Title IV Return of Funds
This requirement applies to you ONLY if:
You received federal student aid, and
You are withdrawing prior to completing 60% of the period for which the aid was provided.
Federal regulations require that Purchase College use a Return of Title IV Funds calculation in cases where a student receiving Title IV financial aid (Pell, Perkins, SEOG, and Direct Loans) discontinues study during a given semester. If you discontinue study (drop, resign or withdraw from all courses in the semester) and have previously been awarded these funds, the university must determine if these funds are required to be returned to the appropriate financial aid programs.
What is Return of Title IV Funds Calculation?
The federally mandated process by which a school calculates the amount of federal funds to be returned for a Title IV aid recipient who withdraws or who ceases attendance during a semester. The calculations may result in a reduction of the student’s Title IV loan and grant aid to reflect the percentage of the semester that the student attended, if he or she attended 60% or less of the semester. The Return of Title IV calculation is based on the following:
- The number of days the student attended.
- The institution charges assessed.
- The total amount of Title IV aid awarded, accepted and or disbursed.
- Furthermore, the school, and the student may be required to return any “unearned” federal assistance.
Students will receive email notification to their Purchase email address and mail to their home address indicating the type and amount of aid returned to the U.S. Department of Education.
Federal law requires aid recipients to “earn” most of the aid they receive by staying enrolled in college at least half time. Students who withdraw prior to completing 60 percent of the semester for which they received federal student aid may be required to return some of the aid they were awarded. The law assumes that the student used the Title IV student aid (e.g., Subsidized and Unsubsidized Stafford Loans, Parent (PLUS) Loan or Perkins Loan) to pay their institutional charges - tuition, fees, residence hall room and board (meal plan), and other institutional charges. Thus, if the student withdraws prior to completing 60 percent of the semester for which they were awarded aid, the unearned portion of the aid must be returned to the federal government.
Purchase College will assess the liability of the student and return the appropriate funds to the federal source. If the amount returned to the federal source is not enough to cover what the student owes based on the length of the enrollment, it will become the student’s obligations to pay for the remaining balance.
Amounts that must be returned to federal aid sources, whether by Purchase College or by the student, will first be applied to the federal loans. With respect to any amount the student owes after the college has paid back its share, the student will be permitted to repay the loans based on the original terms of the loans - usually a 10-year repayment term after a grace period and deferments if the student return to school. In addition, the student may be required to restore portions of grants such as Pell and Supplemental Education Opportunity Grants (SEOG) that they have received. In the case of “unearned” portions of federally funded grants or scholarships, the student will be expected to pay 50 percent immediately or to make satisfactory
Order of return of Title IV funds
(1) Loans. Unearned funds returned by the institution or the student, as appropriate, in accordance with paragraph (g) or (h) of this section respectively, must be credited to outstanding balances on title IV loans made to the student or on behalf of the student for the payment period or period of enrollment for which a return of funds is required. Those funds must be credited to outstanding balances for the payment period or period of enrollment for which a return of funds is required in the following order:
(i) Unsubsidized Federal Stafford loans.
(ii) Subsidized Federal Stafford loans.
(iii) Unsubsidized Federal Direct Stafford loans.
(iv) Subsidized Federal Direct Stafford loans.
(v) Federal Perkins loans.
(vi) Federal PLUS loans received on behalf of the student.
(vii) Federal Direct PLUS received on behalf of the student.
(2) Remaining funds. If unearned funds remain to be returned after repayment of all outstanding loan amounts, the remaining excess must be credited to any amount awarded for the payment period or period of enrollment for which a return of funds is required in the following order:
(i) Federal Pell Grants.
(ii) Academic Competitiveness Grants.
(iii) National SMART Grants.
(iv) FSEOG Program aid.
(v) TEACH Grants.
If the student is entitled to a refund from the college for amounts paid to cover institutional charges, any refund due to the student will first be applied to their obligation to return “unearned” aid before the student receives money back. Thus, portions of institutional refunds may be applied on the student’s behalf to their outstanding Stafford, PLUS or Perkins Loans, or to the federal portions of their grant or scholarship, and not refunded directly to the student.
This policy is based on 34 CFR, Section 668.22 of Title IV of the Higher Education Act of 1965, as amended.
Determining the Amount of Unearned Aid to be Returned
The calculated percentage of the semester completed becomes the percentage of the Title IV aid that the student has earned. The total Title IV aid disbursed to the student, or that could have been disbursed to the student (i.e. disbursable aid) minus the amount of Title IV aid earned by the student yields the amount of Title IV loan and grant aid that is unearned and that must be returned: (688.22(e)).
Total Title IV Disbursable Aid
– (minus) Title IV Aid Earned
= Title IV Loan and Grant to be Returned