Return of Title IV Funds:Return of Title IV Funds:Solving the MysterySolving the Mystery

Ann Marie GruberAnn Marie Gruber

Lakeland Community CollegeLakeland Community Collegeagruber@lakelandcc.eduagruber@lakelandcc.edu

What is R2T4?What is R2T4?Return of Title IV FundsReturn of Title IV Funds

Calculation to determine what Title IV aid a Calculation to determine what Title IV aid a recipient has earned upon total withdrawal and recipient has earned upon total withdrawal and what if any aid must be returned and by whomwhat if any aid must be returned and by whom

Separate from the institution’s and state’s Separate from the institution’s and state’s refund policyrefund policy

Must inform students of Must inform students of allall refund policies refund policies (including R2T4) as well as the requirements (including R2T4) as well as the requirements and procedures to begin the withdrawal and procedures to begin the withdrawal process from the school process from the school

When Does R2T4 Apply?When Does R2T4 Apply?

Recipient of Title IV aid ceases enrollment after Recipient of Title IV aid ceases enrollment after beginning attendance but before the end of the beginning attendance but before the end of the enrollment period (POE) or payment period (PP)enrollment period (POE) or payment period (PP)

Does not apply to students who reduce their Does not apply to students who reduce their course load (change in enrollment status not a course load (change in enrollment status not a withdrawal)withdrawal)

Up through the 60% point of the PP or POEUp through the 60% point of the PP or POE

Still must complete calculation if after 60% point Still must complete calculation if after 60% point to determine if post-withdrawal disbursement is to determine if post-withdrawal disbursement is requiredrequired

Higher Education Reconciliation Higher Education Reconciliation Act of 2005 (HERA)Act of 2005 (HERA)

Changes implemented that effect R2T4Changes implemented that effect R2T4

Different rules…Different rules…– students who withdrew before July 1, 2006 students who withdrew before July 1, 2006 – students who withdraw after July 1, 2006 students who withdraw after July 1, 2006

Completing the CalculationCompleting the CalculationWorksheets provided by the Department of Worksheets provided by the Department of Education available at Education available at http://www.ifap.ed.govhttp://www.ifap.ed.gov

Completing the CalculationCompleting the CalculationWeb product available through FAA Access to CPS Web product available through FAA Access to CPS Online at Online at http://www.fafsa.ed.gov/FOTWWebApp/faa/faa.jsphttp://www.fafsa.ed.gov/FOTWWebApp/faa/faa.jsp

Completing the CalculationCompleting the Calculation

PC version of the R2T4 software was PC version of the R2T4 software was archived on June 1, 2006 and cannot be archived on June 1, 2006 and cannot be used for calculations for students who used for calculations for students who withdrew after July 1, 2006.withdrew after July 1, 2006.

Still available at Still available at http://fsadownload.ed.gov/sitemap.htmhttp://fsadownload.ed.gov/sitemap.htm

After the Calculation….After the Calculation….

If amount of aid the student earns is less If amount of aid the student earns is less than what was disbursed, funds must be than what was disbursed, funds must be returned to the programsreturned to the programs

If amount of aid the student earns is more If amount of aid the student earns is more than what was disbursed, the student is than what was disbursed, the student is eligible for a post-withdrawal disbursement eligible for a post-withdrawal disbursement provided they were eligible for the aid at provided they were eligible for the aid at the time they withdrewthe time they withdrew

Date Institution Determines Student Date Institution Determines Student WithdrewWithdrew

Point in time institution could reasonably Point in time institution could reasonably be aware that student withdrewbe aware that student withdrewNot necessarily same as date of Not necessarily same as date of withdrawal but could bewithdrawal but could beSets the clock for when schools must take Sets the clock for when schools must take action action – 45 days to offer PWD and/or return their 45 days to offer PWD and/or return their

portion of unearned aid (new-was 30 days portion of unearned aid (new-was 30 days prior to July 1, 2006)prior to July 1, 2006)

Determining Date of WithdrawalDetermining Date of WithdrawalFor schools not required to take attendance:For schools not required to take attendance:– date student begins the formal withdrawal processdate student begins the formal withdrawal process– date student provided intent to WDdate student provided intent to WD– date institution becomes aware student ceased date institution becomes aware student ceased

attendanceattendance– midpoint if student stops attending without notifying midpoint if student stops attending without notifying

anyone (must be determined within 30 days of end of anyone (must be determined within 30 days of end of payment period, academic year or student’s payment period, academic year or student’s educational program, whichever is earlier)educational program, whichever is earlier)

– beginning date of Leave of Absence (LOA) for a beginning date of Leave of Absence (LOA) for a student who does not return from LOAstudent who does not return from LOA

