the student
completed 60% of the payment period or period of enrollment, the per-
centage 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 insti-
tutional 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 pre-
viously 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
The goal of the Return provisions is to identify the date that most Withdrawal date at schools
accurately reflects the point when a student ceases academic attendance, required to take attendance cite
not the date that will maximize Federal Student Aid to the institution or 34 CFR 668.22(b)
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 always 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, those who take an unapproved LOA, and those who officially
withdraw.

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Documentation
Documenting a student’s A school must document a student’s withdrawal date and maintain
withdrawal date cite that documentation as of the date of the institution’s determination that
34 CFR 668.22(b)(2)
34 CFR 668.22(c)(4) 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 pur-
poses 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 a
withdrawal date at a school withdrawal date varies with the type of withdrawal. The chart on With-
that is not required to take drawal Dates at the end of this chapter lists the withdrawal date for the
attendance cite various types of withdrawals, as well as the date of the institution’s deter-
34 CFR 668.22(c)
mination 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
Official notification defined withdrawal process. A student may also provide official notification
A notice of intent to withdraw that a student in other ways. If a student otherwise provides official notification (as
provides to an office designated by the in- explained below), the withdrawal date is the date notification was
stitution.
34 CFR 668.22(c)(5)(i) provided.

These withdrawal dates apply even if a student begins the school’s

Notification example withdrawal process or otherwise notifies the school of his or her in-
For example, if on May 5, a student
provided notification of his or her intent to
tent to withdraw and projects a future last date of attendance. How-
cease attending the school beginning on ever, a school that is not required to take attendance may always
May 10, the withdrawal date is May 5. use a last date of attendance at an academically related activity as a
However, the school may use May 10 as student’s withdrawal date (this is discussed in detail below). There-
the student’s withdrawal date if the
institution documents May 10 as the stu-
fore, a school could use a later last documented date of attendance
dent’s last date of attendance at an at an academically related activity if this date more accurately reflects
academically related activity. the student’s withdrawal date than the date the student begins the
school’s withdrawal process or notifies the school of his or her intent
to withdraw.
Consumer Information on
Withdrawing School’s withdrawal process
A school is expected to identify the The beginning of the school’s withdrawal process must be
beginning of its process as a part of the defined. The individual definition is left up to the school. Schools
school’s consumer information regarding
withdrawal (see “Volume 2 – School
are required to make available to students a statement specifying
Eligibility and Operations”). A school the requirements for officially withdrawing from the school.
should be able to demonstrate consistent
application of its withdrawal process,
including its determination of the
beginning of that process.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

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 deter-
mining 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 notifies Otherwise provides official
an office designated by the school of his or her intent to withdraw. notification cite
34 CFR 668.22(c)(5)
In its written description of its withdrawal procedures a school must
designate at least one office for this purpose. For example, a school
could designate a dean’s, registrar’s, or financial aid office. If a stu-
dent provides notification to an employee of that office while that
person is acting in his or her official capacity, the student has pro-
vided official notification.

Official notification from the student is any official notification

that is provided in writing or orally to a designated campus official
acting in his or her official capacity in the withdrawal process. Ac- Informal contact with
ceptable official notification includes notification by a student via a school employee
telephone, through a designated Web site, or orally in person. The
If the student provides notification to an
responsibility for documenting oral notifications is the school’s; how- employee of a designated office while that
ever, the school may request, but not require, the student to confirm person is not acting in his or her official
his or her oral notification in writing. If a student provides official capacity (for example, the student runs
notification of withdrawal to the institution by sending a letter into her financial aid officer at the grocery
store) we would expect the employee
to the designated office stating his or her intent to withdraw, the to inform the student of the appropriate
withdrawal date is the date that the institution receives the letter. means for providing official notification of
Notification is not provided to an institution until the institution re- his or her intent to withdraw.
ceives 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 cam-
pus 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 no-
tification 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 with-
drawal, 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 and
dates cite otherwise provide official notification to the school of his or her in-
34 CFR 668.22(c)(2)(ii)
tent 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
of his or her withdrawal. There are two categories of these unoffi-
Only an institution that is required to take cial withdrawals for purposes of this calculation. First, if the school
attendance by an outside entity is required determines that a student did not begin the withdrawal process or
to use its attendance records to determine
a student’s withdrawal date. However, an
otherwise notify the school of the intent to withdraw due to illness,
institution that is not required to take accident, grievous personal loss, or other circumstances beyond the
attendance by an outside entity but does student’s control, the withdrawal date is the date the school deter-
take attendance may, in order to use the mines that the student ceased attendance because of the aforemen-
most accurate date of last attendance,
use its attendance records to determine a tioned 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 an academically re-
lated activity that the student participated in.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Withdrawal without student notification due to

circumstances beyond the student’s control
There are two circumstances in which a special rule applies that Withdrawal due to circumstances
defines a withdrawal date for a student who withdraws due to cir- beyond the student’s control cite
34 CFR 668.22(c)(1)(iv)
cumstances 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 accurate-

ly reflects when the student ceased academic attendance due to the
circumstances beyond the student’s control. This date would not nec-
essarily 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 re-
sult 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 re-
lated 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 cre-
ate 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 atten-
dance as of a certain date (e.g., a census date), the last possible date of
withdrawal for that student is the census date.

All other withdrawals without student notification

For all other withdrawals without notification, the withdrawal
date is the midpoint of the payment period or the period of enroll-
ment, as applicable at an institution not required to take attendance
by an outside entity.

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Time frame for the determination of a withdrawal date

for an unofficial withdrawal
Time frame for the A school may not know that a student has dropped out (unof-
determination cite ficially withdrawn) until the school checks its records at the end of an
34 CFR 668.22(j)(2) academic period. However, to ensure that Title IV funds are
returned within a reasonable period of time, a school must determine
All other withdrawals cite the withdrawal date (for a student who withdrew without providing
34 CFR 668.22(c)(1)(iii)
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.

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 con-
firmed. That is, institutions are expected to have procedures for de-
termining 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 ap-

plicable;
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 Title IV 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 that an
institution use a specific procedure for making this determination.

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

offered over an entire period, for that class, an institution may presume
that the student completed the course and thus completed the period. If
a student who began attendance and has not officially withdrawn fails to
earn a passing grade in at least one course offered over an entire period,
the institution must assume, for Title IV purposes, that the student has
unofficially withdrawn, unless the institution can document that the stu-
dent completed the period.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

In some cases, a school may use its policy for awarding or reporting Testing the use of a grading
final grades to determine whether a student who failed to earn a pass- policy
ing grade in any of his or her classes completed the period. For example,
a school might have an official grading policy that provides instructors If a school uses its grading policy to
with the ability to differentiate between those students who complete the determine whether students with failing
grades have unofficially withdrawn, during
course but failed to achieve the course objectives, and those students who compliance audits and program reviews
did not complete the course. If so, the institution may use its academic student records might be examined to
policy for awarding final grades to determine that a student who did not determine whether the grades assigned
receive at least one passing grade nevertheless completed the period. An- accurately represent the students’
attendance.
other 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 re-
ceived 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 al-
lows an instructor to indicate the date the student last participated in course ac-
tivities, 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 unof-
ficially 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
Documentation
intent to withdraw and then attends an academically related activity after
Documentation of a student’s attendance that date, the school would have the option of using that last actual
at an academically related activity must attendance date as the student’s withdrawal date, provided the school
always be provided by an official of the
institution. A student’s self-certification
documents the student’s attendance at the activity. Similarly, a school
of attendance at an academically related could choose to use an earlier date if it believes the last documented
activity is never sufficient documentation. date of attendance at an academically related activity more accurately
However a school is not required to take reflects the student’s withdrawal date than the date the student began the
class attendance in order to demonstrate
academic attendance for this purpose. school’s withdrawal process or otherwise provided official notification of
his or her intent to withdraw.

The school (not the student) must document –

Activities that are not
academically related • that the activity is academically related, and
Examples of activities that are not • the student’s attendance at the activity.
academically related include living in
institutional housing and participating in Please note that a school is not required to take class attendance in
the school’s meal plan. order to demonstrate academic attendance for this purpose.

Examples of academically related activities are –

1. examinations or quizzes,
2. tutorials,
3. computer-assisted instruction,
4. academic advising or counseling,
5. academic conferences,
6. completing an academic assignment, paper, or project, and
7. 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 academi-

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

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Withdrawals after rescission of official notification

A student may provide official notification to the school of the in- Withdrawals after rescission of
tent to withdraw and then change his or her mind. To allow a student official notification cite
34 CFR 668.22(c)(2)(i)
to rescind his or her intent to withdraw for purposes of this 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 noti-
fies 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 a offered in modules cite
Return of Title IV Funds calculation is required and if so, the length of DCL-GEN-00-24
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 charac-
teristics:

