Return of Title IV Funds - Regulatory Summary of 668.21 and 668.2
Summary of Sec. 668.21
Treatment of Title IV funds when a student withdraws, drops out, or is expelled before the first day of class.
If a student officially withdraws, drops out, or is expelled before the first day of class of a payment period, all funds paid to the student for that payment period for institutional or non-institutional cost under the Federal Pell Grant, FSEOG (Federal Supplemental Educational Opportunity Grant), and Federal Perkins programs are an overpayment. If an institution is unable to document the student's attendance during the payment period, the student meets the drop out definition.
The institution is required to return the overpayment to the respective Title IV or Higher Education Act (HEA) programs in the amount that the student received in each program.
Summary of Sec. 668.22 Treatment of Title IV funds when a student withdraws
General Information
When a student who is a recipient of Title IV loan or grant assistance withdraws during a payment period or period of enrollment in which the student began attendance, the institution must determine the amount of Title IV grant or loan assistance earned as of the student's withdrawal date.
If the total amount of Title IV grants or loans, or both, that the student earned is less than the amount of Title IV grants that was disbursed to the student or on behalf of the student in the case of a parent PLUS loan as of the date of the institution's determination when the student withdrew, the difference must be returned to the Title IV program. No additional disbursements may be made to the student for the payment period or period of enrollment.
If the total amount of Title IV grants or loans, or both, that the student earned is greater than the total amount of the Title IV grants or loans disburse to the student or on behalf of the student in the case of a parent PLUS loan as of the date of the institution's determination when the student withdrew, the difference between these amounts must be treated as a post-withdrawal disbursement.
A post-withdrawal disbursement must be made from available grant funds before available loan funds. If outstanding charges exist, the institution may credit the student's account up to the amount of outstanding charges with all or a portion of any post-disbursement grant funds. Post-disbursement loan funds to pay outstanding charges require the confirmation of the student or parent for a parent PLUS loan.
The institution must notify the student and parent in the case of the parent PLUS loan within 30 days of the institution's determination that the student withdrew to offer to disburse any grant or loan funds directly to the student or parent in the case of a parent PLUS loan that is not credited to the student's account. The funds may be accepted or declined. The parent or student has 14 days from the date of notification being sent to respond. With a timely notification from the student or parent in the case of a PLUS loan to confirm a post-withdrawal disbursement, the institution must disburse the funds within 120 days of the institution's determination that the student withdrew. For a late response from the student or parent in the case of a PLUS loan, the institution may make or decline to make the post-withdrawal disbursement.
Title IV grant or loan assistance definition
The following programs are defined as Title IV grant or loan assistance:
- Direct Loan – Federal Direct Loans and Direct PLUS loans
- Federal Pell Grant
Federal SEOG (Federal Supplemental Educational Opportunity Grant) programs, not including the non-Federal share of FSEOG awards if an institution meets its FSEOG matching share.
Withdrawal date
The withdrawal date for a student who withdraws from an institution that is not required to take attendance (e.g. IUE) is earlier date of:
- the date the student began the institution’s prescribed withdrawal process; or
- the date the student otherwise provided the school with official notification of the intent to withdraw; or
- the date the institution becomes aware the student ceased attendance; or
- the midpoint of the payment period or period of enrollment for which Title IV assistance was disbursed if the student ceases to attend without official notification and withdrawal.
Percentage of payment period completed
Calculate by dividing the total number of calendar days in the payment period into the number of calendar days completed as of the student's withdrawal date.
Calculation of Title IV assistance earned by the student
The percentage of Title IV assistance earned is equal to the percentage of the payment period completed as of the withdrawal date. If the withdrawal date occurs after the 60 percent point, then the percentage of Title IV assistance earned is 100 percent. This percentage is then applied to the total amount of Title IV grant and loan assistance that was disbursed (and that could have been disbursed) to the student, or on the student's behalf in the case of a parent PLUS loan, for the payment period for which it was awarded.
Calculating aid earned - Example
The percentage of the semester completed is the percentage of aid earned. This is calculated by the number of days the student attended divided by the number of days in the payment period (i.e., semester). For example, if a student withdrew on the 20th day of a semester 114 days in length, the student would have earned only 17.5% of the aid he received. (20/114=0.175).