– last date of academically related activity (taking exam, last date of academically related activity (taking exam, completion of paper, etc.); must be able to document completion of paper, etc.); must be able to document attendanceattendance

Determining Date of WithdrawalDetermining Date of Withdrawal

For schools not required to take For schools not required to take attendance:attendance:– date of illness, accident, or events beyond date of illness, accident, or events beyond

student’s control that prevented them from student’s control that prevented them from notifying the school of their withdrawalnotifying the school of their withdrawal

– for student who fails all courses, school must for student who fails all courses, school must have procedure for determining if student have procedure for determining if student completed and failed all or at least one course completed and failed all or at least one course or they unofficially withdrew (school then uses or they unofficially withdrew (school then uses midpoint of PP or POE or last date of midpoint of PP or POE or last date of academically related activity academically related activity

Determining Date of WithdrawalDetermining Date of Withdrawal

For schools required to take attendance (only For schools required to take attendance (only schools required to take attendance by an outside schools required to take attendance by an outside entity even if is for a limited time*):entity even if is for a limited time*):– date student begins official withdrawal processdate student begins official withdrawal process– the last recorded date of attendance from the the last recorded date of attendance from the

institution’s attendance record institution’s attendance record – if school is required to take attendance for a limited if school is required to take attendance for a limited

time and student withdraws after that date, the school time and student withdraws after that date, the school would calculate the WD date same as a school not would calculate the WD date same as a school not required to take attendance would required to take attendance would

**schools required to take attendance on only one date of the term (census schools required to take attendance on only one date of the term (census date) are not considered to be required to take attendancedate) are not considered to be required to take attendance

Payment Period (PP) or Period of Payment Period (PP) or Period of Enrollment (POE)Enrollment (POE)

Standard term based programs Standard term based programs (semesters, quarters, trimesters)-use PP(semesters, quarters, trimesters)-use PP

Non-standard term-based or non term-Non-standard term-based or non term-based program-school has choice of using based program-school has choice of using either POE or PP, but must use same in either POE or PP, but must use same in all it’s calculations for all student within the all it’s calculations for all student within the program who withdraw program who withdraw

The Calculation…Disbursed AidThe Calculation…Disbursed Aid

Aid is considered disbursed aid if it is Aid is considered disbursed aid if it is disbursed as of the WD date as determined disbursed as of the WD date as determined by the institutionby the institutionFor loans funds, use net amountFor loans funds, use net amountDo not include inadvertent overpayments Do not include inadvertent overpayments (example: funds paid to student who withdrew (example: funds paid to student who withdrew prior to disbursement-count as aid that could prior to disbursement-count as aid that could have been disbursed) have been disbursed) Do not include Federal Work StudyDo not include Federal Work Study

The Calculation…Aid That Could The Calculation…Aid That Could Have Been DisbursedHave Been Disbursed

Aid that could have been disbursed but Aid that could have been disbursed but had not yet been disbursed had not yet been disbursed

All aid for period if conditions for late All aid for period if conditions for late disbursement were met before student disbursement were met before student withdrewwithdrew– Official EFC from a processed ISIROfficial EFC from a processed ISIR– Institution certified FFEL or Direct LoanInstitution certified FFEL or Direct Loan– Federal Perkins or FSEOG-institution made Federal Perkins or FSEOG-institution made

the award to the studentthe award to the student

The Calculation…Aid That Could The Calculation…Aid That Could Have Been Disbursed (but school Have Been Disbursed (but school

is prohibited from disbursing) is prohibited from disbursing) Second or subsequent disbursements of FFEL or Direct Second or subsequent disbursements of FFEL or Direct Loan funds unless student has graduated or successfully Loan funds unless student has graduated or successfully completed program completed program Disbursement of FFEL or DL to first-year first-time Disbursement of FFEL or DL to first-year first-time borrower who withdraws before the 30borrower who withdraws before the 30thth day of program day of programFor clock-hour or credit-hour non term programs, For clock-hour or credit-hour non term programs, Federal Pell Grant funds for a subsequent payment Federal Pell Grant funds for a subsequent payment period that institution is prohibited from making because period that institution is prohibited from making because student did not complete earlier payment periodstudent did not complete earlier payment periodDisbursements of Federal Pell Grant funds to a student Disbursements of Federal Pell Grant funds to a student for whom institution has processed ISIR but not a valid for whom institution has processed ISIR but not a valid (all information on ISIR is correct) EFC by deadlines ie (all information on ISIR is correct) EFC by deadlines ie student has submitted all verification documents to student has submitted all verification documents to school but valid ISIR not received as of date of school but valid ISIR not received as of date of calculation calculation

The Calculation…What Not to The Calculation…What Not to Count in Aid Disbursed or That Count in Aid Disbursed or That Could Have Been DisbursedCould Have Been Disbursed

