Return of Title IV Funds (R2T4)

When a recipient of title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of title IV grant or loan assistance that the student earned as of the student’s withdrawal date in accordance with percentage of enrollment period or period of enrollment.

If the total amount of Title IV grant or loan assistance, or both, that the student earned is less than the amount of title IV grant or loan assistance that was disbursed to the student or on behalf of the student in the case of a PLUS loan, as of the date of the institution’s determination that the student withdrew the difference between these amounts must be returned to the title IV programs in accordance with return of unearned aid, responsibility of institutions and unearned aid, responsibility of the student and no additional disbursements can be made the student for the payment period or period of enrollment.

Federal regulations stipulate that students may forfeit a portion of their federal student financial assistance if they fail to complete the program of study in which they were enrolled. This policy affects students who:

a) received or were eligible to receive federal student financial assistance authorized under Title IV of the Higher Education Act (HEA), i.e., Federal Pell Grants, Federal SEOG awards, or Federal Direct Student Loan (FDSL) program funds,

and

b) who withdrew or were terminated from the institution during the first 60% of any payment period or period of enrollment.

Students will be considered to have withdrawn from their program of study on the date of their official notification
to the school of their intent to withdraw, or for unofficial withdrawals, after 14 consecutive calendar days of absence unless the student is on an approved leave of absence as otherwise stated in the institution’s policies. Eligible Title IV federal aid recipients whose last date of attendance is within the first 60% of a payment period or period of enrollment are considered to have earned federal aid only in an amount equal to the percentage of time that the student was enrolled during the payment period or period of enrollment. Accordingly, a required calculation will be performed to determine if federal aid that has not been earned by the student has been disbursed, in which case the unearned portion must be returned to the U.S. Department of Education, or if federal aid that has been earned by the student has not yet been disbursed, in which case the student may be entitled to a post‐ withdrawal disbursement of earned federal aid. This calculation will be done before a tuition refund calculation is performed in accordance with the institution’s refund policy. In many cases, any return of unearned Title IV funds will result in the student owing tuition and fees to the institution that would otherwise have been paid with federal student aid. Unearned Title IV, HEA funds that must be returned to the U.S. Department of Education will be returned first to Unsubsidized Direct Loans, followed by Subsidized Direct Loans, Direct PLUS Loans, Federal Pell Grant awards and lastly, to any Federal SEOG awards. Unearned funds to be returned to the U.S. Department of Education by the institution, and any unearned grant funds owed by the student, must be repaid within 45 days of the date the institution determined that a student has withdrawn. Unearned, Title IV funds owed by the student to a federal loan program must be repaid in accordance
with the repayment terms of the student’s loan.

In the event a student has earned federal aid in excess of the amount disbursed at the time of withdrawal, and is eligible to receive those funds, the school will process a post‐withdrawal disbursement of such earned funds to the student in accordance with federal regulations and allowances.

If a student earned more aid than was disbursed to him/her, the institution must send written notification to the
student (or parent for PLUS loan funds) to offer a post-withdrawal disbursement for any amount not credited to
the student’s account no later than 30 calendar days after the date that the school determines that the student
withdrew . The institution is required to make a post-withdrawal disbursement within 45 days of the student’s
date of determination that they withdrew for grants and 180 days of the student’s date of determination that they
withdrew for loans.

If outstanding charges exist on the students account, the institution may credit the student’s account with all or a
portion of the post withdrawal disbursement up the amount of outstanding charges.

The institution must disburse directly to a student any amount of a post-withdrawal disbursement of grant funds
that is not credited to the student’s account. The institution must make the disbursement as soon as possible, but
no later than 45 days after the date of the institution’s determination that the student withdrew.

The institution must offer to disburse directly to a student, or parent in the case of a parent PLUS loan, any amount
of a post-withdrawal disbursement of loan funds that is not credited to the student’s account.