Students who remain enrolled through more than 60% of the payment period (semester) are considered to have earned 100% of the aid received and will not owe a repayment of Federal Title IV grant funds.
Students who receive all FN's, all FNN's or a combination of FN's, FNN's and W's during one academic period, and receive federal aid for the same academic period, may be required to repay all or part of any aid received.
Calculation of Title IV assistance unearned to be returned
The unearned amount of Title IV assistance to be returned is calculated by subtracting the amount of Title IV assistance earned by the student from the amount of Title IV aid that was disbursed to the student or on behalf of the student in the case of a parent PLUS loan.
Responsibility of the institution for return of unearned aid
The institution must return the lesser of the calculated total amount of unearned Title IV assistance or an amount equal to the total institutional charges the student incurs for the payment period multiplied by the percentage of awarded Title IV grant and loan assistance that has not been earned by the student.
Institutional charges
Institutional charges are tuition, fees, food and housing (if the students contracts with the institution for food and housing), and other educationally-related expenses assessed by the institution.
Responsibility of the student for return of unearned aid
The student returns unearned Title IV assistance minus the amount the institution returns. Any Title IV loan program is returned in accordance with the terms of the loan and any Title IV grant program as an overpayment of the grant. However, a student is not required to return the portion of a grant overpayment amount that is equal to or less than 50 percent of the total grant assistance that was disbursed for a payment period or a grant overpayment amount of 50 dollars or less that is not a remaining balance.
Repayment of the overpayment by the student and Title IV eligibility
A student who owes an overpayment remains eligible for Title IV and HEA program funds through the earliest of 45 days from the institutional notification of the overpayment or 45 days from the date the institution was required to notify the student of the overpayment if, during the 45 days, the student repays the overpayment in full to the institution or enters into a repayment agreement that is satisfactory with the institution with a maximum payment in full within two years.
Student notification for repayment
The institution must notify a student within 30 days of the institution's determination that the student withdrew and owes a Title IV or HEA overpayment in order to recover the overpayment. The notification provides the student with terms to permit the student to repay the overpayment while maintaining Title IV and HEA program funds with repayment of the full amount of the overpayment within two years of the date of the institution's determination the student withdrew.
Loss of Title IV eligibility
In the context of Return of Title IV funds, a student is no longer eligible if they do not enter into a repayment agreement with the 45 day period or fails to meet the terms of the repayment agreement.
Order of return of Title IV funds:
Unearned funds returned by the institution or student are credited to outstanding Title IV loan balances made to the student or on behalf of the student for the payment period. Excess funds must be credited to outstanding balances in the following order:
- Federal Direct Unsubsidized loans
- Federal Direct Subsidized loans
- Federal Direct PLUS loan received on the behalf of the student
If unearned funds remain to be returned after repayment of all outstanding loan amounts, the remaining excess must be credited to any amount awarded in the payment period to grant programs in the following order:
- Federal Pell Grants
- Federal SEOG
Timeframe for the return of Title IV funds by the institution
An institution must return the funds for which it is responsible as soon as possible but no later than 45 days after the date of its determination that the student withdrew. An institution must determine the withdrawal date for a student that does not provide notification to the institution no later than 30 days after the end of the earlier of the payment period or period of enrollment.
Your Frank O’Bannon and 21st Century Scholars awards will be affected
If you officially withdraw from a semester or drop below full-time enrollment before the state census date (end of the 25% withdraw period or 28th day of the term), the state requires that your Frank O’Bannon and 21st Century Scholar be cancelled.
You may have to repay some money
Within 45 days after you withdraw, we will send you a letter that lists the aid we’ve returned based on the federal Title IV programs on your behalf.
If you received federal aid funds directly (for example, as a refund to be used for other educational expenses), you might have to return some or all of that money.
The Bursar’s office will bill you for any IU charges that remain unpaid.
You may not be eligible for future aid
If you withdraw from IU, your eligibility to receive aid in the future may be affected. Make sure you understand what it means to make satisfactory academic progress (SAP).
