Federal law requires schools to calculate how much federal financial aid you have earned if you:
- completely withdraw, or
- stop attending before completing the semester, or
- do not complete all modules (courses which are not scheduled for the entire semester) for which you registered, unless you successfully complete at least six credits or successfully complete courses which comprise 49% or more of the total number of days in the semester (not counting breaks of five days or more or breaks between modules)
This calculation is not required if you have completed the graduation requirements for your program at the time of withdrawal.
Based on this calculation, students who receive federal financial aid and do not complete their classes during a semester could be responsible to repay a portion of the aid they received.
Federal financial aid covered under this regulation includes the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Direct loans, and Federal Direct Parent PLUS loans. State grant and scholarship programs are not covered under this regulation but follow the College’s institutional refund policy.
How is the financial aid that is earned by the student calculated?
Students who receive federal financial aid must “earn” the aid they receive by staying enrolled in and attending their classes. The amount of federal financial aid assistance the student earns is determined on a pro-rated basis. Students who withdraw or do not complete all registered classes during the semester may be required to return some of the financial aid they were awarded.
For example, if you complete 30 percent of the payment period, you earn 30 percent of the aid you were originally scheduled to receive. This means that 70 percent of your scheduled awards remain unearned and must be returned to the federal government. Once you have completed more than 60 percent of the payment period, you earn all of your federal financial aid.
The following formula is used to determine the percent of unearned aid that has to be returned to the federal government:
The percent earned is equal to the number of calendar days completed up to the withdrawal date, divided by the total calendar days in the payment period (less any scheduled breaks that are at least 5 days long).
The payment period for most students is the entire semester. However, for students enrolled in modules (courses which are not scheduled for the entire semester), the payment period only includes those days for the module(s) in which the student is registered.
The percent unearned is equal to 100 percent minus the percent earned.
What is the withdrawal date?
The withdrawal date used in the return calculation of a student’s federal financial aid is the actual date the official drop form is processed by the Records Office or Student Service Center. If a student stops attending classes without notifying the College, the withdrawal date will be the midpoint of the semester or the last date of recorded attendance in class.
Who returns the unearned federal funds?
The College and the student are both responsible for returning unearned federal financial aid to the federal government. Amounts that must be returned will be applied in the following order: Federal Direct Unsubsidized Loan, Federal Direct Subsidized Loan, Federal Direct Parent PLUS loan, Federal Pell Grant, Federal Supplemental Educational Opportunity Grant. The College must return the lesser of 1) the total amount of unearned aid or 2) institutional charges multiplied by the unearned percentage. The student must return any remaining unearned aid not sent back by the College.
The student also will be billed for any amount due the College resulting from the return of federal aid funds that were used to cover tuition and fees. For example, if the College is required to pay back to the government federal funds used to pay a portion of a student’s tuition for the semester, the student then must pay the College for that unpaid portion of their tuition.
How do students repay the unearned funds?
The Owens Office of Financial Aid will notify students if they owe federal funds back to the government. Amounts that must be returned by the student will first be applied to federal loans. The student will be permitted to repay loans based on the terms of the Master Promissory Note, which usually consists of scheduled payments to the holder of the loan over a period of time. Any grant amounts the student has to return to the federal government must be repaid within 45 days after the student receives notification from the Office of Financial Aid. If the grant overpayment cannot be paid in full, a satisfactory repayment plan may be arranged with the U.S. Department of Education.
If the student owes any money to the College resulting from the return of federal funds used to cover tuition and fees, the student will be billed by the Owens Office of Student Accounts.
What happens if students don’t repay?
If a student does not repay the grant funds that are owed to the government within the 45 days, the account will be turned over to the U.S. Department of Education as an overpayment of federal funds. Students who owe an overpayment of Title IV funds are ineligible for further disbursements from the federal financial aid programs at any institution until the overpayment is paid in full or payment arrangements are made with the U.S. Department of Education.
If a student does not pay funds due to the College to cover a tuition and fees balance that resulted after the College returned their unearned portion of the federal funds, the student’s records will be placed on financial hold. This means you will not be permitted to register for classes (or, in some cases, remain enrolled) or receive transcripts until your balance is paid.
