1. National Association of Student Financial Aid Administrators Presents… © NASFAA 2006 Return of Title IV Funds Module 12

2. Slide 12 - 2 © NASFAA 2006 Return of Title IV Funds Requirements Amount returned is based on the amount student did not earn Amount returned has no bearing on what a school sets as its refund policy Refund calculation is usually the process of calculating earned institutional charges Return of Title IV funds is the process of calculating earned and unearned Title IV aid

3. Slide 12 - 3 © NASFAA 2006 When Return of Title IV Funds Requirements Apply Requirements apply to a Title IV grant or loan recipient who withdraws or leaves school before completing the payment period or period of enrollment –“Title IV recipient” is defined in regulation Also apply to a student who withdrew and whose parent borrowed a PLUS

4. Slide 12 - 4 © NASFAA 2006 Withdrawal Date A school is required to take attendance if required by an outside entity A school that voluntarily takes attendance is not considered to be required to take attendance A school that is required to take attendance continuously for only a limited period (e.g., for census purposes) is considered to be required to take attendance for that limited time period only

5. Slide 12 - 5 © NASFAA 2006 Schools Required to Take Attendance The student’s withdrawal date is the last day of academic attendance as documented by the school’s records.

6. Slide 12 - 6 © NASFAA 2006 Schools Not Required to Take Attendance For a student who officially withdraws, the withdrawal date is the date on which the student: –Began the school’s official withdrawal process; or –Otherwise officially notified the school of his or her intent to withdraw

7. Slide 12 - 7 © NASFAA 2006 Schools Not Required to Take Attendance A school must: –Make its official withdrawal requirements known to students –Identify the office(s) to which the student provides notification of withdrawal –Demonstrate consistent application of its withdrawal process

8. Slide 12 - 8 © NASFAA 2006 Schools Not Required to Take Attendance If a student triggers both definitions of official withdrawal on different dates, the school must use the earlier of: –The date on which the student first notified the school of his or her intent to withdraw; or –The date on which the student actually began the withdrawal process School has the option to use the documented last date of an academically-related activity Slide 12-8

9. Slide 12 - 9 © NASFAA 2006 Examples of Academically-Related Activities Taking an exam Turning in a class assignment Participating in a tutorial, computer-assisted instruction, academic counseling, or academic advisement Attending a study group to which a student was assigned by the school

10. Slide 12 - 10 © NASFAA 2006 Schools Not Required to Take Attendance For a student who drops out without notification, the withdrawal date is: –The midpoint of the payment period or period of enrollment; or –At the school’s option, the documented last date of an academically-related activity The last date of an academically-related activity may be earlier or later than the midpoint

11. Slide 12 - 11 © NASFAA 2006 Leave of Absence A leave of absence (LOA) applies to a period for which academic attendance is a scheduled part of a student’s program School is not required to establish a LOA policy School’s policy must meet regulatory requirements to be an approved LOA for Title IV purposes A student who takes an unapproved LOA or fails to return from an approved LOA is considered to have withdrawn

12. Slide 12 - 12 © NASFAA 2006 Rescinding Official Withdrawal Notice A school may allow a student to rescind his or her withdrawal –Must be in writing –Must declare that he or she will finish the payment period or period of enrollment

13. Slide 12 - 13 © NASFAA 2006 Rescinding Official Withdrawal Notice If the student subsequently withdraws before finishing the period, the withdrawal date is either: –The date the student first began the withdrawal process or officially notified the school; or –The student’s last date of an academically- related activity

14. Slide 12 - 14 © NASFAA 2006 Example: Rescission of Withdrawal September 20: Alan notifies the school that he is withdrawing September 27: Alan rescinds the withdrawal and participates in a special tutoring session September 30: Alan fails an exam and again notifies the school that he is withdrawing

15. Slide 12 - 15 © NASFAA 2006 Example: Rescission of Withdrawal School may use as the withdrawal date: –September 30 based on documentation that Alan took exam –September 27, if Alan withdrew before the exam and the school can document attendance at the tutoring session School must use September 20, if no documentation of the last date of attendance in an academically-related activity