When a student applies for financial aid, the student agrees that financial aid funds will be used for educational purposes only. Therefore, if a student stops attending classes or formally withdraws from classes before completing their program, the federal government requires us to calculate whether your aid must be repaid. We may be required to return all or some of the money already applied to your account.
Within 45 days after you withdraw, we will send you an email that lists the aid we’ve returned to federal Title IV, HEA (federal aid) programs on your behalf. If you received federal aid funds directly (for example, as a refund to be used for other educational expenses), you might have to return some of that money to IU Kokomo.
If you withdraw from IU Kokomo, your eligibility to receive aid in the future may also be affected by other federal requirements such as Satisfactory Academic Progress.
IU Kokomo will calculate the amount of financial aid to be returned to the Title IV, HEA (federal aid) programs and the Indiana Commission for Higher Education (state aid) according to the policies listed below.
Return of Title IV, HEA Funds – Regulatory Summary of 668.21 and 668.22
Summary of Sec. 668.21
Treatment of Title IV, HEA funds when a student withdraws, drops out, or is expelled before the first day of class.
If a student officially withdraws, drops out, or is expelled before the first day of class of a payment period, all funds paid to the student for that payment period for institutional or non-institutional cost under the Federal Pell Grant, FSEOG (Federal Supplemental Educational Opportunity Grant) programs are an overpayment. If an institution is unable to document the student's attendance during the payment period, the student meets the drop out definition.
The institution is required to return the overpayment to the respective Title IV or Higher Education Act (HEA) programs in the amount that the student received in each program.
Summary of Sec. 668.22 Treatment of Title IV funds when a student withdraws
General information
When a student who is a recipient of Title IV loan or grant assistance withdraws during a payment period or period of enrollment in which the student began attendance, the institution must determine the amount of Title IV grant or loan assistance earned as of the student's withdrawal date.
If the total amount of Title IV grants or loans, or both, that the student earned is less than the amount of Title IV grants that was disbursed to the student or on behalf of the student in the case of a parent PLUS loan as of the date of the institution's determination when the student withdrew, the difference must be returned to the Title IV program. No additional disbursements may be made to the student for the payment period or period of enrollment.
If the total amount of Title IV grants or loans, or both, that the student earned is greater than the total amount of the Title IV grants or loans disburse to the student or on behalf of the student in the case of a parent PLUS loan as of the date of the institution's determination when the student withdrew, the difference between these amounts must be treated as a post-withdrawal disbursement.
A post-withdrawal disbursement must be made from available grant funds before available loan funds. If outstanding charges exist, the institution may credit the student's account up to the amount of outstanding charges with all or a portion of any post-disbursement grant funds. Post-disbursement loan funds to pay outstanding charges require the confirmation of the student or parent for a parent PLUS loan. A post-withdrawal disbursement must be made within 180 days of the date the institution determines that the student withdrew. Indiana University disburses accepted Title IV Financial Aid (student loans) within 45 days of withdrawal as long as the student meets SAP and student eligibility requirements such as completion of Master Promissory Note and Loan Entrance Counseling.
For any amount of a post-withdrawal grant disbursement not credited to the student’s account to cover allowable charges, the school must make the disbursement as soon as possible but no later than 45 days after the date of the school’s determination that the student withdrew.
The institution must notify the student and parent in the case of the parent PLUS loan within 30 days of the institution's determination that the student withdrew to offer to disburse any grant or loan funds directly to the student or parent in the case of a parent PLUS loan that is not credited to the student's account. The funds may be accepted or declined. The parent or student has 14 days from the date of notification being sent to respond. With a timely notification from the student or parent in the case of a PLUS loan to confirm a post-withdrawal disbursement, the institution must disburse the funds within 120 days of the institution's determination that the student withdrew. For a late response from the student or parent in the case of a PLUS loan, the institution may make or decline to make the post-withdrawal disbursement.
Title IV grant or loan assistance definition
The following programs are defined as Title IV grant or loan assistance:
- Federal Perkins Loans
Direct Loan – Federal Direct Loans and Direct PLUS loans - Federal Pell Grant
- Iraq and Afghanistan Service Grants (IASG)
Federal SEOG (Federal Supplemental Educational Opportunity Grant) programs, not including the non-Federal share of FSEOG awards if an institution meets its FSEOG matching share.
