Return of Title IV Funds: Solving the Mystery Ann Marie Gruber Lakeland Community College

What is R2T4? Return of Title IV Funds Calculation to determine what Title IV aid a recipient has earned upon total withdrawal and what if any aid must be returned and by whom Separate from the institution’s and state’s refund policy Must inform students of all refund policies (including R2T4) as well as the requirements and procedures to begin the withdrawal process from the school

When Does R2T4 Apply? Recipient of Title IV aid ceases enrollment after beginning attendance but before the end of the enrollment period (POE) or payment period (PP) Does not apply to students who reduce their course load (change in enrollment status not a withdrawal) Up through the 60% point of the PP or POE Still must complete calculation if after 60% point to determine if post-withdrawal disbursement is required

Higher Education Reconciliation Act of 2005 (HERA) Changes implemented that effect R2T4 Different rules… – students who withdrew before July 1, 2006 – students who withdraw after July 1, 2006

Completing the Calculation Worksheets provided by the Department of Education available at

Completing the Calculation Web product available through FAA Access to CPS Online at

Completing the Calculation PC version of the R2T4 software was archived on June 1, 2006 and cannot be used for calculations for students who withdrew after July 1, Still available at

After the Calculation…. If amount of aid the student earns is less than what was disbursed, funds must be returned to the programs If amount of aid the student earns is more than what was disbursed, the student is eligible for a post-withdrawal disbursement provided they were eligible for the aid at the time they withdrew

Date Institution Determines Student Withdrew Point in time institution could reasonably be aware that student withdrew Not necessarily same as date of withdrawal but could be Sets the clock for when schools must take action –45 days to offer PWD and/or return their portion of unearned aid (new-was 30 days prior to July 1, 2006)

Determining Date of Withdrawal For schools not required to take attendance: –date student begins the formal withdrawal process –date student provided intent to WD –date institution becomes aware student ceased attendance –midpoint if student stops attending without notifying anyone (must be determined within 30 days of end of payment period, academic year or student’s educational program, whichever is earlier) –beginning date of Leave of Absence (LOA) for a student who does not return from LOA –last date of academically related activity (taking exam, completion of paper, etc.); must be able to document attendance

Determining Date of Withdrawal For schools not required to take attendance: –date of illness, accident, or events beyond student’s control that prevented them from notifying the school of their withdrawal –for student who fails all courses, school must have procedure for determining if student completed and failed all or at least one course or they unofficially withdrew (school then uses midpoint of PP or POE or last date of academically related activity

Determining Date of Withdrawal For schools required to take attendance (only schools required to take attendance by an outside entity even if is for a limited time*): –date student begins official withdrawal process –the last recorded date of attendance from the institution’s attendance record –if school is required to take attendance for a limited time and student withdraws after that date, the school would calculate the WD date same as a school not required to take attendance would * schools required to take attendance on only one date of the term (census date) are not considered to be required to take attendance

Payment Period (PP) or Period of Enrollment (POE) Standard term based programs (semesters, quarters, trimesters)-use PP Non-standard term-based or non term- based program-school has choice of using either POE or PP, but must use same in all it’s calculations for all student within the program who withdraw

The Calculation…Disbursed Aid Aid is considered disbursed aid if it is disbursed as of the WD date as determined by the institution For loans funds, use net amount Do not include inadvertent overpayments (example: funds paid to student who withdrew prior to disbursement-count as aid that could have been disbursed) Do not include Federal Work Study

The Calculation…Aid That Could Have Been Disbursed Aid that could have been disbursed but had not yet been disbursed All aid for period if conditions for late disbursement were met before student withdrew –Official EFC from a processed ISIR –Institution certified FFEL or Direct Loan –Federal Perkins or FSEOG-institution made the award to the student

The Calculation…Aid That Could Have Been Disbursed (but school is prohibited from disbursing) Second or subsequent disbursements of FFEL or Direct Loan funds unless student has graduated or successfully completed program Disbursement of FFEL or DL to first-year first-time borrower who withdraws before the 30 th day of program For clock-hour or credit-hour non term programs, Federal Pell Grant funds for a subsequent payment period that institution is prohibited from making because student did not complete earlier payment period Disbursements of Federal Pell Grant funds to a student for whom institution has processed ISIR but not a valid (all information on ISIR is correct) EFC by deadlines ie student has submitted all verification documents to school but valid ISIR not received as of date of calculation

