Return to Title IV Refunds
Treatment of Federal Student Aid When a Student Withdraws
Federal financial aid is awarded to a student under the assumption that the student will attend college for the entire period for which the assistance is awarded. For example, if the student is given aid for the fall semester, it is assumed the student will attend college from the beginning of the fall semester through the end of the fall semester. Federal financial aid regulations specify how Isothermal Community College must determine the amount of Federal Student Aid (FSA) assistance a student has earned if they withdraw from school. The FSA programs that are covered by this law are: Federal Pell Grants, and Federal Supplemental Educational Opportunity Grants (FSEOG).
When a student withdraws from all classes during a semester, the amount of FSA program assistance the student has earned up to that point is determined by a specific formula known as Return to Title IV. If the student received more assistance than the student earned, the excess funds must be returned by the college and/or the student. If the student received less assistance than the amount the student earned, the student may be able to receive those additional funds. For example, if the student completed 30 percent of the semester, the student earned 30 percent of the assistance they were originally scheduled to receive. Once the student has completed more than 60 percent of the semester, they are considered to have earned all the assistance they were scheduled to receive.
If the student receives excess FSA program funds that must be returned, the school must return a portion of the excess equal to the lesser of
- your institutional charges multiplied by the unearned percentage of your funds or
- the entire amount of excess funds.
The college must return this amount even if it didn’t keep this amount of your FSA program funds. If the college is not required to return all of the excess funds, the student must return the remaining amount. Any amount of unearned grant funds that must be returned is called an overpayment. The amount of a grant overpayment that the student must repay is half of the unearned amount. The student must make arrangements with the school or the Department of Education to return the unearned grant funds.
If the student did not receive all of the funds they earned, they may be due a post-withdrawal disbursement. The college may automatically use all or a portion of the student’s post-withdrawal disbursement for tuition, fees, and room and board charges. For all other college charges, the college needs the student’s permission to use the post-withdrawal disbursement. If the student does not give permission, which some colleges ask for upon enrollment, the student will be offered the funds. However, it may be in the student’s best interest to allow the school to keep the funds to reduce their debt at the school.
The requirements for FSA program funds when a student withdraws are separate from any refund policy the college may have. Therefore, the student may still owe funds to the college to cover unpaid institutional charges. The college may also charge the student for any FSA program funds that the college was required to return. If the student does not know what the college’s refund policy is, they may ask for a copy. The college can also provide you with the requirements and procedures for officially withdrawing from college.
If a student has questions about their FSA program funds, they may call the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243). The Center accepts calls from 8 a.m. to midnight (EST), seven days a week. TTY users may call 1-800-730-8913. Information is also available on the U.S. Department of Education’s “Financial Aid for Students Home Page” at www.studentaid.ed.gov.