Proration	of	the	Annual	Loan	Limit	for	Students	Who	Graduate	Early	From	a	Clock-Hour	Program
Under	the	regulations	that	govern	the	treatment	of	Title	IV	funds	when	a	student	withdraws,	a	student	who	completes	all
the	requirements	for	graduation	from	a	program	before	completing	the	days	or	hours	that	they	were	scheduled	to
complete	is	not	considered	to	have	withdrawn,	and	no	return	of	Title	IV	funds	calculation	is	required	(see	Volume	5	for
more	detail).	However,	a	school	may	be	required	to	return	a	portion	of	the	Direct	Loan	funds	that	were	disbursed	to	a
student	who	successfully	completes	the	requirements	for	graduation	from	a	clock-hour	program	before	completing	the
number	of	clock	hours	that	they	were	scheduled	to	complete.
A	student's	eligibility	to	receive	Title	IV	aid	for	a	clock-hour	program	is	based,	in	part,	on	the	total	number	of	clock	hours
in	the	program.	If	a	school	allows	a	student	to	graduate	from	a	clock-hour	program	without	completing	all	the	originally
established	hours	for	the	program,	the	school	has	effectively	shortened	the	program	length	and	reduced	a	student's	Title
IV	aid	eligibility	for	the	program.	In	this	circumstance,	the	school	must	prorate	(or	re-prorate)	the	annual	loan	limit	for	the
student	based	on	the	number	of	hours	the	student	actually	completed,	and	after	this	recalculation,	the	school	must	return
to	the	Department	any	portion	of	the	Direct	Loan	funds	the	student	received	that	exceed	the	newly	prorated	(or	re-
prorated)	annual	loan	limit.	(For	a	student	who	received	a	Pell	Grant,	the	school	must	also	recalculate	the	student's	Pell
Grant	award	in	this	situation.	See	Volume	7	for	more	information.)
This	requirement	applies	only	to	clock-hour	programs,	and	it	applies	regardless	of	the	length	of	the	program	or	remaining
portion	of	a	program.	In	some	cases,	this	means	that	a	previously	prorated	annual	loan	limit	must	be	re-prorated.
Examples	8	and	9	illustrate	the	requirement	described	above.
Volume	8,	Chapter	5,	Example	7:	Clock-Hour	Program	With	a	Remaining	Period	Shorter	Than	an	Academic	Year
A	school	has	an	1800	clock-hour	program	with	a	defined	academic	year	of	900	clock	hours	and	26	weeks	of
instructional	time.	A	dependent	undergraduate	student	successfully	completes	the	first	900	clock	hours	of	the
program	in	22	weeks	of	instructional	time.	However,	the	student	must	complete	an	additional	four	weeks	of
instructional	time	before	receiving	a	second	loan	(see	Chapter	6	of	this	volume).
After	26	weeks	of	instructional	time	have	elapsed,	the	student	has	successfully	completed	1,040	clock	hours	and
may	then	receive	a	second	loan.	However,	the	loan	limit	must	be	prorated	based	on	the	number	of	clock	hours
remaining	in	the	program	at	this	point	(760).	To	determine	the	prorated	loan	limit	for	the	student9s	second	loan,
convert	the	fraction	based	on	the	number	of	clock	hours	remaining	to	a	decimal:
760	hours	remaining	in	program/900	hours	in	academic	year	=	0.84
Multiply	this	decimal	by	the	combined	Direct	Subsidized	Loan	and	Direct	Unsubsidized	Loan	annual	loan	limit	for	a
dependent	second-year	undergraduate	($6,500,	not	more	than	$4,500	of	which	may	be	subsidized):
$6,500	x	0.84	=	$5,460	combined	subsidized	and	unsubsidized	prorated	annual	loan	limit
To	determine	the	maximum	portion	of	the	$5,460	prorated	annual	loan	limit	that	the	student	may	receive	in
subsidized	loan	funds,	multiply	the	maximum	subsidized	annual	loan	limit	of	$4,500	by	the	same	decimal	(0.84):
$4,500	x	0.84	=	$3,780	subsidized	prorated	annual	loan	limit
The	total	prorated	loan	limit	for	the	remaining	period	of	study	is	$5,460,	not	more	than	$3,780	of	which	may	be
subsidized.
Volume	8,	Chapter	5,	Example	8:	Proration	of	the	Loan	Limit	for	a	Student	Who	Graduates	Early	From	a	Clock-Hour
Program