16. Slide 12 - 16 © NASFAA 2006 Unable to Begin Withdrawal Process If a student’s inability to officially withdraw is due to circumstances beyond his or her control, the school may establish the withdrawal date as a date that is related to the circumstance that caused the student to leave school

17. Slide 12 - 17 © NASFAA 2006 Return of Title IV Funds Formula Aids for calculating return of Title IV funds include: –NASFAA worksheets –Department of Education (ED) worksheets –ED Web-based application available via FAA Access to CPS Online –ED Return of Title IV Funds software, downloaded from: www.fsadownload.ed.gov/ReturnT4Funds.htm

18. Slide 12 - 18 © NASFAA 2006 Return of Title IV Funds Formula Step 1: Determine percentage of earned aid –Based on percentage of period completed –Calculation of this percentage is the only difference between credit-hour and clock-hour programs –Student who completed more than 60% of period has earned 100% of his or her Title IV aid for the period

19. Slide 12 - 19 © NASFAA 2006 Return of Title IV Funds Formula Step 2: Determine earned amount –Apply percentage completed to the amount of disbursed aid plus the amount that could have been disbursed –If amount disbursed equals the amount earned, no further action is required

20. Slide 12 - 20 © NASFAA 2006 Return of Title IV Funds Formula Step 2: Determine earned amount –If amount disbursed is greater than the amount earned, unearned Title IV funds must be returned –If amount disbursed is less than the amount earned, school must determine amount of post-withdrawal disbursement

21. Slide 12 - 21 © NASFAA 2006 Return of Title IV Funds Formula Step 3: Determine unearned amount –Disbursed aid minus earned aid

22. Slide 12 - 22 © NASFAA 2006 Return of Title IV Funds Formula Step 4: Determine school’s and student’s share for returning funds –School’s share determined first and is lesser of: Total unearned aid; or Amount equal to student’s institutional charges multiplied by unearned percentage –Student’s share is difference between total amount to be returned and school’s share

23. Slide 12 - 23 © NASFAA 2006 Return of Title IV Funds Formula Step 5: Allocate unearned aid back to the Title IV programs –Must follow allocation order (loans allocated ahead of grants) –50% grant protection applies to funds student must return to a Title IV grant program

24. Slide 12 - 24 © NASFAA 2006 Rounding Rule When calculating percentages: –Carry decimal to three places –Round third decimal place up one if fourth decimal place is 5 or higher Examples:.1775 = 17.8%. 1774 = 17.7%

25. Slide 12 - 25 © NASFAA 2006 Worksheet: Percentage Completed *Exclude scheduled breaks that are at least five consecutive days from the numerator and the denominator Days attended Days in period ______(1)* Percentage completed  =

26. Slide 12 - 26 © NASFAA 2006 Example: Percentage Completed for a Credit-Hour Program Semester: 1/4/07- 5/5/07 Federal holidays, no classes scheduled: 1/16/07 and 2/20/07 Spring break, no classes scheduled: 3/11/07 - 3/19/07, classes resume 3/20/07 Date of withdrawal: 3/30/07 Attended 77 days out of 113 days (include holidays, but exclude spring break) Percentage completed: 77  113 = 68.1%

27. Slide 12 - 27 © NASFAA 2006 Nonterm Credit-Hour Program If students progress at own pace, the ending date and number of days in the payment period will not be the same for all students School must project end date of the payment period based on student’s progress as of his or her withdrawal date Projected end date used to determine the number of days in the payment period

28. Slide 12 - 28 © NASFAA 2006 Example: Nonterm Credit-Hour Program 24-credit-hour nonterm program Student expected to complete 12 credit hours each payment period Student originally expected to complete each payment period in 15 weeks (105 days) Student withdraws on day 30 after completing 2 credit hours At current pace (2 credit hours every 30 days), project 150 additional days needed to complete the payment period, for a total of 180 days in the payment period