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

ules 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 of Pell required the modules in a term. For example, a student enrolling in a
If a student withdraws after completing three module per semester program can start in module two or
one module the student is not considered three as well as in module one.
to have withdrawn. However, because the
student failed to begin attendance in the • Students may skip one or more modules within the term. For
number of credit hours for which the example, a student enrolling in a three module per semester
Federal Pell Grant was awarded, the institu- program can attend module one, skip module two, and return
tion must recalculate the student’s eligibil-
ity for Pell and campus-based funds based for module three.
on a revised cost of education and enroll-
ment status (34 CFR 690.80(b)(2)(ii)).
• Students enroll up-front for courses in all of the modules they
plan to attend for the entire term; however, some students
For such a student, a change in enrollment may subsequently add or drop a course in a later module.
status to less than half time as a result of
the failure to begin attendance in all sub- Regarding those determinations, the following principles apply to the
sequent modules would not affect a stu- application of the Return provisions:
dent’s eligibility for any federal education
loan funds previously received because
at the time the previous disbursements
1. If a student withdraws from an institution after completing at
were made, the student was still scheduled least one course in one module within the term, the student
to attend on at least a half-time basis. (Of is not considered to have withdrawn and the requirements
course, a student may not receive as a late of 34 CFR 668.22 for the Return of Title IV aid do not ap-
disbursement any second or subsequent
disbursement of the loan.) ply. Note, however, other regulatory provisions concerning
recalculation may apply (e.g., 34 CFR 690.80, 682.604, and
If a student withdraws without complet- 85.303).
ing at least one module, the student is
considered to have withdrawn. Because 2. If a student withdraws from the institution before completing
the student failed to begin attendance in at least one course in one module, the student is considered to
the number of credit hours for which the
Federal Pell Grant was awarded, before
have withdrawn and the requirements for the Return of Title
performing the required Return calcula- IV aid apply unless the institution has obtained a confirmation
tion, the institution must recalculate the from the student that the student intends to continue in the
student’s eligibility for Pell and campus- program by attending a module later in the term.
based funds based on a revised cost of
education and enrollment status. The insti-
tution then performs a Return calculation For confirmation, a school may not rely upon the student’s
using the student’s revised award. previous registration. Rather, the confirmation from the stu-
(Continued on next page.)
dent must be obtained at the time of or after the student’s
withdrawal. If a student indicates an intention to continue in
a subsequent module in the term but does not return for that
module, the student would be considered to have withdrawn
and withdrawal date would be the withdrawal date that would
have applied if the student had not indicated an intention to
attend a module later in the term.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

3. When a student withdraws without completing at least one

course in one module, the number of completed days used in Recalculation of Pell, contd.
the numerator in Step 2 of the Return calculation begins on An institution may not disburse the pro-
the first day of the first module the student attended in the ceeds of an FFEL or Direct Loan to an ineli-
term, ends on the last day the student was in attendance, and gible borrower. Therefore, if a student who
was enrolled in a series of modules with-
includes only the period during which the student was in draws before beginning attendance as a
attendance. The payment period (the denominator in Step 2 half-time student, and the student had not
of the Return calculation) includes all of the modules the stu- received the first disbursement of an
dent was scheduled to attend in the term. education loan before withdrawing, the
institution may not make the first
4. A student who has not completed at least one course in the disbursement because the institution
knows the student was never enrolled on
payment period does not have to be considered to have with- at least a half-time basis.
drawn if the institution has obtained a confirmation from the
student that the student intends to continue in the program 34 CFR 668.164(g)(3)(iii), which permits an
and attend a module later in the term. institution to make a late disbursement of
an FFEL or Direct Loan for costs incurred
For further treatment of withdrawals from standard term-based pro- to a student who did not withdraw, but
grams using modules, please see DCL-GEN-00-24, December 2000. ceased to be enrolled as at least a half-time
student, does not apply because the stu-
dent never really was a half-time
Withdrawal date when a student dies student.
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 circum-
stances 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 with-
drawal 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. (For
more information on how the death of a student affects the Return pro-
cess, see the discussion under Death of a student later in this chapter.)

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Part 2 – Percentage of Aid Earned

Percentage of payment period or period of
enrollment completed
Once a student’s withdrawal date is determined, a school needs to
Percentage of payment period or
period of enrollment completed calculate the percentage of the payment period or period of enrollment
cite completed. The percentage of the payment period or period of enroll-
34 CFR (f) ment 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 cite Scheduled breaks

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

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Example of Withdrawal Date When a Student Withdraws

during 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 with-
drew 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 45
days after this date.

Credit-hour programs
For a credit-hour program, the percentage of the period complet- Credit-hour programs cite
ed is determined by dividing the number of calendar days completed 34 CFR 668.22(f)(1)(i)
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 sched-
uled 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- earned by a student is equal to the percentage of the period complet-
hour nonterm program cite ed by the student (except 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 percent-
age 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 institu-
tion must project the completion date based on the student’s prog-
ress 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 rea-
sonable 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 reason-
able 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) and the student has not failed any courses for
which he or she was paid in the payment period, the total number of
calendar days in the period will be the same for all students.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

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 suc-
cessfully completed all modules attempted up to the time the 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.) To do this,
the school must modify the denominator used in the Return calcula-
tion. 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.

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 Staf-
ford 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 pro-
gram 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 measure of his
progress and compares it to information from its records about other stu-
dents who have completed the same program to determine an end date.

Looking at the records of students who have completed the same pro-
gram, 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 in-
stitution 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.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Clock-hour programs
Under HERA, only scheduled hours are now used to determine
the percentage of the period completed by a student withdrawing
from a clock-hour program. New
For a clock-hour program, the percentage of the period com-
pleted is determined by dividing the number of hours the student
was scheduled to complete in the payment period or period of enroll- Clock-hour programs cite
ment, as of the day the student withdrew, by the total number of 34 CFR. 668.22(f)(ii)
clock hours in the same period as follows:

Using portions of a clock hour

If an institution tracks the completion of

number of clock hours the student was scheduled clock hours in portions of an hour, it might
to complete in the period be able to use portions of an hour to deter-
mine the percentage of Title IV aid earned
total number of clock hours in the period when a student withdraws.

An institution that tracks the completion of

clock hours in portions of an hour (for
example, in 15-minute intervals) may use
A student withdrawing from a clock-hour program earns 100 those portions of an hour to determine the
percentage of Title IV aid earned when a
percent of his or her aid if the student’s withdrawal date occurs after student withdraws if the institution
the point that he or she was scheduled to complete 60 percent of the counts attended portions of an hour
scheduled hours in the payment period or period of enrollment. toward completion of the program for
all students in the program. If an
institution counts only whole hours with
The scheduled clock hours used for a student must be those no credit for partially completed hours
established by the school prior to the student’s beginning class date toward completion of the program, only
for the payment period or period of enrollment, and must have been whole hours may be used in the Return
calculation.
established in accordance with any requirements of the state or the
institution’s accrediting agency. These hours must be consistent with
the published materials describing the institution’s programs. How-
ever, if an institution modified the scheduled hours in a student’s
program prior to and unrelated to his or her withdrawal in accor-
dance with any State or accrediting agency requirements, the new
scheduled hours may be used.

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Step 3: Amount of Title IV aid earned by

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

Step 4: Total Title IV Aid to be disbursed

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

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

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 contribu-
tion (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
Reminder to make (or offer as appropriate) post-withdrawal disbursements.
A post-withdrawal 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 follow-
ing the requirements for calculating earned Title IV Aid, and has no
relationship to incurred educational costs.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Disburse grant before loan

A post-withdrawal disbursement, whether credited to the stu- Disburse grant before
dent’s account or disbursed to the student or parent directly, must be loan example
made from available grant funds before available loan funds since it If a student is due a post-with-
is in the student’s best interest to minimize loan debt. Available grant drawal disbursement of $500, and
or loan funds refers to Title IV program assistance that could have the student has received $400
of $1,000 in Federal Pell Grant
been disbursed to the student but was not disbursed as of the date of
funds that could have been dis-
the institution’s determination that the student withdrew. bursed, and $1,200 of the $2,000
in Federal Stafford Loan funds
The regulations do not address how a school should ensure that that could have been disbursed,
Title IV funds are disbursed to the proper individual. However, a the available undisbursed funds
school may not require a student who has withdrawn from a school are $600 in Federal Pell Grant
(or a parent of such a student, for PLUS loan funds) to pick up a funds, and $800 in Federal
post-withdrawal disbursement in person. Because the student is no Stafford loan funds. Any portion
longer attending the school, he or she may have moved out of the of the $500 post-withdrawal
area and may be unable to return to the school to pick up a post- disbursement that the school
withdrawal disbursement. makes must be from the $600
in available Federal Pell Grant
Summary of actions a school must take before making a funds.
post-withdrawal disbursement
The actions a school must take before it may disburse funds from
a post-withdrawal disbursement now vary depending on the source
of the funds and whether the funds are to be posted to the student’s
account to cover unpaid charges or disbursed directly to the student.
New
The regulations already required a school to obtain confirmation
from a student, or parent for a parent PLUS loan, before making a
direct disbursement of loan or grant funds from a post-withdrawal
disbursement. The regulations have been revised to make clear that
an institution must now obtain such confirmation before crediting a
student’s account with Title IV loan funds.

As in the past, without permission, Title IV grant funds from a

post-withdrawal disbursement can be credited to a student’s account
to pay for tuition, fees, and room and board (if the student contracts New
with the school). A school may not make a direct disbursement of
Title IV grant funds to a student without obtaining permission.

An institution must obtain a student’s authorization to credit a

student’s account with Title IV grant funds for charges other than
current charges. A school is permitted to use a student’s or parent’s
authorization for crediting the student’s account for educationally
related expenses that the school obtained prior to the student’s with-
drawal date so long as that authorization meets the cash management
New
requirements for student or parent authorizations. If the school did
not obtain authorization prior to the student’s withdrawal, the school

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would have to obtain authorization in accordance with the cash man-

agement requirements before the school could credit the student’s
account for other current charges for educationally related activities.
(See Volume 4 – Processing Aid and Managing Federal Student Aid
Funds for more information on student and parent authorizations.)

Post-withdrawal disbursement of Title IV grant

funds directly to a student
As in the past, a school is permitted to credit a student’s account
with the post-withdrawal disbursement of Title IV grant funds with-
out the student’s 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 stu-
dent’s authorization to credit a student’s account with Title IV grant
funds for charges other than current charges.
New
If a student due a post-withdrawal disbursement of Title IV
grant funds has no outstanding charges on his or her account, or if
grant funds remain to be disbursed from a post-withdrawal disburse-
ment after the outstanding charges on the student’s account have
been satisfied, the school must notify the student in writing that the
grant funds are available.

