Return of Funds Policy

Students receiving financial aid who withdraw or stop attending will, in most cases, be required to return a portion of financial aid received.

The Higher Education Act, as reauthorized and signed into law on October 7, 1998, established the Return of Title IV Funds Policy.

The concept behind the policy is that the college and the student are allowed to retain only the amount of Title IV (Federal) aid that is earned. If a student withdraws or stops attending classes, a portion of the aid received is considered to be unearned and must be returned to the Title IV programs from which it was received. For Title IV purposes, the last date of attendance is one of the following: the date the formal withdrawal process begins, the date the student otherwise gives official notice of intent to withdraw (i.e., letter, phone call, e-mail, in-person), the mid-point of the term, or the last documented date of attendance in an academically-related activity. Northeast uses the last documented date of attendance in an academically-related activity. If a student attends through 60 percent of the term, all Title IV Aid is considered earned.


Definitions

Administrative Drop
A drop processed by the Registrar’s office due to the student’s failure to start a course. The Administrative Drop allows for a 100% refund of tuition and fees.

Official Withdrawal
Withdrawal from a course that was initiated by the student by completing the official withdrawal process. Student will receive a grade of W.

Unofficial Withdrawal
Withdrawal from a course initiated by the institution for a student who has stopped attendance. No refund is given. Students who stop attending a course will be unofficially withdrawn and given a grade of an Unearned F.

Federal Title IV refund Calculation

The Financial Aid Office determines, based on the federally mandated formula, the amount of FSA/Title IV assistance a withdrawn student has earned, based on their determined withdrawal date. The Return of Title IV Funding (R2T4) calculation policy is outlined below:

Step 1) The first step is a series of formulas to determine the amount of aid which must be returned. Following the determination of the last date of attendance, the school must calculate the number of days attended and the total number of days in the term; weekends count and any period of no classes that is five days in length or greater is excluded. Days attended are then divided by days in the term to calculate percentage completed. That percentage is multiplied by total aid for which the student is eligible to determine the amount of aid earned (% completed x total aid = earned aid). Total aid – earned aid = unearned aid (aid to be returned)

Step 2) The next step is for the school to determine total institutional charges and multiply that figure by the percentage of unearned aid (100% - % completed = % unearned). It makes no difference which type of resource actually paid the school bill; the law assumes that Title IV aid goes first to pay institutional charges. Institutional charges x % unearned = Amount returned by school (up to amount indicated as unearned in Step 1)

The school must then return the amount of unearned aid up to the maximum received, to each of the Title IV programs in the following order:

  1. Unsubsidized Federal Stafford Loan
  2. Subsidized Federal Stafford Loan
  3. Federal PLUS Loan
  4. Federal Pell Grant
  5. Federal Supplemental Educational Opportunity Grant (FSEOG)

Step 3) The school then calculates the amount for which the student is responsible by subtracting the amount returned by the school from the total amount which is unearned. That remaining amount is the student’s share and is allocated in the same order as stated above. Total amount unearned – amount returned by school = $$ for which student is responsible.

Once the school determines dollar amounts and which individual programs must be repaid, the student will be notified of any amounts he or she owes. Funds that must be returned by the student to the loan programs can be paid in full in accordance with normal loan repayment terms. For grant dollars that must be repaid, the amount due from a student is limited to the amount by which the original grant overpayment amount due from the student exceeds half of the total Title IV grant funds received by the student. A student has 45 days to make repayment and does not have to repay a grant overpayment of $50 or less. Unpaid balances will be turned over to the Department of Education for collection. Until overpayments are repaid or satisfactory arrangements to repay have been made, students will be ineligible for further Title IV aid.

This policy is totally separate from the institutional refund policy. Unpaid balances due to Northeast that result from amounts returned to Title IV programs and other sources of aid will be charged back to the student. If a student does not begin attendance in all classes or ceases attendance during the 100% refund period, aid may have to be reduced to reflect appropriate status prior to calculating Return of Title IV Funds. Before withdrawing or stopping attendance in classes, the student should be aware of the proper procedure for withdrawing from classes and the consequences of either withdrawing or stopping attendance.

For Students Enrolled in Modules

A student is considered withdrawn if the student does not complete all of the days in the payment period that the student was scheduled to attend. If a student withdraws from a course in a later module while still attending a current module, the student is not considered as withdrawn. However, a recalculation of aid based on the change in enrollment status may be required.

If a student provides written notice to the Financial Aid Office at the time of withdrawal from a current module that she/he plans to attend a later module in the same payment period, she/he is not considered a withdrawal. If the student does not provide that written confirmation, the R2T4 recalculation of aid will be done. However, if the student does return in a later module in the same payment period, regardless of whether prior written confirmation was received, the R2T4 process will be reversed and the student will be awarded the funds that she/he is eligible to receive at the time of return.

Post-Withdrawal Disbursement

If the student did not receive all of the funds that were earned prior to withdrawing, a post withdrawal disbursement may be due. If the post-withdrawal disbursement results in the student’s being eligible to receive either Federal Direct Stafford Subsidized or Unsubsidized Loan proceeds, she/he will be contacted via US Mail by the Financial Aid Office. Written authorization from the student will be requested and is required before loan proceeds can be processed and disbursed to the student. Northeast will automatically use all or a portion of the post withdrawal disbursement of grant funds for any outstanding charges for tuition, fees, room and board charges. Students will be notified of a post-withdrawal disbursement eligibility within 30 days of the date of withdrawal determination and Northeast will return any unearned funds within 45 days.

If a student remains enrolled only in non- Title IV- Eligible courses

A student’s schedule sometimes includes courses that the student is taking for credit and for which the student may not receive Title IV funds. If a student ceases attendance from all his or her Title IV eligible courses and remains enrolled in only non-Title IV eligible courses the student is considered a withdrawal for Title IV purposes.

Any questions on Return to Title IV Funds may be addressed to the Director of Financial Aid. Questions regarding withdrawal should be addressed to the Registrar’s Office or the Dean of Enrollment Management.

More Information:
Financial Aid Office
finaid@northeast.edu
(402) 844-7285