Federal statute requires the return of a percentage of federal financial aid when an aid recipient withdraws from school. Federal financial aid is called Title IV Financial Aid. Listed below is the Title IV Financial Aid that is affected by this statute.
- Unsubsidized Federal Stafford Loan
- Subsidized Federal Stafford Loan
- Perkins Loan
- Parent Loans for Undergraduate Students (PLUS)
- Federal Pell Grant
- Federal Teach Grant
- Federal Supplemental Equal Opportunity Grant (SEOG)
- This listing provides both the types of aid returned, and the order in which it is returned. Note that loans are returned first in order to reduce loan debt and retain more grant assistance.
The federal aid returned by UNK is based on the amount of federal financial aid received, the University charges incurred and the date of withdrawal. We first calculate the amount of financial aid that is earned by the student. The amount of aid earned is determined on a pro rata basis. That is, if a student completed 30% of the semester, then the student has earned 30% of the financial aid received or scheduled to be received. Once a student has completed more than 60% of the semester all of the assistance is considered "earned," and no aid will be returned.
The official date of withdrawal is the date indicated on UNK's official withdrawal form at the Office of Registration and Records. We will use this withdrawal date in the return of aid calculation.
If a student does not officially withdraw, but remains enrolled but stops attending classes and so fails to pass any classes, the calculation must be done in accordance with federal statute. Therefore, failing to officially withdraw does not result in the waiving of the requirement to return Title IV Financial Aid. In these cases, at least 50% of the financial aid will have to be returned. A student who fails all of their classes, but attended the majority of the semester, should contact the financial aid office to determine if the need to return aid can be avoided.
If a student's University charges are reduced as a result of withdrawal, and that withdrawal generates a refund, this refund will be used to repay the federal financial aid programs as determined by the calculation. Grant dollars that have to be returned will go back the the individual grant program, while loan that is returned will be sent to the student's lender, reducing the student's loan debt. If the refund does not cover the entire amount due back to the aid programs, the student will be billed the difference. If the student must return funding back to the Pell or SEOG programs, the student has 45 days to make repayment to the University or be reported to the U.S. Department of Education as a student who owes an overpayment. Owing an overpayment means that student will no longer be eligible for financial aid.
Below is an Example of the Return of Title IV Funds Calculation.
- John is a student who withdraws on 9/24/2010.
- John received $2,668 in Title IV financial aid
- John's bill was $1,276
- Establish the withdrawal date and calculate the percentage of aid the student may retain.
* 9/24/2010 is 29 days into the semester, which is 116 days long. Therefore, he has completed 25% of the semester.
* This means that he may keep 25% of the aid awarded to him, however 75% must go back to the aid programs. (If the percentage of aid a student may retain is at 60% or more, all aid is retained.)
- Calculate the percentage of unearned aid that has to be returned.
*75% of $2,668 in financial aid must be returned: $2,001.
- Calculate the maximum percentage of financial aid applied to cost that the school has to return.
*75% of the cost, $1276, is $957.
* The school must then return the lesser of $957 (percentage of cost) or $2,001 (percent of unearned financial aid) to the aid programs.
*The school returns $957 on John's behalf.
- Aid the student must personally return.
*John's grant aid is returned on his behalf by the school and therefore becomes part of the bill that must be repaid to the school. Failure to pay this would result in reporting to the Department of Education as an overpayment. Reporting is done 45 days after the calculation if the repayment has not been made to the school.
*The balance of John's loan not paid by the school will go into repayment after the 6 month grace period in accordance with the terms of the promissory note.
Return to Financial Aid Home Page