Withdrawal date
A student is to be considered withdrawn for R2T4 purposes if they are not actively attending a course when they withdraw from a course or set of courses and are not scheduled to attend a future course no more than 45 days from their initial withdrawal date within the active term. A withdrawal exemption is applied to students who successfully complete a module of enrollment that equals 49% or more of the student’s overall intended enrollment or if the student successfully completes half time or more enrollment within the student’s overall intended enrollment.
The withdrawal date for a student who withdraws from an institution that is not required to take attendance (e.g. IUK) is earlier date of:
- the date the student began the institution’s prescribed withdrawal process; or
- the date the student otherwise provided the school with official notification of the intent to withdraw; or
- the date the institution becomes aware the student ceased attendance; or
- the midpoint of the payment period or period of enrollment for which Title IV assistance was disbursed if the student ceases to attend without official notification and withdrawal.
At IU Kokomo, the office designated for a student notification to withdraw is the Office of the Registrar.
IU Kokomo does not utilize the process of R2T4 freeze dates. IU Kokomo monitors student enrollment changes throughout the enrollment period to determine what course days should be included in the student’s withdrawal calculation, if applicable.
Percentage of payment period completed
Calculate by dividing the total number of calendar days in the payment period into the number of calendar days completed as of the student's withdrawal date.
Calculation of Title IV assistance earned by the student
The percentage of Title IV assistance earned is equal to the percentage of the payment period completed as of the withdrawal date. If the withdrawal date occurs after the 60 percent point, then the percentage of Title IV assistance earned is 100 percent. This percentage is then applied to the total amount of Title IV grant and loan assistance that was disbursed (and that could have been disbursed) to the student, or on the student's behalf in the case of a parent PLUS loan, for the payment period for which it was awarded.
Calculating aid earned - Example of R2T4 calculation
- IU Kokomo determines 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 and days the student was on an approved leave of absence)
Example: (22 completed days) / (114 total days) = 19.3 percent Title Aid Earned - IU Kokomo determines 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: 19.3 percent x ($1849 disbursed + $2721 that could have disbursed) = $882.01 Aid Earned
Students who remain enrolled through more than 60% of the payment period (i.e, semester) are considered to have earned 100% of the aid received and will not owe a repayment of Federal Title IV grant funds.
For students who remain enrolled less than 60 percent of the payment period (ie, semester), then the percentage earned is equal to the calculated dollar amount earned.
Students who receive all FN's, all FNN's or a combination of FN's, FNN's and W's during one academic period, and receive federal aid for the same academic period, may be required to repay all or part of any aid received.
Calculation of Title IV assistance unearned to be returned
The unearned amount of Title IV assistance to be returned is calculated by subtracting the amount of Title IV assistance earned by the student from the amount of Title IV aid that was disbursed to the student or on behalf of the student in the case of a parent PLUS loan.
Responsibility of the institution for return of unearned aid
The institution must return the lesser of the calculated total amount of unearned Title IV assistance or an amount equal to the total institutional charges the student incurs for the payment period multiplied by the percentage of awarded Title IV grant and loan assistance that has not been earned by the student.
Institutional charges
Institutional charges are tuition, fees, room and board (if the students contracts with the institution for room and board), and other educationally-related expenses assessed by the institution.
Responsibility of the student for return of unearned aid
The student returns unearned Title IV assistance minus the amount the institution returns. Any Title IV loan program is returned in accordance with the terms of the loan and any Title IV grant program as an overpayment of the grant. However, a student is not required to return the portion of a grant overpayment amount that is equal to or less than 50 percent of the total grant assistance that was disbursed for a payment period or a grant overpayment amount of 50 dollars or less that is not a remaining balance.
Repayment of the overpayment by the student and Title IV eligibility
A student who owes an overpayment remains eligible for Title IV and HEA program funds through the earliest of 45 days from the institutional notification of the overpayment or 45 days from the date the institution was required to notify the student of the overpayment if, during the 45 days, the student repays the overpayment in full to the institution or enters into a repayment agreement that is satisfactory with the institution with a maximum payment in full within two years.
