Se ssio n

10

Keeping Current on Return of Title IV

Aid Requirements

Brian Kerrigan
Dan Klock
 The Law & Regul ati ons
 Section 484B of the HEA
– Enacted October 7, 1998, as part of the Higher
Education Amendments of 1998
 NPRM published August 6, 1999
 Final Reg published November 1, 1999
– Effective Date of Reg - July 1, 2000
 Dear Colleague Letter GEN-00-24
 NPRM published August 8, 2002
 Final Reg published November 1, 2002
 Dear Colleague Letter GEN-04-03

2
 The Return to Title IV
Funds Rule
 An institution is required to determine the
earned and unearned portion of Title IV aid
when a student ceases enrollment prior to the
planned completion date
– NOTE: Up through 60% of the Payment Period
(PP) or Period of Enrollment (POE) an otherwise
eligible student earns Title IV aid on a pro rata
basis. After 60% student has earned 100% of TIV
aid
– ALSO: The Return calculation is still required even
if the student has earned 100%, to determine
whether a post-withdrawal disbursement is
required 3
 Earned F und s

 If the amount of the Earned Title

IV funds exceeds the amount
that has been disbursed, the
difference is due the student as a
“Post-Withdrawal Disbursement”
(PWD).

4
 Making a PWD/Late
Disbursement
 Student Withdrew –  Less than ½ Time –
(668.164(g)(3)(i)) (668.164(g)(3)(iii))
– Institution MUST – May disburse initial FFEL
• Make (offer) any or DL disbursement
PWD
– Inst. determines the
• If outstanding
amount of the late
institutional charges
may credit student’s disbursement based
account for upon educational costs
– Tuition and fees for period student was
– Room & board (if eligible
contracted with
the institution)
– Authorized
educationally-
related expenses 5
 Unearned Funds
 Unearned Title IV funds that are
the responsibility of the
INSTITUTION
– Must be returned to the Title IV
programs no later than 30 days
after the date of determination that
the student withdrew.

6
 Unearned Funds – School’s
Responsibility
 Institution MUST return funds within 30
days of the date of determination
 Pell
– 2002-2005
• Phase-In schools – enter a negative
disbursement
• Full Participants – enter a replacement value
 Other Title IV funds – are returned to the
program accounts or the lender

7
 Cash Management – FYI (will be
in the ’04-05 Handbook)
 Schools prohibited from allowing Title IV
funds to escheat
– Credit balances and post-withdrawal
disbursements
– School must ensure that Title IV funds are used
only for educational purposes intended
– Funds cannot escheat to a third party (state or
institutional coffers)
– Must have a process to identify unnegotiated
checks and return the funds to the Title IV
programs

8
 Unearned Funds –
Student’ s
Responsi bi lity
 Unearned Title IV funds that are
the responsibility of the STUDENT
– If loan funds, they can be repaid
under terms of the promissory note.
– If grant funds, they are subject to a
50% reduction and the student may
make satisfactory arrangements to
repay.
9
 Period of
Enrollment

 For a standard term based program, the

institution must use the payment period.

 For a non-term or non-standard term

program, the institution may use either
the payment period or period of
enrollment. Must use consistently for all
students in a program.
10
 Payment Peri od or
Peri od of Enrol lment
Example #1: Student leaves after 23 days in the first term of a two-term academic year.
Non-standard or non-term
PAYMENT PERIOD PERIOD OF ENROLLMENT

Total # of Days: 100 Total # of Days: 200

# of Days Completed 23 # of Days Completed 23
------------- -------------
% Earned 23 % Earned 11.5

Total TIV AID Disb'd or Total TIV AID Disb'd or

Could Have Been Disb'd 2000 Could Have Been Disb'd 4000

-------------- --------------
Amt Earned 460 Amt Earned 460

Amt Unearned 1540 Amt Unearned 3540

11
 Paym ent P eri od or
Peri od of Enrol lment

Example #2: Student leaves after 21 days in the second term of a two-term academic year.
Non-standard or non-term
PAYMENT PERIOD PERIOD OF ENROLLMENT

Total # of Days: 100 Total # of Days: 200

# of Days Completed 21 # of Days Completed 121
------------- -------------
Calculate % 21 % Earned (If > 60%, earned = 100%) 60.5
% Earned (If > 60%, earned = 100%) 21 100

Total TIV AID Disb'd or Total TIV AID Disb'd or

Could Have Been Disb'd 2000 Could Have Been Disb'd 4000

-------------- --------------
Amt Earned 420 Amt Earned 4000

Amt Unearned 1580 Amt Unearned 0

12
 Approve d L eave o f
Absence (L OA)

 The previous limit to only one LOA in

12 months was eliminated in the
November 1, 2002 final regulations.
 Total leave days cannot exceed 180 in
any 12-month period.
 The institution must have a formal
policy that the student and institution
follow.
13
 The In sti tutio n Must

 Determine date of student’s withdrawal.

