Return of Title IV Funds Regulations
As part of the Higher Education Amendments of 1988, Congress passed provisions governing what happens to your federal financial assistance if you completely withdraw from school in any semester. This policy governs all federal grants and loan programs, including Federal Pell Grant, Federal SEOG, Federal Perkins Loan, and Federal Direct loans, but does not affect Federal Work Study.
In general, the law assumes that you “earn” your federal financial aid directly in proportion to the number of days of the term you attend. If you completely withdraw from school during a term, the school must calculate, according to a specific formula, the portion of the total financial assistance you have earned and therefore are entitled to receive up to that point in time. If you receive (or the College receives on your behalf) more assistance than you earn, the unearned excess funds must be returned to the Department of Education. If, on the other hand, you receive (or the College receives on your behalf) less assistance than the amount you have earned, you may be able to receive those additional funds.
The portion of your federal grants and loans you are entitled to receive is calculated on a percentage basis by comparing the total number of days in the semester to the number of days you completed before you withdrew. For example, if you complete 30% of the semester, you earn 30% of the assistance you were originally scheduled to receive. This means that 70% of your scheduled award remains unearned and must be returned to the federal government.
Once you have completed more than 60% of the semester, you can be said to have earned all (100%) of your assistance. For the Fall 2006 semester, the point at which you will have earned 100% of your scheduled federal financial aid award is TUE, 11/7. If you completely withdraw (either officially or unofficially) before this date, you may have to return any unearned federal monies that may have already been disbursed to you.
If you received excess funds that must be returned, the College shares with you the responsibility of returning those excess funds. The College’s portion of the excess funds to be returned is equal to the lesser of:
If the College is not required to return all of the excess funds, you must return the remaining amount. Any loan funds that you must return must be repaid according to the terms for your promissory note. If you must return any grant funds, the law provides that the amount you must repay is to be reduced by 50%. This means that you only have to return half of the excess funds you receive.
Any amount you do have to return is considered a federal grant overpayment. You must either return that amount in full or make satisfactory arrangements with either the College or the Department of Education to repay the amount. You must complete these arrangements within 45 days of the date of the College’s notifying you of your overpayment status or risk losing your eligibility for further federal financial assistance.