Notification and Authorization Requirements

Grants funds disbursed directly
The notice to the student must include the source, type, and
amount of the grant funds. In addition, the notice must inform the
student that he or she may reject the funds or accept all or just a por-
tion of the amount offered. The school may not disburse the funds
New directly to the student without the student first confirming that he or
she wants the funds.

The school must document the result of the notification process

and the final determination made concerning the disbursement, and
maintain that documentation in the student’s file.

Loan funds
A school must notify a student, or parent for a parent PLUS
loan, in writing prior to making any post-withdrawal disbursement
of loan funds, whether those loan funds are to be credited to the
New student’s account or disbursed directly to the student (or parent).
The information provided in this notification must include the infor-
mation necessary for the student, or parent for a parent PLUS loan,
to make an informed decision as to whether the student or parent
would like to accept any disbursement of loan funds.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

The notice must identify the type and amount of the loan funds
it wishes to credit to the student’s account or disburse directly to the
student or parent, and explain that a student, or parent for a parent
PLUS loan, may accept or decline all or a portion of the funds. The
notice must also explain to the student, or parent for a parent PLUS
New
loan, the obligation to repay the loan funds whether they are dis-
bursed to the student’s account or directly to the borrower.

The notice must also make clear that a student, or parent for a
parent PLUS loan, may not receive as a direct disbursement loan
funds that the institution wishes to credit to the student’s account
unless the institution agrees to do so. If the student, or parent for a New
parent PLUS loan, does not wish to accept some or all of the loan
funds that the institution wishes to credit to the student’s account,
the institution must not disburse those funds.

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 of loan funds, the school should include information
about the advantages of keeping loan debt to a minimum. If a post-
withdrawal disbursement is entirely comprised of loan proceeds,
unless the recipient needs the funds to pay educational costs, the
school might want to suggest that the student cancel the loan. With
a student’s permission, funds due a student in a post-withdrawal dis-
bursement can be used to pay down a Title IV loan thereby reducing
any post-withdrawal disbursement made directly to the student.

The school must document the result of the notification process

and the final determination made concerning the disbursement, and
maintain that documentation in the student’s file.
New
If a school has completed post-withdrawal loan notification
(described previously) and confirmed a student’s desire for any loan
funds included in the post-withdrawal disbursement, the school is
permitted to credit a student’s account with the post-withdrawal
disbursement without additional permission from the student (or
parent, in the case of a PLUS loan) for current charges as described
above.

A school may combine providing loan counseling, obtaining au-

thorization to credit loan funds to a student’s account for outstand-
ing charges, and authorization to make a direct disbursement to the
student.

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Separate authorization required for educationally related

Cash management requirements
expenses
for student and parent
authorizations cite A school is permitted to use a student’s or parent’s authorization
34 CFR 668.165(b)
for crediting the student’s account for educationally related expenses
that the school obtained prior to the student’s withdrawal date so
Outstanding charges example long as that authorization meets the cash management requirements
for student or parent authorizations. If the school did not obtain au-
Consider a student who is due a post-with-
drawal disbursement of $800. The institu- thorization prior to the student’s withdrawal, the school would have
tional charges that the student was origi- to obtain authorization in accordance with the cash management
nally assessed by the institution totaled requirements before the school could credit the student’s account for
$2,300. However, under the institution’s
refund policy, the institution may only
other current charges for educationally related activities. (See Volume
keep $600 of those institutional charges. 4 – Processing Aid and Managing Federal Student Aid Funds for more
No funds had been paid toward the institu- information on student and parent authorizations.)
tional charges at the time the student with-
drew. In addition, the student owes $150 Crediting a student’s account
for a bus pass. The outstanding charges
on the student’s account that would be An institution should not request Title IV funds for a post-with-
entered in Box 2 of the Post-Withdrawal
Disbursement Tracking Sheet are $750 (the
drawal disbursement unless and until it has determined that it can
$600 in institutional charges plus the $150 disburse any post-withdrawal disbursement within three business
owed for the bus pass). days of receiving the funds.
A portion of the $800 the institution must
disburse under the post-withdrawal
The requirements for the treatment of Title IV funds when a
disbursement provisions may (with student withdraws reflect the cash management requirements for dis-
authorization if they are loan funds) be bursing Title IV funds. An institution must obtain a student’s autho-
used to satisfy the outstanding balance. If rization to credit a student’s account with Title IV funds for charges
the student has provided written
authorization to credit Title IV funds to his
other than current charges for tuition, fees, room and board (if the
account and use them for non- student contracts with the school) (see Volume 4 – Processing Aid and
educational charges, the school may credit Managing Federal Student Aid Funds and chart on “Institutional and
$750 to institutional charges and Financial Assistance Information for Students” in Volume 2 – School
offer $50 to the student. If the student has
not provided (and does not provide) Eligibility and Operations for more information).
written authorization to use the funds for
non-educational charges, the school may Outstanding charges on a student’s account are charges for which
only credit $600 to institutional charges, the institution will hold the student liable after the application of
and must offer $200 to the student.
any applicable refund policy. These are the institutional charges, after
any adjustment, that reflect what the student will owe for the current
term after his or her withdrawal, any other current charges, plus any
permitted minor prior year charges.

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.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Notice to a student offering a post-withdrawal

disbursement
Flexibility in notifying students
In order to avoid having to contact a student a multiple times, a
school may use one contact to - New
• notify a borrower about his or her loan repayment
obligations;
• obtain permission to credit loan funds to a student’s
Student’s Response to
account to cover unpaid institutional charges;’ an Offer of a PWD
• obtain permission to make a post-withdrawal
disbursement of grant or loan funds for other than A student’s or parent’s response to an
institutional charges; and offer of a direct disbursement of Title IV
funds from post-withdrawal disbursement
• obtain permission to make a post-withdrawal does not have to be in writing. However, a
disbursement of grant or loan funds directly to a school must document the response.
student.

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.

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

an institution may set a deadline of 14 days or more. Any dead-
line must apply to both confirmation of loan disbursements to the
student’s account and direct disbursements of a post-withdrawal
New
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 disburse-
ment based on an acceptance received from a student or parent re-
ceived after school’s deadline.

Under HERA, an institution that chooses to honor a late re-

sponse must disburse all the funds accepted by the student or parent
as applicable. The school cannot credit the student’s account in ac- New
cordance with the student’s request, but decline to disburse post-
withdrawal funds accepted as a direct disbursement. 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.

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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.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

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 Mi-
chael has a remaining potential post-withdrawal disbursement of $850.
3. Michael may accept all, a portion, or none of the $850.
4. Any loan funds that Michael accepts will have to be repaid.
5. 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. Note that
under the HERA a school may allow more than 14 days for a response.
6. 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 re-
lated expense).
7. 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 together with any other grant funds he
chooses to accept.
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 ac-
count 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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Consequently, the sooner a school sends the notification to a student

or parent, the more time the school has to make any accepted post-
Disbursement Prohibited
withdrawal disbursement.
A school may not disburse the proceeds of
a Title IV loan when it knows that the If authorization from a student (or parent for a PLUS loan) is
repayment of the loan will devolve or pass received after the deadline and the school chooses not to make a
to the Department. Therefore, a school
may not disburse the proceeds of a PLUS post-withdrawal disbursement, the school must notify the student (or
loan taken out by a parent who has died, parent) that the post-withdrawal disbursement will not be made and
even though the student for whose benefit why. This notification must be made in writing. If an authorization
the loan was intended remains alive and
otherwise eligible.
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
If a school receives the proceeds of a PLUS recipient’s instructions on an authorization received after the dead-
loan made to a parent who has died, it line, the school does not need to notify the student.
must return the funds to the lender to-
gether with a letter explaining the reason it
is returning the funds. Death of a student
A school may not make a post-withdrawal disbursement of Title
IV funds to the account or estate of a student who has died.

If an institution is informed that a student has died during a pe-

riod, it must perform a Return calculation. If the Return calculation
indicates that an institution is required to return Title IV funds, the
institution must return the Title IV funds for which it is responsible.

The student’s estate is not required to return any Title IV funds.

Therefore, an institution should neither report a grant overpayment
for a deceased student to NSLDS, nor refer a grant overpayment for
a deceased student to Borrower Services. If an institution had previ-
ously reported a grant overpayment for a student who is 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 bor-
rower 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

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

charges that are now unpaid due to the Return of Title IV

Title IV aid to be returned cite
funds by the institution); 34 CFR 668.22(a)(2)
2. retiring any Title IV grant overpayments owed by the student
for previous withdrawals from the present school (the institu-
tion may deposit the funds in its federal funds account and Use aid actually disbursed
make the appropriate entry in GAPS);
The amount of aid that was actually
disbursed, rather than the total amount of
If the institution has previously referred the grant overpay- aid that was disbursed and that could have
ment to Borrower Services, Collections (Collections), the in- been disbursed, is used because the only
amount of Title IV aid that needs to be re-
stitution should provide Collections with documentation that turned is the amount of disbursed aid that
the student has died so that Collections can delete the over- exceeds the amount of earned aid.
payment from its records.
3. returning any remaining credit balance to the Title IV Pro-
grams.
Step 5: Amount of unearned
Part 2 – Title IV aid to be returned Title IV aid due from the school
34 CFR 668.22(g)
If the 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. The amount of Federal Student Aid to be returned
is determined by subtracting the amount of earned Title IV aid (Box I)
from the amount of Title IV aid that was actually disbursed to the stu-
dent, Box E).

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 stu-
dent may both have a responsibility for returning funds. Funds that are
not 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 calcu-
lated first. Thus, the student’s repayment obligation is determined after
A school’s policy and
the school’s share is calculated. the Return requirements
The school must return the lesser of – Title IV funds are provided under the
assumption that they are used to pay
institutional charges ahead of all other aid.
• the amount of Title IV funds that the student does not earn;
Institutions may establish their own
or policies for distributing Title IV aid.
• 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 (Box M) is determined by subtracting the
percentage of Title IV aid earned (Box H) from 100%.