 Calculate percent of period completed.
 Determine amount earned by applying
percent completed to total of amounts
disbursed and amounts that could have
been disbursed.
 Return unearned funds to Title IV
programs, or pay student post-
withdrawal disbursement.
 Determine Title IV overpayment, if any.
14
 Insti tut ions Requi red
to Take Att endance
 Must use official attendance records.
 An institution is required to take
attendance if an outside entity (such as an
accreditor or state agency) has a
requirement, as determined by the entity,
that the institution take attendance.
 Could apply to a subset of students.
 Could apply for a short period of time.

15
 Required to Take Attendance

 Subset of Students  Short Period of Time

– Outside agency – State requires
provides a continuous
scholarship for 10 attendance taking for
students 1st 10 days of class
– Requires attendance for resident students
taking for the cohort
– If a resident
– If one of these
withdraws within the
students withdraws,
withdrawal date = first 10 days,
last date of withdrawal date =
attendance last date of
attendance
16
 Insti tuti ons Not Requi red to
Take At tendance

 Not Required to take attendance by an

outside entity
– Most institutions fit into this
category.
– Institutions or instructors that
decide to take attendance may do
so, but that does not make the
institution “an institution required to
take attendance” for R2T4 purposes.
17
 Instituti ons Not
Requi red
to Take At tendance
 Withdrawal Date Is
– Date student began the formal
withdrawal process or notified…
– Mid-point, if no notification.
– Date of illness, accident, etc.
– Beginning of an approved LOA if
student does not return.
– Last date at an academically-related
activity.
18
 Academic ally-R ela ted
Activity

 An institution not required to take

attendance MAY ALWAYS use the last
date of an academically-related activity as
the withdrawal date.
 The school, not the student, must
DOCUMENT
– That the activity is academically-related,
and
– The student’s attendance at the activity.

19
 Academic ally-R ela ted
Activit y
 Examples of academically-related
activities are
– Examinations or quizzes,
– Tutorials,
– Computer-assisted instruction,
– Completing an academic
assignment, paper or project,
– Attending a school assigned study
group.
20
 In stitutions No t
Required
to Ta ke At tendance
 Date of Determination of Withdrawal Is
• Later of withdrawal date or date
student provided official
notification.
• If no notification, the date that the
institution became aware of the
withdrawal.
• The earlier of the end of approved
Leave of Absence (LOA) if student
does not return or the date the
student contacted the school. 21
 In stitutions No t
Required
t o Take Atte ndance

 If the student withdraws WITHOUT

NOTIFICATION, then the institution must
make a determination of the withdrawal
date
– No later than 30 days after the earlier of
• the end of the payment period or period
of enrollment,
• the end of the academic year, or
• the end of the student’s educational
program.
22
 Dear Col league Letter
(GEN -04- 03)
 Title IV Credit Balances
 Aid That Could Have Been Disbursed
 Verification not completed before
withdrawal
 No Passing Grades
 Non-Term Programs
 Date of Determination that Student
Withdrew
 Treatment of LEAP Funds
23
 Dear Col league Letter
(GEN -04- 03)
Title IV Credit Balances
 Hold all Title IV Credit Balances until
R2T4.
 Credit Balance is “Aid Disbursed.”
 Determine if Credit Balance changes
because of a Refund Policy or R2T4.
 Use Credit Balance to repay Grant on
behalf of student.
 Release Credit Balance within 14 days.
24
 Dear Coll eague Letter
(GEN -04- 03)
Aid That Could Have Been Disbursed
 Old Policy -- Aid must have been able to have
been disbursed during period. Did not include
- Second loan disbursement, or
- Loan within first 30 days.

