Return of Title IV Funds/Institutional Refund Policy
The regulations are concerned only with the amounts of Title IV aid a student received/could have received and earned. Nonfederal aid is not included in the calculation. First-time students are not treated differently from returning students. One calculation is used for all students who receive Title IV aid. Students whose Title IV aid consists only of Federal Work-study (FWS) earnings are not included in this Calculation. This policy applies to students who did not successfully complete at least one course within a term, for which they received title IV funding, through the end of their schedule for that term. Refunds for these students are determined according to the following policy:
- These regulations are based on changes made by the Higher Education Amendments of 1998 (HEA98).
- The term “Title IV Funds” refers to the Federal Financial Aid programs authorized under the Higher Education Act of 1965 (as amended) and includes the following programs: Unsubsidized Federal Direct Loans, Subsidized Federal Direct Loans, Federal Direct PLUS Loans, Federal PELL Grants, and Federal SEOG.
- A student’s withdrawal date is:
1. The date the student began the institution’s withdrawal process or officially notified the institution of intent to withdraw; or
2. The midpoint of the period for a student who leaves without notifying the institution; or
3. The student’s last date of attendance at a documented academically related activity.
Any notification of a withdrawal or cancellation and request for a refund should be in writing and addressed to the KCKCC Registrar or an Admissions Office Representative.
There are six basic steps to the formula for calculating the amount of funds that must be returned to Title IV programs.
1. Determine date of withdrawal and percentage of payment period attended by the student.
2. Calculate amount of Title IV aid earned by the student.
3. Compare amount earned and amounts disbursed to determine amount unearned.
4. If amount earned is greater than amount disbursed, determine late disbursement.
5. If amount earned is less than amount disbursed, determine amount of Title IV aid that must be returned.
6. Calculate portion of funds to be returned by institution and student.
STEP 1 - Date of withdrawal and percentage of period student attended
If a student withdraws from a program measured in credit hours, the institution must calculate the percentage of the period completed, based on calendar days. Scheduled breaks of five consecutive days or longer are excluded from both the numerator and the denominator in the calculation, but weekend days are included. The final regulations clarifies that a scheduled break encompasses all days between the last scheduled day of classes and the first day that classes resume.
STEP 2 - Calculating the amount of Title IV Aid earned by the student
The amount of Title IV aid earned by the student is determined by multiplying the percentage of the payment period completed by the total amount of Title IV aid disbursed, or that could have been disbursed. If the percentage of the payment period completed is more than 60 percent, the student has earned 100 percent of the aid. An institution would add up the total Title IV loan and grant assistance awarded to the student for the payment period (excluding FWS funds and the nonfederal share of funds for the FSEOG) and multiplies this dollar amount by the percentage of the period completed. If the student was subject to the 30-day delayed disbursement restriction for Stafford loans and withdrew during the first 30 days; no Stafford loan amounts could be disbursed and should not be counted.
STEP 3 - Comparing amount of Title IV Aid earned and disbursed to student
The institution compares actual funds disbursed and the total amount of Title IV financial assistance earned by the student at the time of withdrawal to determine whether the student is entitled to additional funds or if funds need to be returned to the Title IV programs.
STEP 4 - If amount earned by the student is greater than the amount disbursed
If the student earned more than the amount disbursed, then the student (or the student’s parent if a PLUS loan is pending) is entitled to a “post-withdrawal disbursement” of funds up to the total amount earned. If there are outstanding current institutional charges, the institution may credit a post-withdrawal disbursement to the student’s account under the terms of the cash management regulations. If loan funds are used, the institution must notify the borrower. If additional funds are available for disbursement beyond those credited to the account, the institution must notify the student (or parent borrower) that he or she is eligible for a post-withdrawal disbursement, provided the student meets the criteria. If the student earned more than the amount disbursed and is entitled to a post-withdrawal disbursement, the institution does not need to complete the rest of the calculation.
STEP 5 - If amount earned is less than amount disbursed
If the amount earned by the student is less than the amount disbursed, funds must be returned to the Title IV programs. An institution is prohibited from making any additional disbursements to the student after it determines that the student has withdrawn if he or she has earned less than the amount disbursed. In some cases, where loan funds have been disbursed but grant funds have not, a student may be left with loan debt, instead of benefiting from grant aid.
STEP 6 - Return of Title IV funds by institution and student; treatment of loans and grants
If Title IV funds need to be returned, the institution has to return funds first. The institution must return the lesser of the unearned aid or the sum of the institutional charges multiplied by the percent of aid unearned. Then, if the amount that the institution is responsible for returning is less than the total amount of aid that needs to be return, the student is responsible for the remainder.
The order in which funds are to be returned to the various Title IV funds is as outlined. Loans are generally repaid first, then grants. While institutions must return loan funds to the lender promptly, students may repay loans under the terms and conditions of the loans. This means that a student may choose whether or not to repay in full at the time of withdrawal, but for purposes of the calculation the amount owed counts as part of the student’s share of repayment. As an allowance for some up-front costs, the student does not have to pay back 50 percent of any grant funds that he or she would otherwise be responsible for returning.
Title IV aid and all other aid is earned in a prorated manner on a per diem basis based on the calendar up to the 60% point in the semester. Title IV aid and all other aid is viewed as 100% earned after that point in time.
If a student has received Federal Title IV student financial aid during the term (PELL, SEOG, Direct Loan, or a PLUS Loan), the student is entitled to a return of Title IV funds calculation. In accordance with federal regulations, when financial aid is involved, returns are allocated in the following order:
1. Unsubsidized Federal Direct Stafford loans
2. Subsidized Federal Direct Stafford Loans
3. Federal Perkins Loans
4. Federal Direct PLUS Loans
5. Federal PELL Grants
6. Federal SEOG
7. Other Title IV assistance