Stafford Loans for which an MPN has not been Stafford Loans for which an MPN has not been signed*signed*Federal Perkins Loan for which an MPN has not Federal Perkins Loan for which an MPN has not been signed*been signed*Title IV funds subject to verification (even those Title IV funds subject to verification (even those where an interim disbursement has been made) and where an interim disbursement has been made) and student has not submitted required documents**student has not submitted required documents**

*Student can sign note between time they withdraw and the *Student can sign note between time they withdraw and the calculation is complete (effective 10-27-05 DC 05-16)calculation is complete (effective 10-27-05 DC 05-16)

****If student submits verification documents after initial R2T4 If student submits verification documents after initial R2T4 calculation but before established verification deadlines, the calculation but before established verification deadlines, the calculation must be redonecalculation must be redone

The Calculation…Percentage of The Calculation…Percentage of Aid EarnedAid Earned

Calendar days completed (determined by Calendar days completed (determined by withdrawal date) divided by calendar days in withdrawal date) divided by calendar days in periodperiodExclude institutionally scheduled breaks of 5 or Exclude institutionally scheduled breaks of 5 or more consecutive daysmore consecutive daysFor clock hours schools, scheduled hours are For clock hours schools, scheduled hours are used to determine % completed (new)used to determine % completed (new)Students who withdraw after the 60% point earn Students who withdraw after the 60% point earn 100% of their aid (still must do calculation to 100% of their aid (still must do calculation to make sure a post-withdrawal disbursement is make sure a post-withdrawal disbursement is not necessary)not necessary)

The Calculation…Aid to be The Calculation…Aid to be Disbursed or Returned???Disbursed or Returned???

If aid disbursed = amount earnedIf aid disbursed = amount earned– no further action neededno further action needed

Amount of aid disbursed Amount of aid disbursed > amount earned> amount earned– unearned portion must be returned to the unearned portion must be returned to the

programsprograms

Amount of aid disbursed < amount earnedAmount of aid disbursed < amount earned– post-withdrawal disbursement requiredpost-withdrawal disbursement required

Amount of aid disbursed Amount of aid disbursed >amount >amount earnedearned

Subtract amount of earned aid from amount Subtract amount of earned aid from amount that was actually disbursed (not including that was actually disbursed (not including aid that could have been disbursed)aid that could have been disbursed)School must return the lesser of:School must return the lesser of:– amount of Title IV aid student does not earn oramount of Title IV aid student does not earn or– amount of institutional charges (tuition, fees, amount of institutional charges (tuition, fees,

room and board if contracted with the school room and board if contracted with the school initially charged to the student even if paid by initially charged to the student even if paid by other sources) that student incurred for the PP other sources) that student incurred for the PP or POE multiplied by percentage of funds that or POE multiplied by percentage of funds that was not earnedwas not earned

Order of Funds to be Returned by Order of Funds to be Returned by the Schoolthe School

Unsubsidized FFEL/Direct Stafford Loan Unsubsidized FFEL/Direct Stafford Loan

Subsidized FFEL/Direct Stafford LoanSubsidized FFEL/Direct Stafford Loan

Perkins LoanPerkins Loan

FFEL/PLUS (graduate students)FFEL/PLUS (graduate students)

FFEL/Direct PLUS (parents) FFEL/Direct PLUS (parents)

Federal Pell Grant Federal Pell Grant

Academic Competitiveness GrantAcademic Competitiveness Grant

National SMART Grant National SMART Grant

FSEOGFSEOG

Return of Funds by the SchoolReturn of Funds by the School

School must return funds within 45 days of School must return funds within 45 days of date institution determined student date institution determined student withdrew (was 30 days prior to July 1, withdrew (was 30 days prior to July 1, 2006)2006)

Return of Funds by the StudentReturn of Funds by the Student

Student must return all unearned funds that the Student must return all unearned funds that the school is not required to return in same order as school is not required to return in same order as the schoolthe school

School could opt to return grant funds for the School could opt to return grant funds for the student and then collect from student or student and then collect from student or

Student returns their portionStudent returns their portion

Return of Funds by the StudentReturn of Funds by the Student

How student returns their portionHow student returns their portion

– repaying grant overpayment not to exceed half of the repaying grant overpayment not to exceed half of the totaltotal TIV TIV grant funds grant funds

– student must repay or make satisfactory overpayment student must repay or make satisfactory overpayment arrangements (with school or DOE) within 45 days of being arrangements (with school or DOE) within 45 days of being notified of owing overpayment to remain eligible for aidnotified of owing overpayment to remain eligible for aid

school is responsible for notifying student they owe overpayment school is responsible for notifying student they owe overpayment within 45 days of determining student withdrewwithin 45 days of determining student withdrewno need to repay if less than $50 (new-was $25 prior tono need to repay if less than $50 (new-was $25 prior toJuly 1, 2006)July 1, 2006)

