Treatment of Title IV funds when a student withdraws
When a federal Title IV grant or loan assistance is disbursed, but the recipient does not complete the enrollment period, the law requires that TSC calculate the amount the school and/or the student must return to Title IV program accounts.
The date the student initiates the withdrawal is used to calculate the percentage used in the formula for the Return of Title IV funds. The number of days from the first class day to the withdrawal date divided by the number of days in the payment period (semester) equals the percentage of Title IV funds earned. If the withdrawal date is after the 60% point of the semester, the student has earned 100% of the Title IV funds.
If a student fails to earn a passing grade in at least one class, TSC is required to calculate the amount for Return of Title IV funds using the midpoint of the period (in lieu of an official withdrawal date) as documentation of the student’s last date of attendance.
Procedure for Return of Title IV Funds
- If the total amount of the Title IV grant and/or loan assistance that the student earned is less than the amount disbursed to, or on behalf of, the student, the difference between these amounts must be returned to the Title IV programs in the following order of priority (not to exceed the amount originally disbursed):
- Unsubsidized FFEL Stafford Loans
- Subsidized FFEL Stafford Loans
- PLUS FFEL Loans
- Federal Pell Grant
- Federal SEOG Grant
- Other Title IV assistance (excluding FWS)
- The school and the student share the responsibility for returning Title IV aid. The school returns “unearned” Title IV funds that have been paid to the school to cover the student’s institutional charges received from Title IV grant and/or loan programs.
- The school must return Title IV funds due to the federal programs no later than 30 days after the date the school determines the student withdrew.
- If the student owes funds back to the Title IV programs, the institution will advise the student within 45 days of determining that the student withdrew. The student has 45 days from the institution’s notification date to take action on the overpayment. If the student’s portion of unearned Title IV funds included a federal grant, the student has to pay no more than 50% of the initial amount that the student is responsible for returning. Immediate repayment of the unearned loan amount is not required because the student repays the loan to the lender according to the terms or conditions in the promissory note. The institution will advise the lender of the student’s withdrawal within 45 days of determining the student’s withdrawal.
- No additional disbursements may be made to the student for the enrollment period. If the student does not repay the amount owed to the Title IV programs or does not make satisfactory payment arrangements with the U.S. Department of Education, TSC will report to the National Student Loan Data System (NSLDS) that the student received an overpayment. The student loses eligibility for further Title IV aid until resolved.
Students completely withdrawing after the official census date should also refer to the Federal Financial Aid Satisfactory Academic Progress Standards.
NOTE on Unofficial Withdrawal: Title IV funds are awarded under the assumption that the student will attend school for the entire period for which the assistance is awarded. When the student withdraws, whether it is an official withdrawal or unofficial (such as the student just stopped attending classes), the amount of aid earned by the student must be determined. If the amount disbursed to the student is greater than the amount earned, unearned funds must be returned. The student may owe financial aid received back to the program from which it was awarded. Students who fail to earn a passing grade in at least one class will be evaluated to determine if they withdrew unofficially (stopped attending classes) or if they must prove they participated in an academically related activity past the 60% point of the payment period. In most cases, if a student cannot prove they were in attendance past the 60% point of the payment period, the institution can use the midpoint of the payment period (semester) as the last date of attendance for calculation purposes. Examples of academically related activities are exams or quizzes, tutorials, computer-based instruction, academic advising or counseling, academic conferences, completing an academic assignment, paper, or project, and attending a school-assigned study group.
Before withdrawing officially or stopping out unofficially, students should see the course schedule and catalog for the complete policy. Contact the Financial Aid Office in Arnulfo Oliveira Student Service Center or call 956-295-3620 for additional information and a tentative calculation. Speaking to a Financial Aid advisor before withdrawing is important to determine if the student will owe funds to the financial aid programs and/or the institution.