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Aid disbursed to the student before

institutional charges are paid
Institutional charges cite Consider a case in which, in order to assist a student with living
34 CFR 668.22(g)(1)(ii) expenses, a school elects to disburse an anticipated credit balance to a stu-
34 CFR 668.22(g)(2) dent rather than pay itself for institutional charges from the first Title IV
DCL-GEN-00-24
funds the school receives. Then, the student withdraws before the school
Determining charges cites receives anticipated aid from all the Title IV programs. The Return calcu-
34 CFR 668.22(a), lations indicate the school must return funds, but the school had passed
34 CFR 668.22(g)(2)(ii), and through all funds to the student. The school still must return the funds
DCL-GEN-00-24
it is responsible for returning as a result of the Return calculation.

Treatment of Work-Study funds Institutional charges

Federal Work-Study funds are not included
in the calculation of earned Title IV funds Institutional charges are used to determine the portion of unearned
when a student withdraws. This remains Federal Student Aid that the school is responsible for returning. Schools
the case even if a student has granted per-
mission for a percentage of the student’s must ensure the inclusion of all appropriate fees as well as applicable
Federal Work-Study earnings to be credit- charges for books, supplies, materials, and equipment in Step 5, Part L of
ed to his or her account to pay educational the Return calculation. (See Institutional versus noninstitutional charges
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.
Fees as noninstitutional charges
Application fees are excluded from If an institution enters into a contract with a third party to provide
institutional charges because they are not an institutional housing, the institution must include the cost of housing
educational cost. (Federal Register, Vol. 59, as an institutional charge in a Return calculation if a student living in
No. 82, April 29, 1994, page 22356).
the third-party housing withdraws.
Effect of other assistance cite
Federal Register/Vol. 64, No. 210, Use of institutional charges in determining
11/1/99, page 59032 the school’s responsibility for return
The institutional charges used in the calculation are always the charg-
Administrative fees es that were assessed the student for the entire payment period or period
The $100 or 5% administrative fee (which-
ever is less) that was excludable under the
of enrollment, as applicable, prior to the student’s withdrawal. Initial
former Refund and Repayment regulations charges may only be adjusted by those changes the institution made prior
is not excluded in Return of Title IV Funds to the student’s withdrawal (e.g., for dropping or adding a class or chang-
calculations. ing enrollment status). If after a student withdraws the institution
changes the amount of institutional charges it assessed a student, or de-
cides to eliminate all institutional charges, those changes affect neither the
charges nor aid earned in the calculation. (Please see Step 3 — Amount
of Title IV Aid Earned by the Student, for a further discussion of aid
earned and institutional charges.)

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

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
Reminder
aid to be used for tuition. The Return regulations presume Title IV pro-
gram funds are used to pay institutional charges ahead of all other sources
of aid.

When an institution that offers courses in a nonterm, credit-hour

format calculates the aid for which the student is eligible, it does so us-
ing 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 Return calculation must
include the charges for all the courses the student was initially expected
to complete.

Effects of a post-withdrawal reduction in charges

If a student withdraws and as a result of applying an institutional Prorated charges example
refund policy the school reverses, reduces, or cancels a student’s charges,
the Return requirements still apply. The statute mandates that an other- Institutional charges are $8,000 for a
nonterm-based program that spans two
wise eligible student who begins attendance at a school and is disbursed payment periods of 450 clock hours each.
or could have been disbursed Title IV grant or loan funds prior to a The school chooses to calculate the
withdrawal earns a portion of those Title IV funds. If as a result of the treatment of Title IV funds on a payment
withdrawal, an institution adjusts or eliminates a student’s institutional period basis. A student withdraws in
the first payment period. The prorated
charges, or changes a student’s enrollment status, the changes made by amount of institutional charges for each
the institution have no bearing on the applicability of the requirements payment period is $4,000. However, be-
in 34 CFR 668.22. Moreover, the charges used in the Return cause of the $1,000 in fees charged at the
beginning of the period, the school has
calculation are always the charges on the student’s account prior to with- retained $5,000 of the Title IV funds for in-
drawal. However, if a student’s enrollment status changed prior to and stitutional charges for the payment period.
unrelated to the withdrawal, the effect of that change on institutional Therefore, the institutional charges for the
charges appropriately should be reflected in any Return calculation. payment period are $5,000 — the greater
of the two elements from the proration
calculation.
When to prorate charges
As stated previously, for students who withdraw from a nonterm-
based educational program, the school has the choice of performing the Waiver Example
Return calculation on either a payment period basis or a period of enroll-
ment basis. If a school with a nonterm program chooses to base the An institution charges state residents $900
Return calculation on a payment period, but the school charges for a per semester. Out-of-state students are
charged an additional $2,000 for a total of
period longer than the payment period (most likely the period of en- $2,900. However, the institution grants
rollment), there may not be a specific amount that reflects the actual waivers of the out-of-state charges to out-
institutional charges incurred by the student for the payment period. In of-state athletes. The waiver is considered
a payment to those charges and the full
this situation, the student’s institutional charges for the payment period $2,900 would need to be included in any
are the prorated amount of institutional charges for the longer period. Return calculation.
However, if a school has retained Title IV funds in excess of the institu-
tional charges prorated amount, including allocating costs for equipment
and supplies to the beginning of the program, the funds retained by the
school are attributed to that payment period because they are a better
measure of the student’s institutional charges for that period.

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Effects of waivers on institutional charges

Order of return of Title IV funds If your school treats a waiver as a payment of tuition and fees that
cite have actually been charged to a student, then the waiver is considered a
34 CFR 668.22(i) financial aid resource, and the full amount of the tuition and fees must
be included in Step 5, Part L of the Return calculation. On the other
hand, if the student is never assessed the full charges, the waiver is not
considered to be financial aid, and only the actual charges would be in-
cluded in the Return calculation. (See DCL GEN 00-24, January 2000
for a further discussion of waivers and the Return calculation.)

Step 6: Return of funds by the school

Order of return of Title IV funds
A school must return Title IV funds to the programs from which the
student received aid during the payment period or period of enrollment
New 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.
8. Federal Pell Grants for which a return of funds is required.
9. Academic Competetiveness Grants for which a return of funds
is required.
10. National Smart Grants for which a return of funds is required.
11. Federal Supplemental Educational Opportunity Grants
(FSEOG) for which a return of funds is required.

Time frame for the return of Title IV funds

Time frame for return of Title IV Previously, regulations required a school to return the unearned
funds cite funds for which it is responsible as soon as possible, but no later than
34 CFR 668.22(j)(1) 30 days after the date of the school’s determination that the student
withdrew. The HERA amended this requirement in the HEA, and
new implementing regulations issued by the Department now require
a school to return unearned funds for which it is responsible as soon as
possible, but no later than 45 days from the determination of a student’s
withdrawal. The new regulations continue to specify that a school must
return those funds as soon as possible.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

A school will be considered to have returned funds timely if the

school does one of the following no later than 45 days after the date it
determines that the student withdrew:

• deposits or transfers the funds into the bank account it is re-

quired to maintain;

• initiates an electronic funds transfer (EFT);

• initiates an electronic transaction that informs the FFEL

lender to adjust the borrower’s loan account for the amount
returned; or
• issues a check.

The school is considered to have issued a check timely if the institu-

tion’s records show that the check was issued no more than 45 days after
the date the school determined that the student withdrew, and the date
on the cancelled check shows that the bank endorsed that check no more
than 60 days (instead of the current 45 days) after the date the school de-
termined that the student withdrew.

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. The cite
initial amount of unearned Federal Student Aid due from the student 34 CFR 668.22(h)
(or parent, for PLUS loan funds) (Box Q) is determined by subtracting
the amount returned by the school (Box O) from the total amount of
unearned Title IV funds to be returned (Box K). This is called the initial
amount due from the student because a student does not have to return
New
the full amount of any grant repayment due. Therefore, the student may
not have to return the full initial amount due.
Return of funds by the student
cite
34 CFR 668.22(h)(3)(i) and (ii)
Step 8: Repayment of Student Loans
The student loans that remain outstanding (Box R) consist of the
loans disbursed to the student (Box B) minus any loans the school repaid
in STEP 6, Block P. These outstanding loans are repaid according to the New
terms of the student’s promissory notes.

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Step 9: grant funds to be returned

For withdrawals occurring on or after July 1, 2006, the HERA
amended the HEA to change the amount of a grant overpayment that
must be repaid. The new implementing regulations issued by ED now
New limit the amount a student must repay to the amount by which the
original overpayment amount exceeds 50 percent of the total grant funds
received by the student for the payment period or period of enrollment.

The initial amount of unearned Title IV grant aid due from the
student (Box S) is found by subtracting the loans to be repaid by the
student (Box R) from the initial amount of unearned aid due from the
student (Box Q).
New
The amount of grant overpayment due from a student is limited to
the amount by which the original grant overpayment (Box S) exceeds
half of the total Title IV grant funds disbursed and could have been dis-
bursed to the student (Box F).

Student overpayments of $50 or less

The HERA amended the HEA to specify that a student does not
have to repay a grant overpayment of $50 or less for grant overpayments
New resulting from the student’s withdrawal. The implementing regulations
issued by ED reflect this statutory provision and specify that a student is
not obligated to return a grant overpayment of $50 or less.

As a result, a grant overpayment of $50 or less will not make the

student ineligible to receive Title IV, HEA program assistance should the
student return to school. A school is not required to attempt recovery of
that overpayment, report it to the Department’s National Student Loan
Data System (NSLDS), or refer it to Borrower Services – Collections.

