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Treatment of Title IV Aid When a Student Withdraws

The law specifies how your school must determine the amount of Title IV aid that you earn if you withdraw from school. The Title IV programs that are covered by this law are Federal Pell Grants, TEACH Grants, Federal Supplemental Educational Opportunity Grants (FSEOGs), Direct Loans, and Direct PLUS Loans.

Though your aid is posted to your account at the start of each period, you earn the funds as you complete the period. If you withdraw during your payment period or period of enrollment (your school can define these terms for you and tell you which one applies to you), the amount of Title IV aid 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 in the form of a PWD. 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.

You will not be subject to returns of your Title IV aid if you meet one of the following exemptions:

• You complete all of the requirements for graduation;
• You successfully complete a class or multiple classes that comprise at least 49 percent of the days in the term (in a program offered in modules); or
• You successfully complete a class or multiple classes that comprise at least half-time enrollment (in a program offered in modules).

If you did not receive all of the funds that you earned, you may be due a PWD. If your PWD 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 PWD of grant funds for tuition, fees, and food and housing charges (as contracted with the school). The school needs your permission to use the post-withdrawal grant disbursement for all other institutional charges. If you do not give your permission (some schools ask for this when you enroll), you will be offered the funds. However, it may be in your best interest to allow the school to keep the funds to reduce your debt at the school.

There are some Title IV funds that you were scheduled to receive that cannot be disbursed to you once you withdraw because of other eligibility requirements. For example, if you are a first-time, first-year undergraduate student and you have not completed the first 30 days of your program before you withdraw, you will not receive any Direct Loan funds that you would have received had you remained enrolled past the 30th day.

If you receive (or your school or parent receive on your behalf ) excess Title IV program funds that must be returned, your school must return a portion of the excess funds equal to the lesser of:

• your institutional charges multiplied by the unearned percentage of your funds, or
• the entire amount of excess funds.

The school must return this amount even if it didn’t keep this amount of your Title IV program funds. If your school is not required to return all of the excess funds, you may be required to return the remaining amount.

For any loan funds that you must return, you (or your parent for a Direct PLUS Loan) will repay the loan funds in accordance with the terms of the promissory note. That is, you will not be required to repay any loan funds immediately, but instead, you will 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 pay the overpayment in full or 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 your school’s refund policy, you should 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 .

Order of return of Title IV funds

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

• Federal Direct Unsubsidized Student Loans (other than Direct PLUS Loans)
• Federal Direct Subsidized Student Loans
• Federal Perkins Loans
• Federal Direct PLUS Loans
• Federal Pell Grants for which a return of Title IV funds is required
• Federal Supplemental Educational Opportunity Grant (FSEOG) for which a return of Title IV funds is required
• Teacher Education Assistance for College and Higher Education (TEACH) Grant for which a return of Title IV funds is required