The institution must make a direct disbursement of any loan funds that make up the post-withdrawal
disbursement only after obtaining the student’s, or parent’s in the case of a parent PLUS loan, confirmation that
the student or parent still wishes to have the loan funds disbursed.

The institution must provide within 30 days of the date of the institution’s determination that the student
withdrew a written notification to the student, or parent in the case of parent PLUS loan, that:

  • Requests confirmation of any post-withdrawal disbursement of loan funds that the institution wishes to
    credit to the student’s account identifying the type and amount of those loan funds and explaining that a
    student, or parent in the case of a parent PLUS loan, may accept or decline some or all of those funds
  • Requests confirmation of any post-withdrawal disbursement of loan funds that the student, or parent in
    the case of a parent PLUS loan, can receive as a direct disbursement, identifying the type and amount of
    these title IV funds and explaining that the student, or parent in the case of a parent PLUS loan, may
    accept or decline some or all of those funds;
  • Explains that a student, or parent in the case of a parent PLUS loan, who does not confirm that a post-
    withdrawal disbursement of loan funds may be credited to the student’s account may not receive any of those loan funds as a direct disbursement unless the institution concurs;
  • Explains the obligation of the student, or parent in the case of a parent PLUS loan, to repay any loan funds he or she chooses to have disbursed; and
  • Advises the student, or parent in the case of a parent PLUS loan, that no post-withdrawal disbursement of loan funds will be made, unless the institution chooses to make a post-withdrawal disbursement based on a late response, if the student or parent in the case of a parent PLUS loan, does not respond within 14 days of the date that the institution sent the notification, or a later deadline set by the institution.

The deadline for a student, or parent in the case of a parent PLUS loan, to accept a post-withdrawal disbursement
must be the same for both a confirmation of a direct disbursement of the post-withdrawal disbursement of loan
funds and a confirmation of a post-withdrawal disbursement of loan funds to be credited to the student’s account.

If the student, or parent in the case of a parent PLUS loan, submits a timely response that confirms that they wish
to receive all or a portion of a direct disbursement of the post-withdrawal disbursement of loan funds, or confirms
that a post-withdrawal disbursement of loan funds may be credited to the student’s account, the institution must
disburse the funds in the manner specified by the student, or parent in the case of a parent PLUS loan, as soon as
possible, but no later than 180 days after the date of the institution’s determination that the student withdrew.

If a student, or parent in the case of a parent PLUS loan, submits a late response to the institution’s notice requesting confirmation, the institution may make the post-withdrawal disbursement of loan funds as instructed
by the student, or parent in the case of a parent PLUS loan (provided the institution disburses all the funds
accepted by the student, or parent in the case of a parent PLUS loan), or decline to do so.

If a student, or parent in the case of a parent PLUS loan, submits a late response to the institution and the
institution does not choose to make the post-withdrawal disbursement of loan funds, the institution must inform
the student, or parent in the case of a parent PLUS loan, in writing of the outcome of the post-withdrawal
disbursement request.

If the student, or parent in the case of a parent PLUS loan, does not respond to the institution’s notice, no portion
of the post-withdrawal disbursement of loan funds that the institution wishes to credit to the student’s account,
nor any portion of loan funds that would be disbursed directly to the student, or parent in the case of a parent
PLUS loan, may be disbursed.

An institution must document in the student’s file the result of any notification made of the student’s right to
cancel all or a portion of loan funds or of the student’s right to accept or decline loan funds, and the final
determination made concerning the disbursement.

If a credit is caused by a Direct Loan, the institution must notify the student or parent in the case of PLUS loan
providing an opportunity for the borrower to cancel all or a portion of the loan.

Should a credit occur from any amount of a post withdrawal disbursement that is not credited to the student’s
account, the student or parent in the case of PLUS loan must be provided written notification within 30 days of the
institution’s determination that the student withdrew.