 New Policy -- All aid for period, if conditions for

late disbursement were met before the student
withdrew. (668.164(g)(2))
 However, if limitations apply, that aid may
not be paid to the student. (668.164(g)(4))25
 Condi tions for a
Late D isbursement
 All Student Aid (including Pell) - ED
processed SAR/ISIR with official (not
necessarily a valid) EFC. (Not needed for
PLUS.)

 FFEL/Direct Loan - Institution certified or

originated the loan.

 Perkins/FSEOG - Institution made the award.

26
 Lim itations on Maki ng
a Late Disburseme nt
 No second or subsequent disbursements
of FFEL/DL, unless student completes the
period.
 No FFEL/DL unless student completes the
30-day delay period.
 No Pell Grant without a valid SAR/ISIR by
the deadlines in the Federal Register.
 No additional Pell Grant if first payment
period is not completed.
 No second disbursements of FFEL/DL
unless student passes the midpoint or
completes half the coursework. 27
 Importance o f Ai d That
Coul d Have Been
Di sbursed

 If total aid (Aid That Could Have Been

Disbursed plus Aid Disbursed) is greater,
the amount earned will be greater.
 Results in a smaller amount to be
returned, or in a post-withdrawal
disbursement.
 Remember - Aid must correspond to the
period for which you are doing the Return
Calculation. (Apples to Apples)

28
 Ai d Tha t Coul d Ha ve
Been Di sbu rsed
Old Rule – Period of Enrollment Basis
Length of Period = 1000 hours
Aid for Period = $4,000 ($2,000 Pell; $2,000 FFEL)
Disbursed = $2,000 ($1,000 Pell; $1,000 FFEL)
Student Withdrew after 400 hours
Not Disbursed = $2,000
Aid That Could Have Been Disbursed = $0
Student Completed 40% of period
Amount Earned = $800 (40% x $2,000*)
Amount to be Returned = $1,200
29
 Ai d Tha t Coul d
Have Been
Di sbur sed
New Rule – Period of Enrollment Basis
Length of Period = 1000 hours
Aid for Period = $4,000 ($2,000 Pell; $2,000 FFEL)
Disbursed = $2,000 ($1,000 Pell; $1,000 FFEL)
Student Withdrew after 400 hours
Not Disbursed = $2,000
Aid That Could Have Been Disbursed = $2,000
Student Completed 40% of period
Amount Earned = $1,600 (40% x $4,000*)
Amount to be Returned = $400
30
 Ai d Tha t Coul d Ha ve
Been Di sbu rsed
New Rule – Period of Enrollment Basis
Length of Period = 1000 hours
Aid for Period = $4,000 ($2,000 Pell; $2,000 FFEL)
Disbursed = $1,000 ($1,000 Pell; $0 FFEL)
Student Withdrew after 400 hours
Not Disbursed = $3,000
Aid That Could Have Been Disbursed = $3,000
Student Completed 40% of period
Amount Earned = $1,600 (40% x $4,000*)
Amount of PWD = $600 (FFEL)
31
 Ai d Tha t Coul d Have
Been Di sbu rsed
New Rule – Period of Enrollment Basis
Length of Period = 1000 hours
Aid for Period = $4,000 ($2,000 Pell; $2,000 FFEL)
Disbursed = $1,000 ($0 Pell; $1,000 FFEL)
Student Withdrew after 400 hours
Not Disbursed = $3,000
Aid That Could Have Been Disbursed = $3,000
Student Completed 40% of period
Amount Earned = $1,600 (40% x $4,000*)
Amount of PWD = $600 (Pell)
32
 Ai d Tha t Coul d Have
Been Di sbu rsed
New Rule – Period of Enrollment Basis
Length of Period = 1000 hours
Aid for Period = $4,000 ($2,000 Pell; $2,000 FFEL)
Disbursed = $3,000 ($2,000 Pell; $1,000 FFEL)
Student Withdrew after 601 hours
Not Disbursed = $1,000
Aid That Could Have Been Disbursed = $1,000
Student Completed >60% of period
Amount Earned = $4,000 (100% x $4,000*)
Amount of PWD = Instead of $1,000*; its $0
33
 Ai d Tha t Coul d Have
Been Di sbu rsed
(Exampl e A)
 First time, first year student starts class on
Sept.1st and withdraws on Sept. 28th and
Stafford loan for $1,000 that has been
certified/originated has not been disbursed
because of the 30-day delay rule.
– Include the $1,000 loan as funds that “Could
Have Been Disbursed.”
– BUT, these funds cannot be disbursed
because the student was not eligible due to
the fact that the first time, first year student
has not been in attendance for at least 30
days. 34
 Ai d That Coul d Have
Been Di sbur se d
(Exampl e B)
 Second year student starts class on Sept.1st
and withdraws on Sept. 28th and Stafford loan
for $1,000 that has been certified/originated
has not been disbursed because of a
processing delay or school choice.
– Include the $1,000 loan as funds that “Could
Have Been Disbursed.”
– A portion of these funds could be disbursed
under a post-withdrawal disbursement
because the student is not covered by the
30-day delay rule.
35
 Ai d That Coul d Have
Been Di sbur se d (Exampl e
C)
 Student in a 900 clock hour program that uses
period of enrollment for R2T4 withdraws after
completing only 300 clock hours. First $1,312
of loan has been disbursed.
– Include the $1,312 that has been disbursed
AND the remaining $1,313 as “Aid That
Could Have Been Disbursed.”
– BUT, no additional loan funds can be
disbursed because subsequent loan
disbursements cannot be made for
students who do not complete the period.
36
 Ai d That Coul d Have
Been Di sbur se d (Exampl e
D)