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

turn calculation resulted in a student having to return $150 in Pell funds
and $20 40 in FSEOG funds, the student would have to return the
Pell funds, but the FSEOG funds would be considered de minimis and
treated as described above.

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Step 10: Return of Grant Funds by the

Student
The student is obligated to return any Title IV overpayment in the
same order that is required for schools.

Grant overpayments may be resolved through –

1. full and immediate repayment to the institution;

Grant overpayments cite
2. repayment arrangements satisfactory to the school; or 34 CFR 668.22(h)(4)

3. overpayment collection procedures negotiated with Borrower

Services.
A school has responsibilities that continue beyond completing
the Return calculation and returning the funds for which it is New
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 limit the amount of grant funds a student
must repay to one half of the grant funds the student received or could
have received during the applicable period. Moreover, 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 over-
payment.
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 fol- Reminder
lowing the date the school sent or was required to send notifi-
cation to the student.

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

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 op-
tions.

45-Day period example When a student receives additional funds during the 45-
day period of extended eligibility
On October 30th during the fall semester
a student withdraws and owes a grant Students who owe overpayments as a result of withdrawals generally
overpayment. On November 29th the insti- will retain their eligibility for Title IV funds for a maximum of 45 days
tution notifies the student of the overpay- from the earlier of (a) the date the school sends the student notice of the
ment. The student has 45 days (until
January 13) to repay the overpayment overpayment, or (b) the date the school was required to notify the stu-
in full or to make arrangements with the dent of the overpayment.
institution or the Department to repay the
overpayment. A student who receives Title IV funds within that period of extended
The spring semester begins on January 7, eligibility and then fails to return the overpayment or make repayment
before the 45-day period ends, and the arrangements becomes ineligible for additional Title IV program funds
student receives Title IV aid for the spring on the day following the 45-day period. However, any Title IV program
semester on January 10. The student then
fails to repay the overpayment in full or
funds received by the student during the 45-day period were received
sign a repayment agreement by the end of while the student was eligible. Therefore, those Title IV funds do not
the 45-day period - January 13. The have to be returned (unless the student withdraws a second time). A
student is not required to return the Title student who loses his or her eligibility for Title IV funds at the expiration
IV funds received on January 10. However,
the student becomes ineligible for
of the 45-day period will remain ineligible for additional Title IV funds
additional Title IV funds on January 14 and until the student enters into a repayment agreement with the
remains ineligible until he or she enters Department.
into a repayment agreement with the
Department.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

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 deter-
mines 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 de-
termines 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.

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.

If at any time a student who previously negotiated a repayment

arrangement fails to comply with the terms of his or her agreement to
repay, that student immediately becomes ineligible for additional Title
IV funds. Any Title IV program funds received by the student between
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 (un-
less 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 arrange-
ments with the Department.

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 accor-
dance with the Return requirements.
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Student overpayments of $50 or less

A student does not have to repay a grant overpayment of $50 or
Student overpayments less than
less for grant overpayments resulting from the student’s withdrawal. As
$50 cite
34 CFR 668.22(h)(3)(ii)--- a result, a grant overpayment of $50 or less will not make the student
ineligible to receive Title IV, HEA program assistance should the student
return to school. A school is not required to attempt recovery of that
overpayment, report it to the Department’s National Student Loan Data
System (NSLDS), or refer it to Borrower Services – Collections.

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

calculation resulted in a student having to return $150 in Pell funds and
Reminder $40 in FSEOG funds, the student would have to return the Pell funds,
but the FSEOG funds would be considered de minimis and treated as
described above.

If a school is currently holding an overpayment resulting from a

withdrawal for which the original amount (after the grant protection was
applied) was less than $50, the school should delete the overpayment in
NSLDS by:

1. from the Overpayment History Page, selecting the overpay-

ment 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.
This new standard does not apply to remaining grant overpayment
balances. That is, a student must repay a grant overpayment that has
been reduced to $50 or less because of payments made. An overpayment
for which the original amount was or more than $50 that has a current
balance of less than $50 may not be written off.

Note: Borrower Services will not accept referrals for which the origi-
nal amount was less than $25.

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

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

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Payments on a student’s behalf

The grant protection always applies to the repayment of grant funds
for which the student is responsible, regardless of who actually returns
the funds. If an institution chooses to return all or a portion of a grant
overpayment that otherwise would be the responsibility of the student to
return, the grant protection still applies. If an institution returns a grant
overpayment for a student, the student would no longer be considered to
have a Title IV grant overpayment and as such no reporting to NSLDS
is required and no referral to Borrower Services for collection is allowed.
This would be true whether the institution simply returned the overpay-
ment for the student or returned the overpayment and created a debit on
the student’s school account.

Recording student payments and reductions in the

Pell Grant, ACG, and National SMART Grant Programs
For reductions and payments to awards in the 2006-2007 award year Reporting reductions
and forward, all schools should record reductions and payments by enter-
ing a replacement value. Schools can report current-year reductions
to awards/disbursements either through
the software they use for Pell transactions
If through its Return calculation a school determines that a student or by using the COD Web site at
has received an overpayment of Pell, ACG, or National SMART Grant
funds, the school should reduce the student’s award/disbursements and https://cod.ed.gov
return the funds.

First, reduce the student’s award/disbursements by entering a replace-

ment value in the COD system. The replacement value will be the origi-
nal values less only the amount the school (not the student) must return.

Note: If a school receives a payment for a current-year overpayment

that has not been referred to Borrower Services, the school
should NOT send the payment to Borrower Services.

After you have reduced the student’s disbursement in COD, return

the unearned funds as follows:

• If your school has made repayment arrangements with a stu-

dent and received a payment on a current year overpayment,
the school should deposit the funds in its Pell, ACG, or Na-
tional SMART account and make the appropriate entry in the
COD system.

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• If a student makes a payment on any previous year’s Pell,

Returning funds to the ACG, or National SMART overpayment, a school makes the
Department aforementioned COD system entry using the same software
the school used to create the award. The school then returns
Using the electronic refund function in the funds to the Department using the Electronic Refund
GAPS is the preferred method whenever
a school must return Pell, ACG, National
function in GAPS following the same procedures the school
SMART, or FSEOG funds. follows when making other GAPS refunds/returns.
Only in exceptional circumstances (and If through its Return calculation a school determines that a student
never for a current Pell , ACG, National has received an overpayment of FSEOG funds, the school must adjust
SMART, or FSEOG award) should a school its institutional ledgers, financial aid records, and the student’s account
return funds from a Return calculation by
sending a check instead of using the elec-
by subtracting the amount the school must return (the FISAP filed for
tronic refund function in GAPS. 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,
Contact the e-payments Help desk at the school should deposit the payment in its federal funds account, and
888-36-8930
(M–F 8a.m. to 6p.m. ET) for assistance
award the funds to other needy students. If the school collects an over-
payment of an FSEOG for an award made in a prior award year, the
If because of extraordinary circumstances funds recovered should be returned to the Department using the Elec-
you must send a check, tronic Refund function in GAPS. Payments should be applied to the
The GAPS lockbox address for Pell and award year in which the recovered funds were awarded.
campus-based funds is:
For information on handling student payments after you have re-
U.S. Department of Education ferred an overpayment to Borrower Services, see the discussion under Ac-
P.O. Box 979053
St. Louis, Missouri 63197-9000 cepting payments on referred overpayments later in this chapter.

The school must note the student’s name, Recording student payments and reductions in the Direct
SSN, the school’s DUNS number, and the
complete 11-digit Document/Program
Loan Program
Award Number and award year on the If through its Return calculation a school determines that a student
check. A school must use a separate check
for each award year. has received an overpayment of Direct Loan funds, the school should
reduce the student’s award/disbursements by making a downward adjust-
ment 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

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

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

Notifying the Department

A school is never required to enter into a repayment agreement with
a student; rather a school may refer an overpayment to the Department
at any time after the student has had the opportunity to pay off the over-
payment in full to the school or indicate his or her intent to negotiate
repayment arrangements with Borrower Services. However, if a school re-
ports a student overpayment (for which a student has not negotiated re-
payment arrangements) to NSLDS before the 45-day period has elapsed,
the student will appear to be ineligible for Title IV aid. Since students re-
tain their eligibility for 45 days, schools should provide students with ev-
ery 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.

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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 with-
in 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 stu-
dent contacts Borrower Services, a school should tell a student to wait 10
days before contacting Borrower Services.

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

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

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 report-
NSLDS cites
DCL-GEN-98-14 July 1998
ing 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
The Email address for NSLDS NSLDS nor referred for collection.
Customer Service is –
A school reports overpayments to the NSLDS via the
[email protected]
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

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

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 overpay-
ment; 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 over-
payment 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 con-
tinue to reflect the status of the overpayment until the debt is repaid in full.

If a school enters into a repayment arrangement with a student who

owes an overpayment, the school should immediately report the repay- Reminder
ment arrangement using the online NSLDS screens. The school should
report the status (Indicator field) of an overpayment for which it has en-
tered a repayment agreement as “Satisfactory Arrangement Made.” After Payment in full
the information is reported to the NSLDS, any future output from the
Anytime a school receives a payment
CPS (SARs and ISIRs) will show that the student owes a repayment of (including the application of a Title IV credit
a Title IV grant and that the student has negotiated a satisfactory repay- balance) that will repay an overpayment in
ment arrangement with the school. full, the school must also update its original
submission to NSLDS by changing the en-
try on the “Overpayment Update Screen”
As long as the student fulfills his or her commitment repayment for the Indicator Field to “Repaid.”
under the repayment arrangement, the NSLDS overpayment status of
“Satisfactory Arrangement Made” will indicate that, though the 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 Important
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.