The written notification must include the following:

  • Identify the type and amount of Title IV Funds that make up the post withdrawal disbursement that is not credited to the student’s account
  • Explain the student or parent that they may accept or decline some or all of the post withdrawal disbursement that is not credited to the students account.
  • Advise the student or parent that no post withdrawal disbursement will be made to the student or parent if the student or parent does not respond within 14 days of the date that the institution sent the notification unless the institution chooses to make a post withdrawal disbursement for any charges outstanding on the student’s account

A post-withdrawal disbursement must be made from available grant funds before available loan funds

Calculation of the amount Title IV Assistance Earned by the Student

The amount of title IV grant or loan assistance that is earned by the student is calculated by:

    • determining the percentage of title IV grant or loan assistance that has been earned by the student which
      is based on the percentage equal to the payment period or period of enrollment that the student completed as of the student’s withdrawal date, if this date occurs on or before completion of 60% of the
      enrollment period.

and

  • applying this percentage to the total amount of title IV grant or loan assistance that was disbursed (and
    that could have been disbursed) to the student, or on the student’s behalf, for the payment period or period of enrollment as of the student’s withdrawal date.

Example of Return of Unearned Funds Calculation

Clock Hour Institutions

Payment Period Length

450 Clock Hours

Title IV Federal Aid Awarded for Payment Period

$6,000.00

Student’s Scheduled Hours of Attendance as of Withdrawal Date

150 Clock Hours

 

In this brief example $6,000 of federal financial aid was awarded to a student for a 450 hour period of training. The student withdrew from school after only 150 scheduled hours of attendance (example: the student was scheduled to attend 30 hours per week and withdrew at the end of the 5th week of enrollment). Accordingly, this student was enrolled for 33.3% (150/450) of the 450 hour payment period. Since the student was enrolled for only 33.3% of the payment period, only 33.3% of the federal aid was earned by the student. The remaining 66.7% of the aid that has not been earned must be returned to the U.S. Department of Education. In this case $4,000 (66.7%) of the original aid awarded must be returned and only the $2,000 (33.3%) of earned federal aid may be applied to the student’s educational costs. A similar calculation is performed for all federal aid recipients who withdraw from school during the first 60% of the period of time for which monies were awarded. Once a student has been enrolled for more than 60% of the payment period, all of the federal aid that has been awarded for that period is considered to be fully earned.

Calculation of amount of Title IV Assistance earned by the student if the student withdrawal occurs after
completion of 60% of the clock hours scheduled to be completed for payment period or period of enrollment for
the program:

  • Percentage Unearned- The percentage of the Title IV Grant or loan assistance that has not been earned by the student is calculated by determining the completion of the percentage of Title IV Grant or loan assistance earned by the student
  • Total Amount of Unearned Title IV Assistance to be returned-the unearned amount of Title IV assistance to be returned is calculated by subtracting the amount of Title IV assistance earned by the student which is calculated based on the percentage of title IV grant or loan assistance that has been earned by the student
  • Use of payment period or period of enrollment- The treatment of Title IV grant or loan funds if a student withdraws must be determined on payment period basis for a student who attended a standard semester in an educational program

 

PCCTI must consistently use either a payment period or period of enrollment for all purposes of this section
for each of the following categories of students who withdraw from the same non-term based or nonstandard
term-based educational program:

 

  • Students who have attended an educational program at the institution from the beginning of the payment period or period of enrollment.
  • Students who re-enter the institution during a payment period or period of enrollment.
  • Students who transfer into the institution during a payment period or period of enrollment.

Percentage of payment period or period of enrollment completed

The percentage of the payment period or period of enrollment completed is determined by dividing the total number of clock hours in the payment period or period of enrollment into the number of clock hours scheduled to be completed as of the student’s withdrawal date. The scheduled clock hours used must be those established by the institution prior to the student’s beginning class date for the payment period or period of enrollment and must be consistent with the published materials describing the institution’s programs, unless the schedule was modified.

 

prior to the student’s withdrawal. The schedule must have been established in accordance with requirements of
the accrediting agency and the State licensing agency, if such standards exist.