 Student in a 900 clock hour program that uses

payment period for R2T4 withdraws after
completing only 300 clock hours. First $1,312
of loan has been disbursed.
– Include the $1,312 that has been disbursed,
BUT do not include the remaining $1,313 as
“funds that could have been disbursed”
since those funds were for a different period.

37
 Dear Col league Letter
(GEN -04- 03)
Verification
 Must complete R2T4 within 30 days.
 If Verification not completed
– Return Interim Disbursements of aid
subject to verification.
– Include Unsubsidized and PLUS loans in
R2T4.
 If Verification completed later, but within
Verification timelines
– School must perform new R2T4 calculation
using additional eligible aid.
38
 Dear Coll eague Letter
(GEN -04- 03)
No Passing Grades
 School must have a process for
determining if student completed.
 At least one passing grade...
 No passing grade, institution must
document completion of period.
 Grading Policy that differentiates
between Failing, Completed; and
Failing, Did Not Complete.
39
 Dear Col league Letter
(GEN -04- 03)
Non-Term, Credit Hour Programs
 Percentage Earned is equal to calendar
days completed divided by calendar
days in the period.
 Project calendar days in period if
student is in a Self-Paced Program.
 Will be the same for a term-based,
credit hour program.

40
 Dear Coll eague Letter
(GEN -04- 03)
Date of Determination that Student
Withdrew for Schools Required to
Take Attendance
 Usually no later than one week after last date
of attendance.
 Based on Attendance Records.
 Date of Official Notification if prior to that.
 After end of school’s Absence Policy.

41
 Dear Coll eague Letter
(GEN -04- 03)

Treatment of LEAP Funds

 Law excludes FWS but not LEAP.
 The State Grant (LEAP) is included in
calculation if the State Grant Agency
has told the school, in writing…

42
 Dear Coll eague Letter
(GEN -04- 03)
Treatment of LEAP Funds
The dollar or percent of student’s State Grant
that is LEAP. ($ or % up to $5,000)
That the specific student’s State Grant includes
an unknown amount of LEAP. (Entire amount
of Grant, up to $5,000)
The percent of LEAP in the school’s State
Grant amount. (% up to $5,000)
That all State Grants include LEAP funds.
(Entire amount of Grant, up to $5,000)
43
 ED’s f ree R2T4
Sof tware o n t he
Web
Sign up for R2T4 OTW
 Signup via SAIG Enrollment website
– https://www.fsawebenroll.ed.gov/PMEnroll/
 The R2T4 Web Application will be
availablevia FAA Access
– https:fafsa.ed.gov/faa/faa.htm
 Set up a simple school profile one or two
popular programs and academic calendar;
do not try to build costs for each program.
 Track post-withdrawal disbursement
notification. 44
 Than k You ! !

Bri an. Ker ri gan@ed. gov

(202) 219 - 7058

Dan. Klock@ed. gov
(202) 377- 4026
45
QUESTIONS???