# Presentation: 695663

## U.S. Department of EducationOffice of Postsecondary Education

**Return of Title IV funds**
- NASFAA Conference
** **July 2000

## Return of Title IV funds

- Sec. 485 of the Higher Education Amendments of 1998  -  (P.L. 105-244)
- Sec. 484B of the HEA of 1965, as amended
-  Statute enacted Oct., 7, 1998
- NPRM published  August 6, 1999
- Final Reg published November 1, 1999
- Effective October 7, 2000 or earlier if institution chooses

## Simply stated:

- If a recipient of title IV aid withdraws during a payment period (or a period of enrollment), the institution must calculate the amount of title IV aid the student earned. Unearned title IV funds must be returned to the title IV programs.

## NEW APPROACH

**Old approach**
- dictated use of specific refund policies that included all sources of aid.
- determined amount of institutional charges that a school had earned and not earned.
**New approach**
- Determines amount of title IV aid a student has earned, the unearned portion is returned** **

## What happens when student withdraws?

- Determine withdrawal date.
- Determine amount student earned.       (Don’t include FWS or the non-Federal share of FSEOG - see next slide.) (Include amounts that were** or** could have been disbursed.)
- Return unearned funds to Title IV programs, **or **pay student post-withdrawal disbursement.

## Treatment of FSEOG

- Individual Matching Fund where the match is made on  the basis of an individual student.  ONLY the Fed share is used (75%).
- Aggregate Matching Fund where the school awards institutional or qual. state grants as the match in the aggregate. ONLY the Fed share is used (75%) in calculating the amount of the return.
- Fund Specific Matching Fund where the 25% of school funds are deposited with the 75% Federal  funds.  Once these are commingled the fund contains 100% FSEOG money, therefore, the amount of the return is based upon 100% of the amount disbursed or could have been disbursed.

## Post-Withdrawal Disbursement

- May credit for institutional charges.
- For loan funds to be credited - notify borrower and borrower can cancel loan.
- If not credited - offer to student (with written notification) within 30 days of institution’s determination of withdrawal.
- Student has 14 days to accept -** but **- school can choose to make disbursement after that, if there is a late acceptance.

## Post-Withdrawal Disbursement

- The written notification --                                - identifies the title IV funds not credited to account,                                                          - explains the ability of the student to accept or decline, and                                                               - advises about the 14 day deadline for the student to respond. (Then 90 days to disb.)
- Electronic or written notification regarding the outcome of a post-withdrawal disbursement request.

## Crediting the student’s account

- Inst. may credit the student’s acct., without permission, to satisfy charges (prior to the WD) for;
- Tuition & fees
- Board - if contracted with the school
- Room - if contracted with the school
- After obtaining authorization - may credit
- current charges for educationally related activities
- minor prior yr. charges that are either less than $100, or if paid, will not prevent the payment of current educational costs

## Withdrawal date (inst. req’d to take attendance)

- Last date as determined by attendance records.
- Institution must document withdrawal date.
- Required = required by outside entity, e.g., --accrediting agency, **or**                                   -state agency.
- Applicable to those who cease attendance, do not return from approved leave of absence, or take an approved LOA

## Withdrawal date (attendance taking not required )

- Date student began withdrawal process,
- Date student otherwise provided official notification,
- Mid-point of PP or Period Of Enrollment,
- Date institution determines is related to illness, accident, grievous personal loss, etc.,
- Date of leave of absence, **or**
- Last date at an academically related activity.

## Rescinding withdrawal 

- Institution’s choice
- Written notice required of student that          - he is continuing in academic activities,       - and intends to complete the period.
- Negated if student subsequently ceases to attend prior to the end of                                          -- the payment period or                                -- the period of enrollment.

## Approved leave of absence

- Only one in 12 months (except for LOA’s granted for 1.) military reasons,  2.) under the Family and Medical Leave Act of 1993, and 3.) for jury duty),
- Subsequent leave for unforeseen circumstances (up to 30 days),
- Total leave days cannot exceed 180,
- Formal policy that the student and institution followed,

## Leave of absence (con’t)

- Reasonable expectation that the student will return (and the student must return by the end of the leave of absence or the student is treated as a withdrawal),
- No additional institutional charges,** and**
- The student is permitted to complete the  coursework.
- Must tell Title IV loan recipient that failure to return will affect grace period.

## Calculation of amount of aid to be returned

- Multiply the % of the payment period or period of enrollment completed (or 100% once the student completes >60%) **X** the aid that was disbursed and could have been disbursed.  **This is the earned amount.**
- Subtract the earned amount from the aid disbursed.  This is the amount to be returned.

