The Federal Return of Title IV funds formula (R2T4) dictates the amount of Federal Title IV aid that must be returned to the federal government by the school and/or the student. The federal formula is applicable to an eligible student receiving federal aid when that student withdraws at any point during the payment period. If a student did not start attendance at the school, the R2T4 formula does not apply. Official Withdrawal Process: If a student wishes to withdraw from school, they must notify the Director of the school. The notification may be in writing or orally. The date the notification is received is the date of determination. The Director begins the withdrawal process. For unofficial withdrawals, a student’s withdrawal date at a school that is required to take attendance is their last day of physical attendance. Their date of determination is 14 calendar days after they cease attendance.
The federal formula requires a Return of Title IV calculation if the student received or could have received (based on eligibility criteria) federal financial assistance in the form of Pell Grants, Direct Loans or Direct PLUS Loans, FSEOG, and Iraq Afghanistan Service Grants (IASG) during the payment period. The percentage of Title IV aid earned is equal to the percentage of the payment period that was completed as of the withdrawal date if this occurs on or before the 60% point of time. After the 60% point of the payment period, the student is considered to have earned 100% of the aid for the period. The percentage that has not been earned is calculated by subtracting the percentage of Title IV aid earned from 100%.
The percentage of the payment period completed is calculated by the hours scheduled in the payment period as of the withdrawal date divided by the scheduled hours in the payment period. The amount to be returned to the department disbursing Title IV is calculated by subtracting the amount of Title IV assistance applied to hours the student attended from the amount of Title IV aid that was disbursed as of the withdrawal date of the student. If a student receives less Title IV funds than the amount earned, the school will offer the student a disbursement of the earned aid that was not received at the time of their withdrawal, which is called a post-withdrawal disbursement. If the student earned 7500.00 in title IV but received 6000.00 the post-withdrawal disbursement would be 1500.00. Post-withdrawal disbursements will be made from Pell Grant funds first if the student is eligible. If there are current educational costs still due the school at the time of withdrawal, a Pell Grant post-withdrawal disbursement will be credited to the student’s account.
Any remaining Pell funds must be released to the student without the student having to take any action. The funds must be released as soon as possible but no more than 45 days after the date of determination. Any federal loan program funds due in a post-withdrawal disbursement must be offered to the student and the school must receive the student’s authorization before crediting their account.
If a credit balance still exists on the student’s account after the R2T4 and institutional refund calculations are done, that credit balance must be used to pay any grant overpayment that exists based on the current withdrawal within 14 days from the date that the R2T4 calculation was performed. The overpayment must be eliminated prior to offering a credit balance to a student. So, if there is a credit balance of 1000.00 on the students account but there exists a grant overpayment of 500.00, then the school would repay the grant overpayment first of 500.00 leaving a credit balance of 500.00 to be offered to the student.
The following Title IV return distribution is used for all FSA students. 1. Unsubsidized Direct Loan 2. Subsidized Direct Loan 3. Direct PLUS Loan (Parent) 4. Federal Pell Grant 5. FSEOG 6. Iraq Afghanistan Service Grant
Returns must be made as soon as possible to the federal programs but no later than 45 days after the date of determination. The law requires that a student is responsible for all unearned Title IV program assistance that the school is not required to return. This is determined by subtracting the amount returned by the school from the total amount of unearned Title IV funds to be returned.
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