Return of Title IV Funds
The financial aid office is required by federal statute to recalculate federal financial aid eligibility for students who withdraw, drop out, are dismissed, or take a leave of absence prior to completing 60% of a payment period or term. The Federal Title IV financial aid programs must be recalculated in these situations.
If a student leaves the institution prior to completing 60% of a payment period or term, the financial aid office recalculates eligibility for Title IV funds. Recalculation is based on the percentage of earned aid using the following federal return of title IV funds formula:
- Percentage of payment period or term completed = the number of days completed up to the withdrawal date divided by the total days in the payment period or term. (Any break of five days or more is not counted as part of the days in the term.) This percentage is also the percentage of earned aid.
Your last day of attendance used for return of Title IV funds will be the day that you fill out the withdrawal form for regular withdraws during the term or the date that corresponds to your medical condition for medical withdrawals. For unofficial withdrawals, either the midpoint (or 50% point) of the semester or the latest date of attendance indicated by your professor will be used.
Funds are returned to the appropriate federal program based on the percentage of unearned aid using the following formula:
- Aid to be returned = (100% of the aid that could be disbursed minus the percentage of earned aid) multiplied by the total amount of aid that could have been disbursed during the payment period or term.
For a student who withdraws after the 60 percent point of the period of enrollment, a student has earned 100 percent of the Title IV funds he or she was scheduled to receive during the period. Thus, there are no unearned funds. We must still perform a R2T4 to determine the amount of aid that the student has earned and whether or not the student is eligible for a post withdrawal disbursement
We determine the percentage of Title IV, HEA aid the student earned by taking the calendar days completed in the period of enrollment and dividing by the total calendar days in the period of enrollment (excluding breaks of 5 days or more days)
- Example: (18 completed days) / (118 total days) = 15.3 percent Title Aid Earned
We determine the dollar amount of Title IV aid the student earned by multiplying the percentage of Title IV, HEA aid earned by the total of the Title IV aid disbursed plus the Title IV aid that could have been disbursed for the period of enrollment.
- Example: 15.3 percent x ($1800 disbursed + $1005 that could have disbursed) = $429.17 Aid Earned
If this percentage is greater than 60 percent, the student earns 100 percent of the disbursed Title IV, HEA funds or aid that could have been disbursed.
If this percentage is less than 60 percent, then the percentage earned is equal to the calculated dollar amount earned.
Aid to be returned is equal to unearned percentage (100 percent minus the Percent earned) multiplied by the amount of aid disbursed toward institutional charges. If a student earned less aid than was disbursed, the institution would be required to return a portion of the funds and the student may be required to return a portion of the funds. All Title IV fund returns must be completed no later than 45 calendar days after the date SRU determines that the student withdrew. SRU will refund back to the US Department of Education both the school portion and student portion of any unearned funds; this may create a balance due to SRU and payable by the student to SRU.
If a student earned less aid than was disbursed, the institution would be required to return a portion of the funds and the student would be required to return a portion of the funds. Keep in mind that when Title IV funds are returned, the student borrower may owe a debit balance to the institution.
If a student earned more aid than was disbursed to him/her, the institution would owe the student a post-withdrawal disbursement which must be paid within 120 days of the student's withdrawal. Any post withdrawal disbursements of grants will be disbursed and credited to the students account within 45 days and refunded to the student if this creates a credit balance. Additionally, post withdrawal disbursement of loans will be initiated with a form that is both mailed and emailed to the student and processed accordingly within 30 days. The student will have 14 days to respond to the post-withdrawal loan letter. As with grants, any credit balance will be refunded to the student.
All credit balances will be disbursed as soon as possible and no later than 14 days after the calculation is complete.
The institution must return the amount of Title IV funds for which it is responsible no later than 45 days after the date of the determination of the date of the student's withdrawal.
Refunds are allocated in the following order:
- Unsubsidized Federal Direct Loans
- Subsidized Federal Direct Loans
- Direct PLUS Loans
- Federal Pell Grants for which a return of funds is required
- Federal Supplemental Opportunity Grants for which a return of funds is required
- other assistance under this title for which a return of funds is required (e.g., leap)
Students who stop attending all of their classes prior to completing 60% of the payment period or term, but have not officially withdrawn from SRU, may need to have their financial aid adjusted and may have a portion of their funds returned to the federal government and/or other funding sources. Students in this situation may then have a balance due to the university. Students are strongly encouraged to follow the appropriate university procedures for withdrawing from coursework and speak to the Financial Aid Office regarding any impact on their financial aid, rather than stop attending their classes.