Title IV Return of Funds
This requirement applies only to students who received federal student aid, and are withdrawing prior to completing 60 percent of the period (semester) 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 (e.g. Pell Grant, Direct Loans, Perkins Loan, etc.) discontinues study during a given semester.
While there is no academic penalty associated with the ‘W’ grade, there may be financial aid implications. If you discontinue study (drop, resign, or withdraw from all courses in the semester) and have previously been awarded these funds, the college must determine if these funds are required to be returned to the appropriate financial aid programs. Any student who received federal Title IV financial aid funding will have their eligibility recalculated in order to determine:
- the amount of financial aid the student is eligible to retain; and
- the amount of “unearned financial aid” that must be returned to the U.S. Department of Education
In addition, the calculation will based on the student’s actual “separation date” and not necessarily the date the student dropped or resigned all of their courses.
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 percent 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 school is required to return any unearned aid, Purchase College will reduce or cancel the award(s), debit the student’s account and return the unearned portion of aid to the U.S. Department of Education. This adjustment may result in a balance due to Purchase College. The student becomes responsible for the “unearned” portion of aid that was charged back to the student account. Students will receive email notification to their Purchase email address and mail to their home address; this will also be updated on their eBill.
Again, the balance becomes the student’s obligation. This is a federal statutory and regulatory requirement and enforced accordingly. Furthermore, if the student account remains unpaid, the college sends delinquent accounts to a collection agency. Unpaid bills that reach this stage may negatively affect your credit rating, and may be subject to additional fees or service charges under section 18 of the state finance law.
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.
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 Direct Stafford loans
- (ii) Subsidized Federal Direct Stafford loans
- (iii) Federal Perkins loans
- (iv) Federal Direct PLUS loans received on behalf of the student
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.
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
- If TAP was awarded and certified for full time tuition for the term of withdrawal, then it will be de-certified for the following term. A TAP Waiver may be necessary.
- If TAP was certified as a withdrawal with liability, then the student will receive the reduced amount of the award for the term of withdrawal and will most likely be de-certified the following term. A TAP Waiver may be necessary for the following term.
- If tuition charges are reduced or cancelled for the term of withdrawal, the current TAP award will be reduced or cancelled accordingly.
- Your Excelsior Scholarship award may be canceled for the current semester and/or for the following semester.
Please contact the Registrar’s Office for more information regarding your state grant certification.