29. Slide 12 - 29 © NASFAA 2006 Percentage Completed: Clock-Hour Programs Clock hours at withdrawal Clock hours in period

30. Slide 12 - 30 © NASFAA 2006 Worksheet: Earned Aid Total (4) X % earned (1) = Earned aid (5)

31. Slide 12 - 31 © NASFAA 2006 Example: Amount Earned First-year, first-time student Enrolls 9/4/06 and withdraws 9/25/06 Percentage of period completed/earned = 20% Aid awarded for period: $1,900 Federal Pell Grant, $500 FSEOG, and $1,000 Federal Stafford Loan Only Federal Pell Grant and FSEOG disbursed

32. Slide 12 - 32 © NASFAA 2006 Example: Amount Earned Disbursed aid = $2,400 Aid that could have been disbursed = $1,000 Federal Stafford Loan $2,400 + $1,000 = $3,400 (Disbursed aid + Aid that could have been disbursed) x Percentage earned = Amount earned $3,400 x 20% = $680

33. Slide 12 - 33 © NASFAA 2006 Worksheet: Unearned Aid Total disbursed aid (2) – Earned aid (5) = Unearned aid to be returned (6)

34. Slide 12 - 34 © NASFAA 2006 Worksheet: Institution’s Share The institution’s share is the lesser of: –The total amount of unearned aid (item 6); or –An amount equal to the student’s institutional charges multiplied by the percentage of unearned aid (item 8). Unearned: 100% – _____________ = _________ (7) percentage % completed (1) % unearned Uncoverable: ____________ x __________ = ___________ (8) charges % unearned (7) Institutional Uncoverable charges charges

35. Slide 12 - 35 © NASFAA 2006 Example: Institutional Charges Student’s full-time tuition charges at the beginning of enrollment period = $2,500 Student’s half-time tuition charges at the end of add/drop period = $1,250 Student completely withdrew 3 weeks after the add/drop period

36. Slide 12 - 36 © NASFAA 2006 Example: Institutional Charges Use student’s reduced tuition charges based on school’s refund policy at the end of drop/add period Amount of tuition charges used in return of Title IV funds formula = $1,250 Do Not Use reduced institutional charges resulting from student’s withdrawal

37. Slide 12 - 37 © NASFAA 2006 Worksheet: Student’s Share of Unearned Aid Unearned aid (6) – Institution’s share (9) = Student’s share of unearned aid (10)

38. Slide 12 - 38 © NASFAA 2006 Allocating Unearned Funds School’s share –Fully allocate first –Return unearned aid in allocation order up to the full amount disbursed from the Title IV program

39. Slide 12 - 39 © NASFAA 2006 Allocating Unearned Funds Student’s share –Allocated among programs not already fully satisfied by the school’s share –50% grant protection applied to student’s unearned funds allocated to grant programs –Effective 7/1/06, student does not have to repay grant overpayments of $50 or less

40. Slide 12 - 40 © NASFAA 2006 Returning Unearned Funds Prior to 7/1/06, school has 30 days from the date of its determination that the student withdrew in which to return its share of unearned Title IV funds Effective 7/1/06, school has 45 days

41. Slide 12 - 41 © NASFAA 2006 Use of Payment Period or Period of Enrollment Payment period –Refers to standard term-based programs such as semesters, quarters, or trimesters Period of enrollment –Refers to nonstandard term and nonterm programs –Schools may base calculation of unearned aid on payment period or period of enrollment –Choice must be applied consistently for all students in an academic program except for transfer students or readmits

42. Slide 12 - 42 © NASFAA 2006 Proration of Institutional Charges If the school uses the payment period and institutional charges cover more than one payment period, the amount of institutional charges used to calculate the school’s share is the greater of: –The amount of Title IV funds the school retained for institutional charges; or –A prorated amount of institutional charges

