Financial Consequences of Withdrawal
Treatment of Title IV Funds When a Student Withdraws
The Return of Title IV Funds/Institutional Refund Policy
- The term "Title IV Funds" refers to the Federal Financial Aid Programs authorized under the Higher Education Act of 1965 (as amended) and includes the following programs: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, Federal Pell Grants, and Federal SEOG.
- A student's withdrawal date is:
- The date the student began the institution's withdrawal process or officially notified the institution of intent to withdraw; or
- The midpoint of the period for a student who leaves without notifying the institution; or
- The student's last date of attendance at a documented academically related activity.
- Title IV aid is earned in a prorated manner on a per diem basis up to the 60% point
in the semester. Title IV aid is viewed as 100% earned after that point in time. A
copy of the worksheet used for this calculation can be requested from the Student
Financial Aid Office. In accordance with federal regulations, when financial aid is
involved, refunds are allocated in the following order:
- Direct Unsubsidized Loans
- Direct Subsidized Loans
- Direct PLUS Loans
- Federal Pell Grants
- Federal SEOG
- Other Title IV Assistance
- Other Federal Sources of Aid
- Other State, Private and Institutional Aid
Institutional and student responsibilities in regard to the return of Title IV funds
ECTC's responsibility in regard to the Return of Title IV funds include:
Providing each student with information given in this policy;
Identifying students who are affected by this policy and completing the Return of Title IV Funds calculation for those students;
Returning any Title IV funds that are due the Title IV programs.
The student's responsibilities in regard to the Return of Title IV Funds include:
- Returning to the Title IV programs any funds that were disbursed directly to the student and which the student was determined to be ineligible for via the Return of Title IV funds calculation.
- The fees, procedures and policies listed above supersede those published previously and are subject to change at any time.
SUMMARY OF THE REQUIREMENTS OF 34 CFR 668.22
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, Iraq and Afghanistan Service Grants, TEACH 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 define these for you and tell you which one applies), the amount of Title IV program assistance that you have earned up to that point is determined by a specific formula. If you received (or your school or parent received on your behalf) less assistance than the amount that you earned, you may be able to receive those additional funds. If you received more assistance than you earned, the excess funds must be returned by the school and/or you.
The amount of assistance that you have earned is determined on a pro rata basis. For example, if you completed 30% of your payment period or period of enrollment, you earn 30% of the assistance you were originally scheduled to receive. Once you have completed more than 60% of the payment period or period of enrollment, you earn all the assistance that you were scheduled to receive for that period.
If you did not receive all of the funds that you earned, you may be due a Post-withdrawal disbursement. If your Post-withdrawal disbursement includes loan funds, your school must get your permission before it can disburse them. You may choose to decline some or all of the loan funds so that you don't incur additional debt. Your school may automatically use all or a portion of your Post-withdrawal disbursement of grant funds for tuition, fees, and room and board charges (as contracted with the school). The school needs your permission to use the Post-withdrawal grant disbursement for all other school charges. If you do not give your permission (some schools ask for this when you enroll), you will be offered the funds. However, it may be in your best interest to allow the school to keep the funds to reduce your debt at the school.
There are some Title IV funds that you were scheduled to receive that cannot be disbursed to you once you withdraw because of other eligibility requirements. For example, if you are a first-time, first-year undergraduate student and you have not completed the first 30 days of your program before you withdraw, you will not receive any Direct Loan funds that you would have received had you remained enrolled past the 30th day.
If you receive (or your school or parent receives on your behalf) excess Title IV program funds that must be returned, your school must return a portion of the excess equal to the lesser of:
1. Your institutional charges multiplied by the unearned percentage of your funds, or
2. The entire amount of excess funds.
The school must return this amount even if it didn't keep this amount of your Title IV program funds.
If your school is not required to return all of the excess funds, you must return the remaining amount.
Any loan funds that you must return, you (or your parent for a PLUS Loan) repay in accordance with the terms of the promissory note. That is, you make scheduled payments to the holder of the loan over a period of time.
Any amount of unearned grant funds that you must return is called an overpayment. The maximum amount of a grant overpayment that you must repay is half of the grant funds you received or were scheduled to receive. You do not have to repay a grant overpayment if the original amount of the overpayment is $50 or less. You must make arrangements with your school or the Department of Education to return the unearned grant funds.
The requirements for Title IV program funds when you withdraw are separate from any refund policy that your school may have. Therefore, you may still owe funds to the school to cover unpaid institutional charges. Your school may also charge you for any Title IV program funds that the school was required to return. If you don t already know what your school's refund policy is, you can ask your school for a copy. Your school can also provide you with the requirements and procedures for officially withdrawing from school.
If you have questions about your Title IV program funds, you can call the Federal Student Aid Information Center at 1-800-4-FEDAID (1-800-433-3243). TTY users may call 1-800-730-8913. Information is also available on Student Aid on the Web at www.studentaid.ed.gov.