Though a student’s aid is posted to his account
as soon as all FA requirements are completed, a student earns the funds
as he completes the period. If a student withdraws during his payment
period or period of enrollment, the amount of Title IV program
assistance that a student has earned up to that point is determined by a
specific formula. If a student, his parent or the institution received
(on the student’s behalf) less assistance than the amount the student
earned, he may be able to receive those additional funds. If the student
received more assistance than he earned, the excess funds must be
returned by the institution and/or the student.
The amount of assistance the student has earned
is determined on a pro rata basis. For example, if the student completed
30% of his payment period or period of enrollment, he earned 30% of the
assistance he was originally scheduled to receive. Once a student has
completed more than 60% of the payment period or period of enrollment,
he has earned all the assistance that he was scheduled to receive for
If a student did not receive all of the funds
that he earned, he may be due a post-withdrawal disbursement. If his
post-withdrawal disbursement includes loan funds, the institution must
get the student’s permission before the funds can be released to the
institution. A student may choose to decline some or all of the loan
funds so that he does not incur additional debt. The institution may
automatically use all or a portion of the student’s post-withdrawal
disbursement of grant funds for tuition, fees, and room and board
charges. The institution will need the student’s permission to use the
post-withdrawal grant disbursement for all other school charges. If the
student does not give your permission, he will be offered the funds.
However, it may be in the student’s best interest to allow the school to
keep the funds to reduce his debt at the school.
There are some Title IV funds that a student may
be scheduled to receive that cannot be disbursed to him once he
withdraws because of other eligibility requirements. For example, if a
student is a first-time, first-year undergraduate student and he has not
completed the first 30 days of his program before he withdraws, the
student will not receive any Direct Loan funds that he would have
received had he remained enrolled past the 30th day. If the student, his
parent or the institution received (on the student’s behalf) excess
Title IV program funds that must be returned, the institution must
return a portion of the excess equal to the lesser of:
1. The student’s institutional charges multiplied by the unearned percentage of his funds, or
2. the entire amount of excess funds.
The institution must return this amount even if
it didn’t keep this amount of your Title IV program funds. This could
create a balance owed to the institution by the student.
If the institution is not required to return all of the excess funds, the student must return the remaining amount.
Any loan funds that the student must return, he
(or his parent for a Direct PLUS Loan) repay in accordance with the
terms of the promissory note. That is, the student will make scheduled
payments to the holder of the loan over a period of time.
Any amount of unearned grant funds the student
must return is called an overpayment. The maximum amount of a grant
overpayment that a student must repay is half of the grant funds he
received or was scheduled to receive. A student does not have to repay a
grant overpayment if the original amount of the overpayment is $50 or
less. The student must make arrangements with the institution or the
Department of Education to return the unearned grant funds. Students who
owe a balance as a result of an overpayment are not eligible for any
additional Title IV aid until the balance has been satisfied.
The requirements for Title IV program funds when
a student withdraws are separate from any refund policy the institution
may have. Therefore, a student may still owe funds to the institution
to cover unpaid institutional charges. Your school may also charge you
for any Title IV program funds that the school was required to return.
Students considering dropping or withdrawing can begin the process by completing the Registration Form.