– return loan funds in accordance with the terms of the loanreturn loan funds in accordance with the terms of the loan

Amount of aid disbursed<amount Amount of aid disbursed<amount earnedearned

Post-withdrawal disbursement (PWD) is duePost-withdrawal disbursement (PWD) is due

Must meet current conditions for late Must meet current conditions for late disbursementdisbursement

School credits student account for allowable School credits student account for allowable incurred costs with PWD funds up to incurred costs with PWD funds up to outstanding charges outstanding charges

School must get student’s or parent’s School must get student’s or parent’s signature to credit account for charges other signature to credit account for charges other than tuition, fees, room and board (if than tuition, fees, room and board (if contracted by the school)contracted by the school)

Amount of aid disbursed<amount Amount of aid disbursed<amount earned (PWD)earned (PWD)

School is School is requiredrequired to offer PWD in excess of to offer PWD in excess of what used to pay allowable charges to student what used to pay allowable charges to student no later than 45 days after the date the school no later than 45 days after the date the school determines that the student withdrew (must determines that the student withdrew (must identify type and amount of aid and indicate identify type and amount of aid and indicate student or parent’s right to decline all or part of student or parent’s right to decline all or part of award)award)Student or parent given 14 days from date of Student or parent given 14 days from date of notification to accept PWD or school can choose notification to accept PWD or school can choose not to make PWDnot to make PWDPWD must be made no later than 120 days of PWD must be made no later than 120 days of determination student withdrewdetermination student withdrewHas no relationship to incurred costs Has no relationship to incurred costs No PWD for a deceased student can be madeNo PWD for a deceased student can be made

Amount of aid disbursed<amount Amount of aid disbursed<amount earned (PWD)earned (PWD)

New (as of July 1, 2006)…New (as of July 1, 2006)…

School is required to contact a withdrawn School is required to contact a withdrawn student prior to making PWD of loan funds student prior to making PWD of loan funds and explain their obligation to repay the fundsand explain their obligation to repay the funds

School must document outcome of the contact School must document outcome of the contact

Credit Balances and R2T4Credit Balances and R2T4

if student has credit balance at time they if student has credit balance at time they withdraw, do not issue refund to student or withdraw, do not issue refund to student or return funds to program until calculation is return funds to program until calculation is completecompletemay go past the 14 days to issue credit balance, may go past the 14 days to issue credit balance, but still compliant if within 45 days to do but still compliant if within 45 days to do calculationcalculationafter the calculation is complete, must pay any after the calculation is complete, must pay any remaining credit balance per cash management remaining credit balance per cash management rules (14 days)rules (14 days)

Other R2T4 Changes Due to Other R2T4 Changes Due to HERA HERA

Funds no longer included in calculation Funds no longer included in calculation are LEAP, SLEAP, GEAR UP or SSS are LEAP, SLEAP, GEAR UP or SSS

Institution may grant more than one leave Institution may grant more than one leave of absence to a studentof absence to a student

Questions???Questions???

Example: Example:

Classes started 8-28-06Classes started 8-28-06

Student Withdrew 8-31-06 with Student Withdrew 8-31-06 with documented attendance in 12 credit documented attendance in 12 credit hourshours

Eligible for $2025 in Federal Pell GrantEligible for $2025 in Federal Pell Grant

Original institutional charges= $1140.05Original institutional charges= $1140.05

Earned 3.6% (4 days out of 112) of Earned 3.6% (4 days out of 112) of aid=$72.90 aid=$72.90

Unearned aid (amount to be returned) = Unearned aid (amount to be returned) = $1952.10 ( 96.4% x $2025)$1952.10 ( 96.4% x $2025)

Unearned aid for school to return = Unearned aid for school to return = $1099.01 ($1140.05 x 96.4%)$1099.01 ($1140.05 x 96.4%)

Unearned aid for student to return = $853.09Unearned aid for student to return = $853.09

($1952.10 – $1099.01)($1952.10 – $1099.01)

Under new laws, student not required to Under new laws, student not required to return their portion because not more than return their portion because not more than 50% of original grant amount of $202550% of original grant amount of $2025

Under new regulations Pell award amount Under new regulations Pell award amount is $925.99 ($2025-1099.01)is $925.99 ($2025-1099.01)

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Under old law, student would be required Under old law, student would be required to return 50% of amount they owe or to return 50% of amount they owe or $426.55 (50% x $853.09)$426.55 (50% x $853.09)

Pell award amount under old regulations = Pell award amount under old regulations = $925.99 with the student owing an $925.99 with the student owing an overpayment of $426.55 (total Pell of overpayment of $426.55 (total Pell of $499.44 once student repays)$499.44 once student repays)