## PP or POE

- For a **standard** **term based program**, use
- 		payment period.
- For a **non-term based or non-standard term program**, use
- 		payment period or period of enrollment.
- For a **non-term or non-standard term based program, **an institution must consistently use either a PP or POE for all students (in a category) in a particular program.  May make a separate selection for transfer/re-entry students.

## % of PP or POE completed

- For credit hour programs, it** =                  **
_**calendar days* completed**_**                 *****   except****          calendar days* in the period ****	****           ****scheduled**
- For clock hour programs, it** =               ****breaks of****  **
_**	**__**clock hours completed**__**	**__**	**_**           ****5 consecutive**_**	**__**                                                 **_**clock hours in the period     ****	****           ****days or more **
**	****	****	****(*****OR*** )                      	   **        and days on**
_**	**__**clock hours scheduled**_**                        ****approved**** ****LOA****                clock hours in the period     ***(if  *_*>*_* 70%)*** **
**    ****Note: Excused absences are NOT counted as completed hours**

## Return of Unearned Aid

**Institution** returns the **lesser** of --
**1)** Total Title IV to be returned
**	****	****	****	****or**
**2.) ****	****       **institutional charges
-       	    **x**_ percentage not earned_

-   amount disbursed

- - amount earned

- or

## Institutional Charges

- For a non-term program, where the treatment of title IV aid is calculated on a PP basis, **but** the institutional charges are for a period longer than the PP --
-    --the amount of institutional charges incurred for the PP is the **greater** of --
- 	    --the pro rated amount of the charges,** or**
- 	    --the amount of title IV aid retained for 		institutional charges.

## Return of title IV funds

- Student Responsibility
- Total amount of unearned title IV aid - Amount institution is required to return = Amount for which the student is responsible.
- Student returns his or her share to --
- Title IV loan programs in accordance with the terms of the loan
- Title IV grant programs as an overpayment (only up to 50% of the amount of the overpayment).

## Return of title IV funds

- Student Responsibility, (cont’d)
**Title IV grant overpayment**
- Student remains title IV elig. thru 45 days, if the student -
- repays the overpayment in full to the institution,
- makes repayment arrangements satisfactory to the institution, or
- signs a repayment agreement w/ the Secretary which will include terms that permit continued elig. while in repayment.

## Student’s Overpayment (con’t)

- Student in overpayment **remains eligible**
- 		- (generally) for 45 days **or**
- 		- until he fails to meet terms of 			   repayment agreement.
- 		- beyond the 45 days, if he
- 		    - repays in full, **or**
- 	          - enters into repayment agreement**	****	****     **with either the inst or the secretary.

## Return of Title IV funds

**1.) Loans                    2.) Grants (& Other)**
- 	  -Fed. Unsubsidized              -FPell
- 	  -Fed. Subsidized                   -FSEOG
- 	  -FPerkins                         -Other title IV
- 	  -FPlus
- Institution must return the funds ASAP,
- 		- but no later than 30 days after the   		 institution determines withdrawal date.

## Return of funds (con’t)

- Institution must determine the withdrawal date (for a student who does not provide notification) --
- 		-- no later than 30 days after the 		         expiration of the earlier of --
- 			-- PP or POE,
- 			-- the academic year, or
- 			-- the educational program.

## Consumer Information

- Institution must provide information about the return of title IV funds when a student withdraws per § 668.44 (.43 in new regs).
- § 668.43 requires information about --
- 	-- any refund policy with which the 		     	institution is required to comply,
- 	-- requirements for officially withdrawing,
- 	-- summary of requirements of § 668.22.

## Definitions

**“****Could have been disbursed”** =
- late disbursement provisions of  §668.164(g)
- 	- received SAR/ISIR w/ EFC
- 	- FFEL/DL loan was certified/originated
- 	- FPerkins/FSEOG aid was awarded
**“****Period of enrollment”** = academic period for which charges are assessed, i.e., the program or academic year

## Definitions con’t

**“****Date institution determines withdrawal”**
**(when student provides notification) =**
_*the later of*_   	-- the withdrawal date **or**
- 				-- the date of notification of           		   	    withdrawal.
**(student does not provide notification) =**
- the date the institution becomes aware that the student ceased attendance.

## Definitions con’t

**“****Date institution determines withdrawal”**
**( when student does not return from leave of absence)** =
_*the earlier of*_    --the expiration of the leave **or**
**                         **-- the date the student notifies               			  the institution that he will 				  not be returning.

## Definitions con’t

**“****Date institution determines withdrawal”**
**(for a student whose rescission of his notification to withdraw is negated by the fact that he subsequently stops attending the institution)** =
- 		-- the date the institution becomes aware that the student did not or will not complete the PP or POE.

## R2T4 software

- Available in Spring, 2000.
- Financial Aid community involvement in design and testing.
- Use of the software is not required.
- Software is free!