The Calculation…What Not to Count in Aid Disbursed or That Could Have Been Disbursed Stafford Loans for which an MPN has not been signed* Federal Perkins Loan for which an MPN has not been signed* Title IV funds subject to verification (even those where an interim disbursement has been made) and student has not submitted required documents** *Student can sign note between time they withdraw and the calculation is complete (effective DC 05-16) ** If student submits verification documents after initial R2T4 calculation but before established verification deadlines, the calculation must be redone

The Calculation…Percentage of Aid Earned Calendar days completed (determined by withdrawal date) divided by calendar days in period Exclude institutionally scheduled breaks of 5 or more consecutive days For clock hours schools, scheduled hours are used to determine % completed (new) Students who withdraw after the 60% point earn 100% of their aid (still must do calculation to make sure a post-withdrawal disbursement is not necessary)

The Calculation…Aid to be Disbursed or Returned??? If aid disbursed = amount earned –no further action needed Amount of aid disbursed > amount earned –unearned portion must be returned to the programs Amount of aid disbursed < amount earned –post-withdrawal disbursement required

Amount of aid disbursed >amount earned Subtract amount of earned aid from amount that was actually disbursed (not including aid that could have been disbursed) School must return the lesser of: –amount of Title IV aid student does not earn or –amount of institutional charges (tuition, fees, room and board if contracted with the school initially charged to the student even if paid by other sources) that student incurred for the PP or POE multiplied by percentage of funds that was not earned

Order of Funds to be Returned by the School Unsubsidized FFEL/Direct Stafford Loan Subsidized FFEL/Direct Stafford Loan Perkins Loan FFEL/PLUS (graduate students) FFEL/Direct PLUS (parents) Federal Pell Grant Academic Competitiveness Grant National SMART Grant FSEOG

Return of Funds by the School School must return funds within 45 days of date institution determined student withdrew (was 30 days prior to July 1, 2006)

Return of Funds by the Student Student must return all unearned funds that the school is not required to return in same order as the school School could opt to return grant funds for the student and then collect from student or Student returns their portion

Return of Funds by the Student How student returns their portion –repaying grant overpayment not to exceed half of the total TIV grant funds –student must repay or make satisfactory overpayment arrangements (with school or DOE) within 45 days of being notified of owing overpayment to remain eligible for aid school is responsible for notifying student they owe overpayment within 45 days of determining student withdrew no need to repay if less than $50 (new-was $25 prior to July 1, 2006) –return loan funds in accordance with the terms of the loan

Amount of aid disbursed<amount earned Post-withdrawal disbursement (PWD) is due Must meet current conditions for late disbursement School credits student account for allowable incurred costs with PWD funds up to outstanding charges School must get student’s or parent’s signature to credit account for charges other than tuition, fees, room and board (if contracted by the school)

Amount of aid disbursed<amount earned (PWD) School is required to offer PWD in excess of what used to pay allowable charges to student no later than 45 days after the date the school determines that the student withdrew (must identify type and amount of aid and indicate student or parent’s right to decline all or part of award) Student or parent given 14 days from date of notification to accept PWD or school can choose not to make PWD PWD must be made no later than 120 days of determination student withdrew Has no relationship to incurred costs No PWD for a deceased student can be made

Amount of aid disbursed<amount earned (PWD) New (as of July 1, 2006)… School is required to contact a withdrawn student prior to making PWD of loan funds and explain their obligation to repay the funds School must document outcome of the contact

Credit Balances and R2T4 if student has credit balance at time they withdraw, do not issue refund to student or return funds to program until calculation is complete may go past the 14 days to issue credit balance, but still compliant if within 45 days to do calculation after the calculation is complete, must pay any remaining credit balance per cash management rules (14 days)

Other R2T4 Changes Due to HERA Funds no longer included in calculation are LEAP, SLEAP, GEAR UP or SSS Institution may grant more than one leave of absence to a student

Questions???

Example: Classes started Student Withdrew with documented attendance in 12 credit hours Eligible for $2025 in Federal Pell Grant Original institutional charges= $ Earned 3.6% (4 days out of 112) of aid=$72.90

Unearned aid (amount to be returned) = $ ( 96.4% x $2025) Unearned aid for school to return = $ ($ x 96.4%) Unearned aid for student to return = $ ($ – $ ) Under new laws, student not required to return their portion because not more than 50% of original grant amount of $2025

Under new regulations Pell award amount is $ ($ ) Under new regulations Pell award amount is $ ($ ) Under old law, student would be required to return 50% of amount they owe or $ (50% x $853.09) Pell award amount under old regulations = $ with the student owing an overpayment of $ (total Pell of $ once student repays)