Student notification for repayment
The institution must notify a student within 30 days of the institution's determination that the student withdrew and owes a Title IV or HEA overpayment in order to recover the overpayment. The notification provides the student with terms to permit the student to repay the overpayment while maintaining Title IV and HEA program funds with repayment of the full amount of the overpayment within two years of the date of the institution's determination the student withdrew.
Loss of Title IV eligibility
In the context of Return of Title IV funds, a student is no longer eligible if they do not enter into a repayment agreement with the 45 day period or fails to meet the terms of the repayment agreement.
Order of return of Title IV funds
Unearned funds returned by the institution or student are credited to outstanding Title IV loan balances made to the student or on behalf of the student for the payment period. Excess funds must be credited to outstanding balances in the following order:
- Federal Direct Unsubsidized loans
- Federal Direct Subsidized loans
- Federal Direct PLUS loan received on the behalf of the student
If unearned funds remain to be returned after repayment of all outstanding loan amounts, the remaining excess must be credited to any amount awarded in the payment period to grant programs in the following order:
- Federal Pell Grants
- Iraq and Afghanistan Service Grants (IASG)
- Federal SEOG
Timeframe for the return of Title IV funds by the institution
An institution must return the funds for which it is responsible as soon as possible but no later than 45 days after the date of its determination that the student withdrew. An institution must determine the withdrawal date for a student that does not provide notification to the institution no later than 30 days after the end of the earlier of the payment period or period of enrollment.
IU Kokomo refunds credit balances as soon as possible, but no later than 14 days after the R2T4 calculation is completed. In the event of a deceased student, all credit balances are removed by returning aid to the proper Title IV programs.
The following rules apply when completing a return calculation for a student:
- IU Kokomo will return any unearned Title IV funds it is responsible for returning within 45 calendar days of the date IU Kokomo determined the student withdrew, and offer any post-withdrawal disbursement of loan funds within 30 calendar days of that date.
- Unless a student subject to verification has provided all required verification documents in time for IU Kokomo to meet the Return deadlines, IU Kokomo includes as Aid Disbursed or Aid That Could Have Been Disbursed in the Return calculation.
- If it is determined that a student who failed to provide all required verification documents in time for IU Kokomo to meet the Return deadline and later provides those documents prior to the applicable verification deadline, IU Kokomo must perform a new Return calculation on all of the aid the student qualified for based on the completed verification documents and make the appropriate adjustments.
- To give a Pell Grant to a student, IU Kokomo must have a valid output document (one with an official Expected Family Contribution computed from correct data) while the student is still enrolled for the award year or in the time frame the student qualifies for a late disbursement under 34 CFR 668.164(j)(4)(i).
Time Frame for the return of an unclaimed Title IV credit balance
In the event that IU Kokomo cannot locate the student (or parent) to whom a Title IV credit balance must be paid, IU Kokomo Bursar will determine what programs constitute the refund and will notify IU Kokomo FAS of any unclaimed credit balances that need to be returned to Title IV, HEA programs. IU Kokomo must return the funds no later than 240 calendar days after the date the school issued the check or 45 calendar days after the EFT was rejected.
Return of state funds
- The Indiana Commission for Higher Education (ICHE) return of funds period applies to all student financial aid administered by the former State Student Assistance Commission of Indiana (SSACI).
- State grants are awarded to eligible students based on the assumption that they will attend full-time each semester. If you are enrolled less than full-time, you cannot receive any of the listed state grants: Frank O’Bannon, Academic Honors, Core 40, 21st Century Scholars. If you drop classes or withdraw from school, your state grant can be reduced or canceled, even after the grant has been credited to your bursar account.
- The measure of whether or not you are enrolled full-time is taken at the end of the ICHE census period, the end of the 4th week of classes for an individual semester. If you drop classes and are enrolled less than full-time or withdraw completely before the end of the ICHE census period, you are ineligible to receive any of the listed state grants. You must be full-time at the end of the ICHE census period (the end of the 4th week of classes for an individual semester).
- There are two general cases in which all or a portion of an offered award might have to be returned to ICHE:
- A student completely withdraws during the ICHE census period.
- A students stays enrolled but drops below full-time during the ICHE census period ("withdraws from a class").