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Required referrals
A school must refer to the Department:
REMINDER

All referrals to Borrower Services must be 1. a student who does not satisfy the requirements of a repay-
made on institutional letterhead. ment agreement with the school;
2. a student who fails to contact the school during the 45-day
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 arrange-
ment.
If a school is referring to Borrower Services a student overpayment
previously reported to NSLDS, the school must also update the informa-
tion 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 Arrange-
ment 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 “Overpayment” as the status (Indicator field).

To refer student overpayments for collection, schools should use a

Tip 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
Remember to include your school’s typed or printed and must be submitted on school letterhead.
Reporting Pell Identification number on
the referral. 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 used when it cre-
Important ated 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 overpay-

ment, 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 2007-2008 award year, on its Overpayment Referral,

schools must continue to provide their School’s Pell Identification Num-
ber. During the 2007-2008 award year, schools should not enter their
Routing Identifier.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

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

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Accepting payments on referred overpayments

A school may continue to accept payment on a Title IV grant over-
payment after the overpayment has been referred to the Department. A
school that accepts a check made out to the Department on an overpay-
ment 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 indicat-
ing 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 re-

ferred 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:

1. deposit the payment in its appropriate institutionally main-

tained federal funds account;
2. for a Federal Pell Grant overpayment, make the appropriate
entry in the COD system (for a phase-in participant — a neg-
ative disbursement, for a full participant — the replacement
value); and
3. send a letter or fax to Borrower Services identifying the stu-
dent 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 is –

(319) 665-7646

Note: This process cannot be performed via email.

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

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

1. award year of the overpayment (current award year only);

2. student’s social security number;
3. student’s last name, first name, and middle initial;
4. student’s date of birth;
5. type of overpayment — Federal Pell Grant or FSEOG; and
6. the disbursement date the institution used to create the over-
payment 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 incor-
rect, you should fax or mail a letter explaining the situation to
Collections at –

(319) 665-7646

Important: You should not send a revised referral form when

making changes or corrections.

The letter must include the –

1. student’s last name, first name, and middle initial;

2. student’s social security number;
3. award year of the overpayment;
4. disbursement date the institution used to create the overpay-
ment record in NSLDS;
5. amount originally referred; and
6. description of the issue, and the requested action.

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Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2007-2008

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 Bor-
rower 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 sec-
ond 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.

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 stu-
dent 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 overpay-
ment resulting from a withdrawal violates the terms of that agreement,
the institution must immediately cease disbursing Title IV aid to the stu-
dent. 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

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

Date of the Institution’s
Student’s
Withdrawal Type Circumstance Determination that the
Withdrawal Date1
Student has Withdrawn

The student begins the The date the student begins The student’s withdrawal date,
school’s withdrawal process, or the school’s withdrawal pro- or the date of
cess, or notification, whichever is later.
The student otherwise pro-
vides official notification to the The date that the student
school of intent to withdraw. otherwise provides the
Official Notification notification.

(If both circumstances occur,

use the earlier
withdrawal date.)

Official notification not pro- The date that the school The date that the school
vided by the student because determines is related to the becomes aware that the
of circumstances beyond the circumstance beyond the student has ceased
student’s control. student’s control. attendance.2
Official Notification Not
Provided All other instances where The midpoint of the
student withdraws without payment period or period of
providing official enrollment, as applicable.
notification.

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

The student withdraws after The student’s original with- The date the school becomes
Withdrawal After rescinding a previous official drawal date from the aware that the student did
Rescission of Official notification of withdrawal. previous official notification. not, or will not, complete the
Notification 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 earliest of the (1) payment period or period of enrollment (as appropriate), (2) academic
year, or (3) educational program.

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Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2007-2008

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, Academic Competetiveness Grants, National SMART grants, Stafford Loans, PLUS
Loans, Federal Supplemental Educational Opportunity Grants (FSEOGs), and Federal Perkins Loans.

When you withdraw during your payment period or period of enrollment (your school can de-
fine 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 prorata 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 dis-
bursement. If the post-withdrawal disbursement includes loan funds, your school must get your
permission before it can disburse them. You may choose to decline some or all of the loan funds
so that you don’t incur additional debt. Your school may automatically use all or a portion of your
post-withdrawal disbursement (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.

Your school must also get your permission before it can disburse directly to you any Title IV grant
funds that are part of a post-withdrawal disbursement.

There are some Title IV funds that you were scheduled to receive that cannot be disbursed to
you once you withdraw because of other eligibility requirements. For example, if you are a first-time,
first-year undergraduate student and you have not completed the first 30 days of your program be-
fore you withdraw, you will not receive 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

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

2. the entire amount of excess funds.

The school must return this amount even if it didn’t keep this amount of your Title IV program
funds.

If your school is not required to return all of the excess funds, you must return the remaining
amount. Any loan funds that you must return, you (or your parent for a PLUS Loan) repay in accor-
dance 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 grant funds you received or were
scheduled to receive. You must make arrangements with your school or the Department of Educa-
tion 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 In-
formation Center at 1-800-4-FEDAID (1-800-433-3243). TTY users may call 1-800-730-8913. Informa-
tion is also available on Student Aid on the Web at www.studentaid.ed.gov.

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Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2007-2008

Return of Title IV Funds Requirements and Deadlines

Party Responsible Requirement Deadline
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
School student withdrew
• Educational program from which
student withdrew

Return of unearned Title IV funds As soon as possible, but no later than

School 45 days after date school determined
student withdrew

Post-withdrawal disbursement to student’s ac- As soon as possible, but no later than 120
count for: days of date school determined
Outstanding current (allowable) charges (tuition student withdrew, in accordance with
School and fees, room and board, etc.) requirements for disbursing Title IV
Minor (e.g., under $100) prior year charges that funds 34 CFR 668.164
the school has authorization to retain

Written notification providing Within 30 days of disbursement of loan

student (or parent) providing funds, in accordance with requirements
opportunity to accept all/part of a loan, for post- for notifications and authorizations
withdrawal disbursements of loan funds (Perkins, 34 CFR 668.22(a)(4)(i)(B)
School FFEL, Direct Loan, or PLUS) to student’s account

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

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

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

earned Title IV funds in excess of outstanding cur- 120 days of date school determined
School rent (educationally related) charges student withdrew

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

Notification to student of grant Within 30 days of date school

School overpayment determined student withdrew

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

Submit response instructing school to make Within specified number of days

Student (or parent) post-withdrawal disbursement school allows for response.

Return of unearned Title IV funds Loans - according to terms of the loan

Grants - within 45 days of earlier of
Student date school sent, or was required to
send notice

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 Chapter 2 — Withdrawals and the Return of Title IV Funds

Return of Title IV Funds Requirements for Notification

Party Responsible Notification Requirements
Report of student to NSLDS if student does not No later than 45 days from the date
pay overpayment in full, does not enter into student is notified of overpayment
School repayment agreement, or fails to meet terms of
repayment agreement
Consumer Information • School’s withdrawal policy
• School’s refund policy
• Office(s) designated to receive
School official notifications of intent to
withdraw
• Requirements regarding return of
Title IV funds

Written notification of student’s eligibility for • Identify type and amount of Title
post-withdrawal disbursement of funds in excess IV funds that make up post-with-
of outstanding current educationally related drawal disbursement not credited to
charges student’s account
• Explain that student or parent may
School accept all or part of disbursement
• Advise student or parent that no
post-withdrawal disbursement will be
made unless school receives response
within the timeframe established by
the school

Response (written or electronic) to late request Outcome of request

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

Repayment Agreement • Terms permitting student to repay

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

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 Treatment Of Title IV Funds When A Student Withdraws From A Credit-Hour Program
Student’s Name Social Security Number
Date form
completed / / Date of school’s determination
that student withdrew / /
Period used for calculation (check one) Payment period Period of enrollment

Monetary amounts should be in dollars and cents (rounded to the nearest penny).
When calculating percentages, round to three decimal places. (For example, .4486 = .449, or 44.9%)

STEP 1: Student’s Title IV Aid Information

E. Total Title IV aid disbursed for the
Amount that Could
Title IV Grant Programs Amount Disbursed Have Been Disbursed payment period or period of enrollment.
1. Pell Grant A.
2. Academic Competitiveness Grant + B.
3. National SMART Grant
= E. $ .
4. FSEOG F. Total of Title IV grant aid disbursed +
could have been disbursed for the
A. C. payment period or period of enrollment.
Subtotal Subtotal
A.
Net Amount that Could
+ C.
Title IV Loan Programs Net Amount Disbursed Have Been Disbursed
= F. $ .
5. Unsubsidized FFEL / Direct Stafford Loan G. Total of Title IV aid disbursed + could
6. Subsidized FFEL / Direct Stafford Loan have been disbursed for the payment
period or period of enrollment.
7. Perkins Loan
A.
8. FFEL/Direct PLUS (Graduate Student)
B.
9. FFEL/Direct PLUS (Parent)
C.
B. D. + D.
.
Subtotal Subtotal
= G. $
STEP 2: Percentage of Title IV Aid Earned STEP 3: Amount of Title IV Aid Earned by the Student
/ / / / / / Multiply the percentage of Title IV aid earned (Box H)
times the total of the Title IV aid disbursed plus the Title
Start date Scheduled end date Date of withdrawal IV aid that could have been disbursed for the payment
A school that is not required to take attendance may, for a period or period of enrollment (Box G).

