The Financial Aid Office is required by federal statute
to determine how
much financial aid was earned by students who withdraw, drop out, are
dismissed, or take a leave of absence prior to completing 60% of a
payment
period or term.
For a student who withdraws after the 60% point-in-time, there are no
unearned funds. However, a school must still complete a Return
calculation
in order to determine whether the student is eligible for a
post-withdrawal
disbursement.
The calculation 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.
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.
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.
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 Stafford Loans
· Subsidized Federal Stafford Loans
· Unsubsidized Direct Stafford Loans (other than PLUS loans)
· Subsidized Direct Stafford Loans
· Federal Perkins Loans
· Federal Parent (PLUS) 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)