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 (i.e., documented attendance in a class or lab or submission of an assignment in a video course). 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.
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:
- Unsubsidized Federal Stafford Loan
- Subsidized Federal Stafford Loan
- Federal PLUS Loan
- Federal Pell Grant
- Academic Competitiveness Grant (ACG)
- 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. Any questions on Return of Title IV Funds may be addressed to the Director of Financial Aid. Questions regarding withdrawal should be addressed to the Registrar’s Office or to the Vice-President of Student Services.