Return of Federal Title IV Funds

The Higher Education Amendments of 1998 (HEA98) represent a major shift in the return of Title IV Federal Financial Aid when a student withdraws from the university. The policy governs all federal grant and loan programs (Pell, SEOG, Stafford Loans, Perkins and PLUS loans), but does not include the Federal Work-Study program.

In general, the law assumes that a student “earns” approved (verified) federal financial aid awards in proportion to the number of days in the term prior to the student’s complete withdrawal. If a student completely withdraws from school, stops attending without notification or does not earn any credit during a term, the school must calculate (according to a specific formula) the portion of the total financial assistance that the student has earned and entitled to retain up to the time of withdrawal or last attendance. If a student receives (or the university receives on the student’s behalf) more assistance than what was earned, the unearned funds must be returned to the Department of Education. If a student’s institutional charges are less than the amount earned, the student will receive a refund for any excess funds. 

The portion of the federal grants and loans that the student is entitled to receive is calculated on a percentage basis by comparing the total number of days in the semester to the number of days that the student completed before he/she withdrew or stopped attending. The policy governs the earned and unearned portions of the student’s Federal Title IV Financial Aid only. It determines how much, if any, the student and/or the school may need to return. This policy does not affect the student’s institutional charges or refund of those charges. The university’s withdrawal policy will be used to determine the reduction, if any, in the student’s tuition and fee or room and board charges. The student is responsible for paying any outstanding charges to the university.

If it is determined that funds must be returned to Title IV programs, funds will be returned in the following order: Unsubsidized Loan, Subsidized Loan, Perkins Loan, Grade PLUS Loan, Parent PLUS Loan, Pell Grant, SEOG Grant, Teach Grant and Iraq and Afghanistan Service Grant.

The refund will be returned to the student only if the student did not receive financial aid assistance from either a Federal Title IV programs or a state program. In the cases where the student did receive assistance from these programs, the funds will be returned to the programs in the following order: Unsubsidized Loan, Subsidized Loan, Perkins Loan, PLUS Loan, Pell Grant, FSEOG Grant, TPEG Grant, RPEG Grant, NPEG Grant and Texas Grant.

The student’s official withdrawal date will be determined by the university as any one of the following:

  • the date the student began the university’s withdrawal process.
  • the midpoint of the semester if the student withdraws without notifying the university.
  • the student’s last day of attendance at an academically-related activity as documented by the university.

If the student received less Federal Student Aid than the amount earned, the university will disburse the earned aid that was not received (Post-withdrawal disbursement).

If it is determined that the university must return to the Title IV programs monies in excess of any tuition and fees or room and board, the student will be responsible for those monies.

Any grant funds that the student is required to return to the federal programs are considered an overpayment. The student must either repay the amount in full to the university within 45 days of notification of the overpayment or make satisfactory payment arrangements with the Department of Education Collections that the student owes an overpayment. At that point, until the student pays the amount in full to the Department of Education or makes repayment arrangements with the Department of Education, the student will lose his/her eligibility to receive future federal financial aid at any institution.