43. Slide 12 - 43 © NASFAA 2006 Example: Proration of Institutional Charges School charges $6,000 up front for entire program Program consists of 2 payment periods $4,000 in Title IV funds applied to student’s account for the first payment period Student withdraws during the first payment period Student’s prorated charges: $6,000 ÷ 2 = $3,000 Because applied aid is larger than prorated charges, school must use applied aid to calculate the school’s share of earned aid

44. Slide 12 - 44 © NASFAA 2006 Post-Withdrawal Disbursements Earned aid > Disbursed aid = Post-withdrawal disbursement School may not deny post-withdrawal disbursement Grant funds must be used before loan funds for post-withdrawal disbursements

45. Slide 12 - 45 © NASFAA 2006 Post-Withdrawal Disbursements Example: –$1,500 post-withdrawal disbursement –Undisbursed aid = $1,000 Federal Pell Grant, $1,000 FSEOG, and $2,000 Federal Perkins Loan –Post-withdrawal disbursement must be made from grant funds

46. Slide 12 - 46 © NASFAA 2006 Post-Withdrawal Disbursements Example: –$1,500 post-withdrawal disbursement –Undisbursed aid = $1,000 Federal Pell Grant, $1,000 FSEOG, and $2,000 Federal Perkins Loan –Suppose student already received $500 Stafford Loan –School cannot use $500 remaining grant funds to replace previously disbursed loan proceeds

47. Slide 12 - 47 © NASFAA 2006 Post-Withdrawal Disbursements May credit post-withdrawal disbursement toward unpaid tuition, fees, and institutional room and board charges without student’s or parent’s (if a parent PLUS) authorization May credit post-withdrawal disbursement toward minor prior-year or other institutional charges with student’s or parent’s (if a parent PLUS) authorization

48. Slide 12 - 48 © NASFAA 2006 Post-Withdrawal Disbursements If school credits a loan to student’s account, it must notify the borrower of the disbursement and his or her right to cancel all or a portion of the loan School must disburse or offer, in writing, any portion of post-withdrawal disbursement not credited to student's account

49. Slide 12 - 49 © NASFAA 2006 Post-Withdrawal Disbursements Written post-withdrawal notification must: –Identify amount(s) and type(s) of funds –Explain that student or parent (in the case of parent PLUS) may accept all, a portion, or none of the funds –Indicate deadline for requesting post-withdrawal disbursement (at least 14 days from date of notification) –State that if response is received after the deadline, no post-withdrawal disbursement will be made unless school chooses to make it

50. Slide 12 - 50 © NASFAA 2006 Post-Withdrawal Disbursements If request for post-withdrawal disbursement received after the deadline and school chooses not to make the post-withdrawal disbursement, school must notify student, or parent in the case of a parent PLUS If borrower requests cancellation of post- withdrawal disbursement after the deadline, school is not required to cancel the post- withdrawal disbursement, but must notify borrower of outcome of cancellation request

51. Slide 12 - 51 © NASFAA 2006 Verification Process Not Completed Before Student’s Withdrawal If student has not provided required verification documentation within 30 days of date of school’s determination that student withdrew, school must: –Perform return of Title IV funds calculation for Title IV funds not subject to verification (i.e., unsubsidized Stafford Loan or PLUS certified or originated before student’s withdrawal) –Return any interim disbursement made to the student to Title IV programs

52. Slide 12 - 52 © NASFAA 2006 Verification Process Not Completed Before Student’s Withdrawal If student later provides required verification documentation before verification submission deadline, school must: –Complete verification and adjust aid as necessary –Perform new return of Title IV funds calculation for Title IV funds for which student: Established eligibility as a result of verification Met conditions for a late disbursement under 668.164(g)(2) before student’s withdrawal

53. Slide 12 - 53 © NASFAA 2006 Verification Process Not Completed Before Student’s Withdrawal If school is unable to offer any portion of post- withdrawal disbursement not credited to student’s account within 30 days of date of its determination student withdrew, school must: –Make offer as soon as possible; and –Provide minimum 14-day response period whenever possible Any post-withdrawal disbursement must be made within 120 days of the date of school’s determination that the student withdrew

54. Slide 12 - 54 © NASFAA 2006