Student Financial Services 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 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.
This percentage is also the percentage of earned aid. Any break of five days or more is not counted as part of the days in the term. 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 30 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 (or Stafford) Loans
- Subsidized Federal Direct (or Stafford) Loans
- Federal Perkins Loans
- Federal Direct Graduate or Parent PLUS Loans (or Federal Parent or Graduate PLUS through private lender)
- Federal Pell Grants
- Federal Academic Competitiveness Grants
- National SMART Grants
- Federal Supplemental Educational Opportunity Grants
- Federal Teach Grant
- Other assistance under this title for which a return of funds is required
Refer to the flow chart to see if you may be subject to a Return to Title IV calculation.