If you withdraw from the university and have received financial aid, any refundable amount of your institutional charges (tuition and fees and/or university housing costs) may be returned to the appropriate financial aid sources. You may be expected to repay the “unearned” portion of your financial aid if you withdraw from school or receive any combination of non-passing grades (F, I, NP, NC, W, M, or X) in all courses in a particular term. You are also required to complete exit counseling.
Your withdrawal date is the date that you inform a university official that you will be withdrawing from the university. If you do not notify the university that you plan to withdraw, and you stop attending courses, your last day of attendance will be determined by the latest date submitted by your instructor(s).
Financial aid is returned in the following order:
- Direct Unsubsidized loans (other than PLUS loans)
- Direct Subsidized loans
- Direct PLUS loans
- Federal Pell Grants
- Federal SEOG
- Federal TEACH Grants
- Iraq and Afghanistan Service Grant
Aid disbursed to you is considered in the calculation of your aid eligibility upon withdrawal. Aid for the term from which you withdrew, for which you were eligible and that was not disbursed to you, is also used in the calculation under certain conditions.
Below is an example of the calculations used to determine the amount of unearned aid a student would be expected to repay based on the reported last day of attendance of the term from which a student has withdrawn.
Example of Returned Funds
Victor E. Viking stopped attending classes on January 26 and notifies the university that he was withdrawing. The term began on January 5 and is 75 days long. Victor has attended 22 days and has earned 29.3 percent of his financial aid (22 days divided by 75 days equals 29.3 percent).
Victor received in aid:
- Direct Subsidized Loan: $1167
- Direct Parent PLUS Loan: $1500
- Pell Grant: $1000
- Total Aid for the term: $3667
- The amount of federal aid earned is 29.3% x $3667 = $1074.43.
- Total federal aid unearned is $3667 - $1074.43 = $2592.57.
- The second calculation determines the percentage of the amount unearned based on school charges for tuition and housing. Victor was charged $1,843 in tuition and did not live on campus. Percentage of unearned aid for this second calculation is 100% - 29.3% = 70.7%. Therefore, based on the tuition charges for the term, $1843 x 70.7% = $1303.
- The amount of federal aid Victor must return is the lesser of step 2 or 3 ($1,303 in our example).
- Federal guidelines determine the order of aid types to be reduced: Direct Subsidized Loan, Parent PLUS Loan, and then Pell Grant until $1,303 has been repaid. Therefore Victor’s aid will be reduced to:
Direct Stafford Loan: $1167- $1167 = $0
Direct Parent PLUS Loan $1,500-$136 = $1,364
Pell Grant: $1000 - $0 =$1,000
Total Returned: $1,303
The total returned amount reflects the amount to be billed to Victor’s student billing account from his financial aid. Any refunds from tuition that are determined and applied to his account may affect the amount that Victor owes for winter term.
Treatment of Title IV Aid When a Student Withdraws
The law specifies how your school must determine the amount of Title IV program assistance that you earn if you withdraw from school. The Title IV programs that are covered by this law are: Federal Pell Grants, Iraq and Afghanistan Service Grants, TEACH Grants, Direct Loans, Direct PLUS Loans, and Federal Supplemental Educational Opportunity Grants (FSEOGs).
Though your aid is posted to your account at the start of each period, you earn the funds as you complete the period. If you withdraw during your payment period or period of enrollment (your school can define these for you and tell you which one applies), the amount of Title IV program assistance that you have earned up to that point is determined by a specific formula. If you received (or your school or parent received on your behalf) less assistance than the amount that you earned, you may be able to receive those additional funds. If you received more assistance than you earned, the excess funds must be returned by the school and/or you.
The amount of assistance that you have earned is determined on a pro rata basis. For example, if you completed 30% of your payment period or period of enrollment, you earn 30% of the assistance you were originally scheduled to receive. Once you have completed more than 60% of the payment period or period of enrollment, you earn all the assistance that you were scheduled to receive for that period.
If you did not receive all of the funds that you earned, you may be due a post-withdrawal disbursement. If your post-withdrawal disbursement includes loan funds, your school must get your permission before it can disburse them. You may choose to decline some or all of the loan funds so that you don’t incur additional debt. Your school may automatically use all or a portion of your post-withdrawal disbursement of grant funds for tuition, fees, and room and board charges (as contracted with the school). The school needs your permission to use the post-withdrawal grant disbursement for all other school charges. If you do not give your permission (some schools ask for this when you enroll), you will be offered the funds. However, it may be in your best interest to allow the school to keep the funds to reduce your debt at the school.
There are some Title IV funds that you were scheduled to receive that cannot be disbursed to you once you withdraw because of other eligibility requirements.
If you receive (or your school or parent receive on your behalf) excess Title IV program funds that must be returned, your 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 school must return this amount even if it didn’t keep this amount of your Title IV program funds. If your school is not required to return all of the excess funds, you must return the remaining amount.
Any loan funds that you must return, you (or your parent for a Direct PLUS Loan) repay in accordance with the terms of the promissory note. That is, you make scheduled payments to the holder of the loan over a period of time.
Any amount of unearned grant funds that you must return is called an overpayment. The maximum amount of a grant overpayment that you must repay is half of the grant funds you received or were scheduled to receive. You do not have to repay a grant overpayment if the original amount of the overpayment is $50 or less. You must make arrangements with your school or the Department of Education to return the unearned grant funds.
The requirements for Title IV program funds when you withdraw are separate from any refund policy that your school may have. Therefore, you may still owe funds to the school to cover unpaid institutional charges. Your school may also charge you for any Title IV program funds that the school was required to return. If you don’t already know your school’s refund policy , you should ask your school for a copy. Your school can also provide you with the requirements and procedures for officially withdrawing from school.
If you have questions about your Title IV program funds, you can call the Federal Student Aid Information Center at 1-800-4-FEDAID (1-800-433-3243). TTY users may call 1-800-730-8913. Information is also available on Student Aid on the Web at www.studentaid.gov.