 

The total number of calendar days in a payment period or period of enrollment includes all days within the period
that the student was scheduled to complete, except scheduled breaks of at least five consecutive days are
excluded from the total number of calendar days in a payment period or period of enrollment and the number of
calendar days completed in that period.

The total number of calendar days in a payment period or period of enrollment does not include days in which the
student was on an approved leave of absence or for a payment period or period of enrollment in which any
courses in the program are offered in modules, any scheduled breaks of at least five consecutive days when the
student is not scheduled to attend a module or other course offered during that period of time.

Return of unearned aid, responsibility of the institution.
The institution must return, in the order specified below the lesser of:

  • The total amount of unearned title IV assistance to be returned as calculated based on the total amount of unearned title IV assistance to be returned
  • An amount equal to the total institutional charges incurred by the student for the payment period or period of enrollment multiplied by the percentage of title IV grant or loan assistance that has not been earned by the student the percentage unearned

Return of unearned aid, responsibility of the student.
The student (or parent in the case of funds due to a PLUS Loan) must return or repay, as appropriate:

  • Any title IV loan program in accordance with the terms of the loan; and
  • The portion of a grant overpayment amount that is equal to or less than 50 percent of the total grant assistance that was disbursed (and that could have been disbursed) to the student for the payment period or period of enrollment.

A student who owes an overpayment remains eligible for title IV, HEA program funds through and beyond the
earlier of 45 days from the date the institution sends a notification to the student of the overpayment, or 45 days
from the date the institution was required to notify the student of the overpayment if, during those 45 days the
student:

  • Repays the overpayment in full to the institution;
  • Enters into a repayment agreement with the institution in accordance with repayment arrangements satisfactory to the institution; or
  • Signs a repayment agreement with the Secretary, which will include terms that permit a student to repay
    the overpayment while maintaining his or her eligibility for title IV, HEA program funds.

Within 30 days of the date of the institution’s determination that the student withdrew, an institution must send a
notice to any student who owes a title IV, HEA grant overpayment as a result of the student’s withdrawal from the institution in order to recover the overpayment.

If an institution chooses to enter into a repayment agreement with a student who owes an overpayment of title IV,
HEA grant funds, it must:

  • Provide the student with terms that permit the student to repay the overpayment while maintaining his
    or her eligibility for title IV, HEA program funds; and
  • Require repayment of the full amount of the overpayment within two years of the date of the institution’s
    determination that the student withdrew.

An institution must refer to the Secretary, when an overpayment of title IV, HEA grant funds owed by a student
occurs as a result of the student’s withdrawal from the institution if:

  • The student does not repay the overpayment in full to the institution, or enter a repayment agreement with the institution within the earlier of 45 days from the date the institution sends a notification to the student of the overpayment, or 45 days from the date the institution was required to notify the student of the overpayment;
  • At any time the student fails to meet the terms of the repayment agreement with the institution; or
  • The student chooses to enter into a repayment agreement with the Secretary.

A student who owes an overpayment is ineligible for title IV, HEA program funds:

  • If the student does not meet the requirements on the day following the 45-day period; or
  • As of the date the student fails to meet the terms of the repayment agreement with the institution or the Secretary

A student who is ineligible regains eligibility if the student and the Secretary enter into a repayment agreement.

The Secretary may waive grant overpayment amounts that students are required to return under this section if the
withdrawals on which the returns are based are withdrawals by students—

  • Who were residing in, employed in, or attending an institution of higher education that is located in an
    area in which the President has declared that a major disaster exists, in accordance with section 401 of
    the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170);
  • Whose attendance was interrupted because of the impact of the disaster on the student or institution; and
  • Whose withdrawal occurred within the award year during which the designation occurred or during the next succeeding award year.