What if the student is eligible for additional funds?
The Owens Office of Financial Aid will notify students if additional federal funds can be disbursed. This is called a “post-withdrawal disbursement.” Federal grants will automatically be applied towards the student’s account within 45 days of determining that the student withdrew. Federal Direct Loans must be accepted within 14 days of the notice; otherwise the loan funds will be cancelled. Students who are serving active duty or qualifying National Guard Service, or reside or work in a declared disaster area may have additional time to respond; please contact the Student Service Center. If the Federal Direct Loan post-withdrawal disbursement offer is accepted by the deadline, Owens will make the disbursement within 180 days of determining that the student withdrew.
Return of Title IV Funds Policy Example
The following example illustrates how the federal Return of Title IV Funds policy would affect a student who withdraws from classes at Owens Community College:
A student is attending Fall Semester full-time, which is 104 calendar days in length. Classes are scheduled for the entire semester. The student withdraws from classes on the 26th day of the semester.
The student’s financial aid and charges are:
| Federal Pell grant | $3,698.00 |
| Federal Direct Subsidized Loan | +2,750.00 |
| Total Financial Aid awarded | $6,448.00 |
| Tuition and fees (institutional charges) |
($3,070.00) |
| Financial aid refund disbursed to student after tuition and fees are paid | $3,378.00 |
Percentage of federal financial aid earned
The student withdrew from classes on the 26th day of the semester. This number is divided by the 104 calendar days for which the student’s classes were scheduled. The result is the percentage of aid earned.
| Completed days | 26 |
| Total days in payment period | ÷ 104 |
| = Percentage of aid earned | 25% |
Amount of federal financial aid earned
Multiply the percentage of aid earned by the total financial aid awarded to determine the amount of aid earned.
| Percentage of aid earned | 25% |
| Total Financial Aid awarded | x $6,448.00 |
| Aid earned based on completion | $1,612.00 |
Amount of federal aid to be returned
Subtract the amount of aid earned from the total financial aid awarded to determine the amount of financial aid that must be returned.
| Total Financial Aid awarded | $6,448.00 |
| Aid earned based on completion | – $1,612.00 |
| Financial Aid to be returned | $4,836.00 |
Of the $4,836.00 that must be returned to the Department of Education:
To determine the amount the college must return, compare the following amounts:
1.) The total amount of unearned aid is $4,836.00.
2.) The institutional charges of $3,070.00, multiplied by the unearned percentage of 75% is $2,302.50.
The college must return the lesser of these two, which is $2,302.50. The remainder is the student’s portion.
| College returns (student repays Owens) |
$2,302.50 |
| Student’s portion | $2,533.50 |
Funds are returned to loan programs first and then grant programs.
The college would return $2,302 to the Federal Direct Subsidized Loan program, creating a balance on the student’s Owens account. The student is responsible for paying their Owens balance of $2,302.
The student’s portion to return is calculated as $2,533.50. The student’s remaining loan for the semester is applied towards this amount first. Because the college returned $2,302, the student’s loan for the semester has been reduced to $448, which the student repays to the U.S. Department of Education in accordance with the terms of the Master Promissory Note (by beginning payments six months after graduation or dropping below six credit hours.)
The remaining balance of $2,085.50 is from the Federal Pell Grant program. The actual amount which the student must return to the U.S. Department of Education for the grant programs is reduced by 50% of the original grant amount ($3,698 x 50% = $1,849). The amount remaining after this Title IV grant protection is applied is $236.75. The student is not responsible for returning funds to the grant programs that are under $50.00. Therefore, the student in this example would be required to return funds to the Federal Pell Grant program.
Student portion to be returned
| Student portion | $2,533.50 |
| Loan returned during repayment | – 448.00 |
| Student still needs to return | $2,085.75 |
| 50% Title IV grant protection | – 1,849.00 |
| Grant amount remaining | $236.75 |
All information is subject to change based on changes to federal law, regulation, or College policy and procedure. If changes are made, students must abide by the new policy.