%x =
student who withdraws without notification, enter 50% in
Box H and proceed to Step 3. Or, the school may enter the I. $ .
last date of attendance at an academically related activity Box H Box G
for the “withdrawal date,” and proceed with the calculation
as instructed. For a student who officially withdraws, enter STEP 4: Total Title IV Aid to be Disbursed or Returned
the withdrawal date.
If the amount in Box I is greater than the amount in
H. Percentage of payment period or period of Box E, go to Post-withdrawal disbursement (Item J).
enrollment completed
Determine the calendar days completed in the pay- If the amount in Box I is less than the amount in
ment period or period of enrollment divided by the total Box E, go to Title IV aid to be returned (Item K).
calendar days in the payment period or period of enroll- If the amounts in Box I and Box E are equal, STOP.
ment (excluding scheduled breaks of five days or more No further action is necessary.
AND days that the student was on an approved leave of
absence). J. Post-withdrawal disbursement
Subtract Total Title IV aid disbursed for the payment
÷ = . % period or period of enrollment (Box E) from the
Completed days Total days amount of Title IV aid earned (Box I). This is the
amount of post-withdrawal disbursement due.
If this percentage is greater than 60%, enter 100% in
Box H and proceed to Step 3. Stop here, and enter the amount in Box 1 on Page 3
(post-withdrawal disbursement tracking sheet).
If this percentage is less than or equal to 60%, enter
that percentage in Box H, – = J. $ .
and proceed to Step 3. H. . % Box I Box E Step 4 continued
 Student’s Name Social Security Number

STEP 4: Aid to be Disbursed or Returned CONTINUED STEP 7: Initial Amount of Unearned Title IV Aid
K. Title IV aid to be returned Due from the Student
Subtract the amount of Title IV aid earned (Box I) from Subtract the amount of Title IV aid due from the school
the Total Title IV aid disbursed for the payment period (Box O) from the amount of Title IV aid to be returned (Box K).
or period of enrollment (Box E). This is the amount of
Title IV aid that must be returned. – = Q. $ .
Box K Box O
– = K. $ . STEP 8: Repayment of the Student’s loans
Box E Box I
Subtract the Total loans the school must return (Box P) from the
STEP 5: Amount of Unearned Title IV Aid Due Net loans disbursed to the student (Box B) to find the amount of
from the School Title IV loans the student is still responsible for repaying (Box R).
These outstanding loans consist either of loan funds the student
L. Institutional charges for Tuition has earned, or unearned loan funds that the school is not
the payment period or responsible for repaying, or both; and they are repaid to the loan
Room
period of enrollment holders according to the terms of the borrower’s promissory note.
Board
Other
Other
– = R. $ .
Box B Box P
Other If Box Q is less than or equal to Box R, STOP.
The only action a school must take is to notify the holders
Total Institutional Charges
(Add all the charges together)
= L.$ . of the loans of the student’s withdrawal date.
If Box Q is greater than Box R, proceed to Step 9.
M. Percentage of unearned Title IV aid
100% – %= M. . % STEP 9: Grant Funds to be Returned
Box H S. Initial amount of Title IV grants for student to return
Subtract the amount of loans to be repaid by the student
N. Amount of unearned charges
(Box R) from the initial amount of unearned Title IV aid
Multiply institutional charges for the payment period or due from the student (Box Q).
period of enrollment (Box L) times the percentage of
unearned Title IV aid (Box M). – = S. $ .
x %= N. $ . Box Q Box R
T. Amount of Title IV grant protection
Box L Box M
Multiply the total of Title IV grant aid that was disbursed
O. Amount for school to return and could have been disbursed for the payment period
Compare the amount of Title IV aid to be returned or period of enrollment (Box F) by 50%.
(Box K) to amount of unearned charges (Box N),
and enter the lesser amount. x 50% = T. $ .
O. $ . Box F
U. Title IV grant funds for student to return
STEP 6: Return of Funds by the School Subtract the protected amount of Title IV grants
(Box T) from the initial amount of Title IV grants for
The school must return the unearned aid for which the student to return (Box S).
school is responsible (Box O) by repaying funds to the
following sources, in order, up to the total net amount
disbursed from each source.
– = U. $ .
Box S Box T
Amount for School
Title IV Programs to Return
STEP 10: Return of Grant Funds by the Student
1. Unsubsidized FFEL/Direct Stafford Loan
Except as noted below, the student must return the unearned
2. Subsidized FFEL / Direct Stafford Loan grant funds for which he or she is responsible (Box U). The grant
3. Perkins Loan funds returned by the student are applied to the following sources
in the order indicated, up to the total amount disbursed from that
4. FFEL/Direct PLUS (Graduate Student) grant program minus any grant funds the school is responsible for
5. FFEL / Direct PLUS (Parent) returning to that program in Step 6.
Note that the student is not responsible for returning funds
Total loans the
school must return
= P. $ . to any program to which the student owes $50.00 or less.
Title IV Grant Programs Amount To Return
6. Pell Grant
1. Pell Grant
7. Academic Competitiveness Grant
2. Academic Competitiveness Grant
8. National SMART Grant
3. National SMART Grant
9. FSEOG
4. FSEOG
 POST-WITHDRAWAL DISBURSEMENT TRACKING SHEET

Student’s Name Social Security Number

Date of school's determination that student withdrew / /

I. Amount of Post-withdrawal Disbursement (PWD)

Amount from “Box J” of the Treatment of Title IV Funds When a Student Withdraws worksheet Box 1
$ .
II. Outstanding Charges For Educationally Related Expenses Remaining On Student’s Account

Total Outstanding Charges Scheduled to be Paid from PWD Box 2 $ .

III. Post-withdrawal Disbursement Offered Directly to Student and/or Parent

Subtract the Post-withdrawal Disbursement to be credited to the student’s account (Box 2) from the total Post-withdrawal
Disbursement due (Box 1). This is the amount you must offer to the student and/or parent as a Direct Disbursement.

$ . – $ . = $ Box 3 .$ .
Box 1 Box 2

IV. Allocation of Post-withdrawal Disbursement

Loan Amount Loan Amount Amount of Amount of

Grant Aid
School Seeks Authorized Aid Offered Aid Accepted
Type of Aid Credited to
to Credit to to Credit to as Direct as Direct
Account
Account Account Disbursement Disbursement
Unsubsidized FFEL/Direct N/A
Subsidized FFEL/Direct N/A
Perkins N/A
FFEL/Direct Grad Plus N/A
FFEL/Direct Parent Plus N/A
Pell Grant N/A N/A
ACG N/A N/A
National SMART Grant N/A N/A
FSEOG N/A N/A
Totals
V. Authorizations and Notifications

Post-withdrawal disbursement notification sent to student and/or parent on / /

Deadline for student and/or parent to respond / /

Response received from student and/or parent on / / Response not received

School does not accept late response

VI. Date Funds Sent

Date Direct Disbursement mailed or transferred / /

 Treatment Of Title IV Funds When A Student Withdraws From A Credit-Hour Program
Student’s Name Social Security Number
Date form
completed / / Date of school’s determination
that student withdrew / /
Period used for calculation (check one) Payment period Period of enrollment

Monetary amounts should be in dollars and cents (rounded to the nearest penny).
When calculating percentages, round to three decimal places. (For example, .4486 = .449, or 44.9%)

STEP 1: Student’s Title IV Aid Information

E. Total Title IV aid disbursed for the
Amount that Could
Title IV Grant Programs Amount Disbursed Have Been Disbursed payment period or period of enrollment.
1. Pell Grant A.
2. Academic Competitiveness Grant + B.
3. National SMART Grant
= E. $ .
4. FSEOG F. Total of Title IV grant aid disbursed +
could have been disbursed for the
A. C. payment period or period of enrollment.
Subtotal Subtotal
A.
Net Amount that Could
+ C.
Title IV Loan Programs Net Amount Disbursed Have Been Disbursed
= F. $ .
5. Unsubsidized FFEL / Direct Stafford Loan G. Total of Title IV aid disbursed + could
6. Subsidized FFEL / Direct Stafford Loan have been disbursed for the payment
period or period of enrollment.
7. Perkins Loan
A.
8. FFEL / Direct PLUS (Graduate Student)
B.
9. FFEL / Direct PLUS (Parent)
C.
B. D. + D.
.
Subtotal Subtotal
= G. $
STEP 2: Percentage of Title IV Aid Earned STEP 3: Amount of Title IV Aid Earned by the Student
/ / / / / / Multiply the percentage of Title IV aid earned (Box H)
times the total of the Title IV aid disbursed plus the Title
Start date Scheduled end date Date of withdrawal IV aid that could have been disbursed for the payment
A school that is not required to take attendance may, for a period or period of enrollment (Box G).

%x =
student who withdraws without notification, enter 50% in
Box H and proceed to Step 3. Or, the school may enter the I. $ .
last date of attendance at an academically related activity Box H Box G
for the “withdrawal date,” and proceed with the calculation
as instructed. For a student who officially withdraws, enter STEP 4: Total Title IV Aid to be Disbursed or Returned
the withdrawal date.
If the amount in Box I is greater than the amount in
H. Percentage of payment period or period of Box E, go to Post-withdrawal disbursement (Item J).
enrollment completed
Determine the calendar days completed in the pay- If the amount in Box I is less than the amount in
ment period or period of enrollment divided by the total Box E, go to Title IV aid to be returned (Item K).
calendar days in the payment period or period of enroll- If the amounts in Box I and Box E are equal, STOP.
ment (excluding scheduled breaks of five days or more No further action is necessary.
AND days that the student was on an approved leave of
absence). J. Post-withdrawal disbursement
Subtract Total Title IV aid disbursed for the payment
÷ = . % period or period of enrollment (Box E) from the
Completed days Total days amount of Title IV aid earned (Box I). This is the
amount of post-withdrawal disbursement due.
If this percentage is greater than 60%, enter 100% in
Box H and proceed to Step 3. Stop here, and enter the amount in Box 1 on Page 3
(post-withdrawal disbursement tracking sheet).
If this percentage is less than or equal to 60%, enter
that percentage in Box H, – = J. $ .
and proceed to Step 3. H. . % Box I Box E Step 4 continued
 Student’s Name Social Security Number