Order of return of title IV funds

  • Loans.
    • Unearned funds returned by the institution or the student 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:

      • Unsubsidized Federal Stafford loans. (If applicable)
      • Subsidized Federal Stafford loans. (If applicable)
      • Unsubsidized Federal Direct Stafford loans.
      • Subsidized Federal Direct Stafford loans.
      • Federal Perkins loans. (If applicable)
      • Federal PLUS loans received on behalf of the student.
      • Federal Direct PLUS 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:

      • Federal Pell Grants.
      • Federal SEOG Program aid.
      • Other grant or loan assistance authorized by title IV of the HEA.
  • Timeframe for the return of title IV funds.

    An institution must return the amount of title IV funds for which it is responsible as soon as possible but no later
    than 30 days after the date of the institution’s determination that the student withdrew.

    An institution must determine the withdrawal date for a student who withdraws without providing notification to
    the institution no later than 30 days after the end of the earlier of the:

  • Payment period or period of enrollment, as appropriate;
  • Academic year in which the student withdrew; or;
  • Educational program from which the student withdrew.

Determination of Student Withdrawal

Students may officially withdraw from their training at the institution by submitting a notice of withdrawal to a
school administrator. The notice should include your anticipated last date of attendance at the school and may be
submitted in hard copy format or by email to a school official. For students who officially withdraw from the institution, your last date of attendance will be your withdrawal date as well as the date that the institution determined you to have withdrawn.

Students may also be considered to have unofficially withdrawn from the institution. An unofficial withdrawal is
deemed to have occurred when a student has failed to attend classes as scheduled for 14 consecutive calendar
days. The 14-day period does not include periods of leave of absence or scheduled school breaks of 5 or more
days. In most cases if a student ceases attending class and does not officially withdraw, the student will be
considered to have withdrawn from the institution on the 14th calendar day of absenteeism.

If a student has obtained an approved leave of absence and fails to return to classes as scheduled, the student will
be considered to have withdrawn from the institution as of the date that the student was expected to return to
classes. In all cases, your “withdrawal date”, which is the date used to determine the percentage of time enrolled,
is the student’s last physical date of attendance at the institution.

Withdrawal Date

For a student who ceases attendance at an institution that is required to take attendance including a student who
does not return from an approved leave of absence or a student who takes a leave of absence that does not meet
the requirements, the students withdrawal date is the last date of academic attendance as determined by the
institution from its attendance records.

An institution must document a student’s withdrawal date maintain the documentation as of the date of the
institution’s determination that the student withdrew.

Student Responsibilities

It is the student’s responsibility to notify the Financial Aid Office if he or she is a financial aid recipient and
withdraws from all classes at any point during the term. If students withdraw from all classes at any point during
the semester, the Financial Aid Office will determine whether they are eligible for a cancellation of charges for
tuition and mandatory fees; and, if so, the correct payment of the refund to the various financial aid programs,
beginning with federal loans.

It is to a student’s benefit to immediately notify the Registrar and the Financial Aid Office when he or she stops
attending classes with the intent to withdraw.

If students or parents received funds under federal or school loan programs, it is their responsibility to notify the
lender or holder of loans that they are no longer enrolled on at least a half-time basis. Student borrowers of
federal or school loans must also satisfy exit loan counseling requirements.

Cancellation of Charges

In addition to the school refund policy, students who are recipients of Title IV federal financial aid are also covered
by federal refund policies. The federal refund policy provides for a prorated cancellation of institutional costs
proportional to the duration of student enrollment only in cases where the student withdraws from all classes. For
example, students who withdraws from all classes 50 percent of the way through the semester may be entitled to
a 25 percent cancellation of charges for institutional costs if they are continuing students, or a 50 percent cancellation of charges if they are new students. As Title IV federal financial aid recipients, students are entitled to a cancellation of charges under the policy, school or federal, that provides for the largest refund to the federal
financial aid programs from which they received funds.