STEP 4: Aid to be Disbursed or Returned CONTINUED STEP 7: Initial Amount of Unearned Title IV Aid
K. Title IV aid to be returned Due from the Student
Subtract the amount of Title IV aid earned (Box I) from Subtract the amount of Title IV aid due from the school
the Total Title IV aid disbursed for the payment period (Box O) from the amount of Title IV aid to be returned (Box K).
or period of enrollment (Box E). This is the amount of
Title IV aid that must be returned. – = Q. $ .
Box K Box O
– = K. $ . STEP 8: Repayment of the Student’s loans
Box E Box I
Subtract the Total loans the school must return (Box P) from the
STEP 5: Amount of Unearned Title IV Aid Due Net loans disbursed to the student (Box B) to find the amount of
from the School Title IV loans the student is still responsible for repaying (Box R).
L. Institutional charges for These outstanding loans consist either of loan funds the student
Tuition has earned, or unearned loan funds that the school is not
the payment period or responsible for repaying, or both; and they are repaid to the loan
Room
period of enrollment holders according to the terms of the borrower’s promissory note.
Board
Other
Other
– = R. $ .
Box B Box P
Other If Box Q is less than or equal to Box R, STOP.
The only action a school must take is to notify the holders
Total Institutional Charges
(Add all the charges together)
= L.$ . of the loans of the student’s withdrawal date.
If Box Q is greater than Box R, proceed to Step 9.
M. Percentage of unearned Title IV aid
100% – %= M. . % STEP 9: Grant Funds to be Returned
Box H S. Initial amount of Title IV grants for student to return
N. Amount of unearned charges Subtract the amount of loans to be repaid by the student
(Box R) from the initial amount of unearned Title IV aid
Multiply institutional charges for the payment period or due from the student (Box Q).
period of enrollment (Box L) times the percentage of
unearned Title IV aid (Box M). – = S. $ .
x %= N. $ . Box Q Box R
T. Amount of Title IV grant protection
Box L Box M
Multiply the total of Title IV grant aid that was disbursed
O. Amount for school to return and could have been disbursed for the payment period
Compare the amount of Title IV aid to be returned or period of enrollment (Box F) by 50%.
(Box K) to amount of unearned charges (Box N),
and enter the lesser amount. x 50% = T. $ .
O. $ . Box F
U. Title IV grant funds for student to return
STEP 6: Return of Funds by the School Subtract the protected amount of Title IV grants
(Box T) from the initial amount of Title IV grants for
The school must return the unearned aid for which the
student to return (Box S).
school is responsible (Box O) by repaying funds to the
following sources, in order, up to the total net amount
disbursed from each source.
– = U. $ .
Box S Box T
Amount for School
Title IV Programs to Return
STEP 10: Return of Grant Funds by the Student
1. Unsubsidized FFEL/Direct Stafford Loan
Except as noted below, the student must return the unearned
2. Subsidized FFEL / Direct Stafford Loan grant funds for which he or she is responsible (Box U). The grant
3. Perkins Loan funds returned by the student are applied to the following sources
in the order indicated, up to the total amount disbursed from that
4. FFEL/Direct PLUS (Graduate Student) grant program minus any grant funds the school is responsible for
5. FFEL/Direct PLUS (Parent) returning to that program in Step 6.
Total loans the Note that the student is not responsible for returning funds
school must return
P. $ . to any program to which the student owes $50.00 or less.
Title IV Grant Programs Amount To Return
6. Pell Grant
1. Pell Grant
7. Academic Competitiveness Grant
2. Academic Competitiveness Grant
8. National SMART Grant
3. National SMART Grant
9. FSEOG
4. FSEOG
 POST-WITHDRAWAL DISBURSEMENT TRACKING SHEET

Student’s Name Social Security Number

Date of school's determination that student withdrew / /

I. Amount of Post-withdrawal Disbursement (PWD)

Amount from “Box J” of the Treatment of Title IV Funds When a Student Withdraws worksheet Box 1
$ .
II. Outstanding Charges For Educationally Related Expenses Remaining On Student’s Account

Total Outstanding Charges Scheduled to be Paid from PWD Box 2 $ .

III. Post-withdrawal Disbursement Offered Directly to Student and/or Parent

Subtract the Post-withdrawal Disbursement to be credited to the student’s account (Box 2) from the total Post-
withdrawal Disbursement due (Box 1). This is the amount you must offer to the student and/or parent as a Direct
Disbursement.
$ . – $ . = $ Box 3 .$ .
Box 1 Box 2

IV. Allocation of Post-withdrawal Disbursement

Loan Amount Loan Amount Amount of Amount of

Grant Aid
School Seeks Authorized Aid Offered Aid Accepted
Type of Aid Credited to
to Credit to to Credit to as Direct as Direct
Account
Account Account Disbursement Disbursement
Unsubsidized FFEL/Direct N/A
Subsidized FFEL/Direct N/A
Perkins N/A
FFEL/Direct Grad Plus N/A
FFEL/Direct Parent Plus N/A
Pell Grant N/A N/A
ACG N/A N/A
National SMART Grant N/A N/A
FSEOG N/A N/A
Totals
V. Authorizations and Notifications

Post-withdrawal disbursement notification sent to student and/or parent on / /

Deadline for student and/or parent to respond / /

Response received from student and/or parent on / / Response not received

School does not accept late response

VI. Date Funds Sent

Date Direct Disbursement mailed or transferred / /

Volume 5 — Overawards, Overpayments, and Withdrawal Calculations, 2007-2008

Information Required when Referring

Student Overpayments to Borrower Services - Collections
Student Information

Name (Last, First, MI): Address:

Telephone Number:

Social Security Number: Date of Birth:

If the overpayment includes an Academic Competitiveness or National Smart Grant, enter the Award ID (see instructions on next page).

ACG Award ID: National Smart Grant Award ID:

Parent/Spouse Information
Name (Last, First, MI): Address:

Telephone Number:

School Information

If your Pell Reporting ID is different than your Pell Attended ID, please report both. Otherwise, just report the Attended ID.

Reporting School’s Pell ID Number: Attending School’s Pell ID Number:

Name of Contact: Telephone Number:

Disbursements and Repayments

Academic National
Pell Grant Competitiveness Smart FSEOG
Grant Grant
Award year in which overpayment was disbursed:

Total grant disbursed:

Dates of disbursement:
(Must match NSLDS overpayment record)

Overpayment amount owed by student *

Total grant repaid by student to school, if any:

Date of last payment to school, if any:

1
Total being referred for collection:
1
If using individual or aggregate matching, report federal share only. Otherwise report total FSEOG.

* If the overpayment is the result of a withdrawal, provide the date of the withdrawal / /

If the overpayment is not the result of a withdrawal, please provide a brief explanation of the reason for the overpayment.

SEND INFORMATION TO ➾ Student Loan Processing Center-Overpayments

P.O. Box 4157
➾
5–118 (903) 454-5398 FAX Greenville, Texas 75403
 Chapter 2 — Withdrawals and the Return of Title IV Funds

ACG and National SMART Grant award identifiers

When referring an ACG or National SMART Grant overpayment to Federal Student Aid’s Borrower Ser-
vices the school must create a unique identifying Award ID in the format described below. Note that these
same formatting requirements will be used when schools submit ACG and National SMART Grant origi-
nations and disbursements to the Common Origination and Disbursement (COD) system beginning in
December 2006.

The ACG or National Smart Grant Award ID contains 21 characters as follows:

Characters 1 – 9: The student’s Social Security Number

Character 10: Award Type: ACG = A, SMART Grant =T
Characters 11 & 12: Award Year (e.g., for 2006-2007, Award Year = 07)
Characters 13 – 18: The school’s 6-digit Pell ID
Characters 19 – 21: Financial award number, either 001 or 002 (See below.)

Financial Award Number for ACG: Use “001” as the Financial Award Number when the overpayment is
from the student’s first ACG award for the award year at the school regardless of whether that award is a
Year 1 ACG for the student’s first academic year or a Year 2 ACG for the student’s second academic year.
Use “002” as the Financial Award Number when the overpayment is from the Year 2 ACG award AND
the student had an Academic Year 1 ACG award in the same award year at the same school.

Financial Award Number for National SMART Grant: Use “001” as the Financial Award Number when
the overpayment is from the student’s first National SMART Grant award for the award year at the school
regardless of whether that award is a Year 3 SMART Grant for the student’s third academic year or a
Year 4 SMART Grant for the student’s fourth academic year. Use “002” as the Financial Award Number
when the overpayment is from a Year 4 SMART Grant award AND the student had an Academic Year 3
SMART Grant award in the same award year at the same school.

Example 1: A student received half of her Year 1 ACG in the amount of $375 for the fall term and then
advances to her second academic year for the spring term of the same award year at the same school where
she receives $650 of her Year 2 ACG. The COD origination record for this student’s Year 1 ACG of $375
will include a Financial Award Number of “001.” The reporting to COD of this student’s Year 2 ACG
award of $650 will be a new origination and will include a Financial Award Number of “002” because the
Year 2 ACG award was made within the same award year as the Year 1 ACG award. If the student with-
draws from the spring term owing an ACG overpayment of all or part of the $650 Year 2 ACG, the school
would use Financial Award Number “002” in the ACG Award ID in the referral to the Department.

Example 2: A student received all of his Year 2 ACG during the fall and spring terms of the same award
year. At the end of the spring term, but within the same award year, he advances to his third academic year.
The school awards the student the first part of his Year 3 SMART Grant for his summer enrollment. The
COD reporting for this student’s Year 3 SMART Grant will include a Financial Award Number of “001”
because it is the first SMART Grant award made within the award year. If the student withdraws from the
summer term owing a SMART Grant overpayment, the school would use the Financial Award Number
“001” in the SMART Grant Award ID in the referral to the Department.

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