Title IV Federal Financial Aid

Students are considered recipients of Title IV federal financial aid if they have used funds from one or more of the
following programs to meet educational expenses for the semester in question: Federal Stafford Loan (Subsidized
and Unsubsidized), Federal PLUS Loan, Federal Perkins Loan, Federal Pell Grant, Federal Supplemental Equal
Opportunity Grant (FSEOG), and Federal Work Study.

Institutional Costs

Institutional costs include charges for tuition and mandatory fees.

Refunds and Repayment

If the school cancels charges for tuition and fees and other institutional costs under either the school refund policy
or one of the federal refund policies, and students used Title IV federal financial aid funds to help cover those
costs, the financial aid office will calculate the amount of the refund to the financial aid programs.
The amount refunded to financial aid programs will be reduced by any unpaid institutional costs remaining on the
student account for new students who completely withdraw before or on the 60 percent point in time for the
period of enrollment. If students have a large billing balance at the time of withdrawal, it is possible that no
refunds will be made to the financial aid programs and they may continue to owe the school for unpaid
institutional and non-institutional costs. It is also possible that once the refund payments have been made, they
will owe the school for unpaid non-institutional costs, such as health insurance, phone service and other similar
charges.

The amount refunded to financial aid programs will not be reduced by any unpaid charges for continuing students
who completely withdraw on or before the 50 percent point in time. As a result, if they are carrying a billing
balance at the time of withdrawal, they may still be liable for unpaid institutional costs as well as any non-
institutional costs.

If students and/or their parents made payments to their account in addition to the financial aid funds, it is possible
they and/or their parents may receive a refund after the financial aid programs (including state and university
programs) have been duly refunded and if no outstanding charges remain on the student account.

TREATMENT OF TITLE IV FUNDS WHEN A STUDENT WITHDRAWS / IS DROPPED FROM A CLOCK HOUR SCHOOL

The Financial Aid Office is required by federal statute to calculate the percentage of earned Title IV Funds received
or pending to be received and to return the unearned funds for a student who withdrew, was terminated or failed
to return from an approved leave of absence. If a student fails to return from a Leave of Absence the Date of Withdrawal is the last day the student attended class before the Leave began. Recalculation is based on the percentage of earned aid using the following Federal Return of Title IV funds formula:

Percentage of aid earned = the number of scheduled hours in the payment period completed up to the student’s
last date of attendance as per the school’s attendance records, divided by the total clock hours in the payment
period.

If this percentage is greater than 60%, the student earns 100% of the disbursed Title IV funds or aid that could have
been disbursed.

If this percentage is less than 60%, then the percentage earned is equal to the calculated value.
Funds are returned to the appropriate federal program based on the percent of unearned aid using the following
formula:

Aid to be returned = (100% minus the percent earned) multiplied by the amount of aid disbursed toward
institutional charges. If a student earned less aid than was disbursed, the institution would be required to return a
portion of the funds and the student may be required to return a portion of the funds. All Title IV funds that the
institution must return will be made no later than 45 calendar days after the date the school determines that the
student withdrew.

When Title IV funds are returned, the student may owe a balance to the institution.
PCCTI is required to complete Return of Title IV Funds (R2T4) for any student who fails to earn a passing grade in
any semester completed or withdrawn. The institution must determine the amount of title IV grant or loan
assistance that the student earned as of the student’s last date of attendance in accordance with percentage of
enrollment period or period of enrollment.

Consumer Information.

An institution must provide students with information about the requirement of Return of Title IV Funds.

Definitions.

  • A “period of enrollment” is the academic period established by the institution for which institutional charges are generally assessed (i.e. length of the student’s program or academic year)
  • The “date of the institution’s determination that the student withdrew” –
  • For a student who provides notification to the institution of his or her withdrawal, the student’s
    withdrawal date as determined under paragraph (c) of this section or the date of notification of
    withdrawal, whichever is later;
  • For a student who did not provide notification of his of her withdrawal to the institution, the date that the
    institution becomes aware that the student ceased attendance;