Avoiding Pitfalls in the Return of Title IV

John Gritts - MSURSD

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Basic Principles

• Title IV funds are awarded to a student with the assumption that the student will attend school for the entire period for which the assistance is awarded• How much will the school earn?

• When a student ceases attendance prior to the planned ending date, the student may not be eligible for the full amount of Title IV funds the student was scheduled to receive• How much did the student earn?

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Basic Principles

• Student earns Title IV aid equal to the amount of attendance

• Percentage of aid earned equal to percentage of payment period or period of enrollment completed

• School has disbursed more aid than student earned, Title IV aid must be returned to the programs

• School has disbursed less Title IV aid than student earned, a post-withdrawal disbursement (PWD) calculated and offered

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Basic Principles

• Student completes more than 60% of the PP or POE, student earned 100% scheduled Title IV funds

• Institutional or other refund policies do not impact amount of Title IV aid earned R2T4 calculation

• School use best information available to determine withdrawal date (document)

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Applicability• Student never in attendance student is not an

eligible student for Title IV fundso All Pell, FSEOG, and Iraq Afghanistan Service Grant funds must be returned

o DL funds credited to the student’s account must be returned

o The DL loan servicer must be notified when funds were disbursed directly to the student

• No R2T4 Required

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Consumer Information

• Refund policy the school must comply for the return of unearned funds

• State / Accreditor• School’s refund policy• Requirements for treatment of Title IV funds after

withdrawal• Institution’s procedures to officially withdraw

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Two Types of Institutions

• Required to Take Attendance

• NOT Required to Take Attendance

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Institution Required to Take Attendance

• “Institution Required to Take Attendance” if -o Outside entity requires attendance takeno or institution requires take class attendance

• Must use official attendance records determine withdrawal date (WD)

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NOT Required To Take Attendance

• Not required to take attendance by an outside entity

• Most institutions fit into this category

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Withdrawal Date• Date the institution uses to determines Earned

and Unearned Title IV Funds for R2T4 • Institution Required to Take Attendanceo Last date of Attendance is based on attendance records

school required to maintaino School must have a process to determine when a

student is no longer attendingoSee GEN-04-12

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Withdrawal Date

• School NOT Required to Take Attendance the Withdrawal Date Is:o Date student began formal withdrawal

process or provided official notificationo When school determines student no longer

attendingo If because of illness, accident, etc.o Last date of an academically-related activity

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Academic Attendance

• “Academic attendance” and “attendance at an academically-related activity” include, but are not limited to:o Physically attending a class with direct interactiono Academic assignment submissiono Taking an exam, interactive tutorial, or a computer-based instruction

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Academic Attendance – cont’d

•Attending a school-assigned study group

•Participating in an online discussion that is academically-related

• Interacting online with faculty about subject matter or to ask course-related questions

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Academic Attendance

• An academically-related activity DOES NOT include:o Living in institutionally provided housing or

participating in the meal plan

oLogging into an online course without active participation

oParticipating in academic counseling or advisement

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• School not required to take attendance MAY ALWAYS use last date of academically-related activity as withdrawal date

• The school, not the student, must DOCUMENTo Activity is academically-related, and o Student’s attendance at activity

Academically-Related Activity

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Date of Determination

• For an Institution Required to Take Attendance• The date the student provides notification that he or she is ceasing enrollment

• The last date of attendance (LDA)

• The institution must have a process in place that will determine when a student’s absence is a withdrawal. oSee GEN-04-12, 11/17/04

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Date of Determination

• For an Institution NOT Required to Take Attendanceo The date the student provides notificationo The date the institution becomes aware that the student

ceased attendanceo A determination must be made at the end of the earlier

of

1) The payment period or the period of enrollment,

2) The academic year, or

3) The student’s educational program

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Date of Determination-Deadlines

• Within 30 days, the institution must:o Perform the R2T4 calculationo Notify the student of any grant overpaymento Notify the student of eligibility for a post-withdrawal

disbursement (PWD)• Institution must return the Title IV funds it has

responsibility to return within 45 days• Institution must make the PWD to the student and/or

parent (in the case of a PLUS loan) within 180 days

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The Institution Must

• Determine date of student’s withdrawal• Calculate percent of period completed• Determine amount earned by applying

percent completed to total of amounts disbursed and amounts that could have been disbursed

• Return unearned funds to Title IV programs, or pay student post-withdrawal disbursement

• Determine Title IV overpayment, if any

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Aid that Could Have Been Disbursed

• In addition to the Title IV aid that was disbursed, include aid that could have been disbursed if – o Conditions for late disbursements in 34 CFR 668.164(g)(2) were met prior to the withdrawal date ED processed the ISIR/SAR with an official EFC

FSEOG – school made the award Direct Loan – school originated loan

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The Return to Title IV Funds Rule

• An institution is required to determine the earned and unearned portion of Title IV aid when a student ceases enrollment prior to the planned completion date of the payment period or period of enrollmento NOTE: Up through 60% of the Payment Period (PP) or

Period of Enrollment (POE) an otherwise eligible student earns Title IV aid on a pro rata basis. After the 60% point - student has earned 100% of TIV aid

o ALSO: The return calculation is still required even if the student has earned 100%, to determine whether a post-withdrawal disbursement is required

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When to Perform a Return Calculation

• A Return of Title IV Funds calculation must be performed when any student who received, or was eligible to receive, Title IV aid ceases attendance in all classes

• A return calculation is not required if the student:o Never began attendance at the school. o Continues to attend at least one Title IV-eligible class. o Is on a leave of absenceo Did not receive, and is not eligible to receive Title IV o Received, or eligible to only receive, FWS

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Possible outcomes when R2T4 calculated

• Amount of Title IV funds exceeded amount earned and funds must be returned

• Amount of Title IV funds less than amount earned and a post-withdrawal disbursement must be made

• Amount of Title IV funds equals amount earned

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Post-withdrawal disbursement (PWD)

• If amount of the Earned Title IV funds exceeds amount disbursed, the difference is due the student as a “Post-Withdrawal Disbursement” (PWD)

• Must meet the late disbursement requirements

• The PWD must be made from grant funds before loan funds

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Post-withdrawal disbursement (PWD)

• A PWD comprised of grant funds may be used to pay the following current charges:o For tuitiono For feeso For room and board, if contracted with the institution

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PWD – Grant Funds

• No student confirmation required to pay current outstanding charges for tuition, fees, room, and board listed on previous slide or for prior year charges up to $200

• Written confirmation is required for all other current charges

• If disbursed directly to the student, must be disbursed as soon as possible, but within 45 days of the Date of Determination

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PWD – Loan Funds• If Title IV loan funds are part of the PWD theno It must be made within 180 days of the Date of Determination

o It cannot be a second or subsequent disbursement of a Direct Loan (DL)

o School cannot make a late disbursement of a DL if the student was a first year, first-time borrower unless the student completed the first 30 days of the program or the school was not under that restriction

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PWD – Loan Funds – Cont’d

• Must offer the student (or parent in the case of a PLUS) the PWD within 30 days of the Date of Determination and request confirmation that the PWD is accepted

• Must obtain authorization to pay for other than current charges

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PWD Loan Funds - Notifications

• Required notifications─Within 30 days of the Date of Determination, the school must notify the student (and parent in the case of a PLUS loan)oExplain that the borrower may decline all or a portion of the loan disbursementoRequest confirmation of any amount to be credited to the student’s account or directly disbursed to the borroweroExplain the obligation to repay the loan

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PWD Loan Funds Notifications Cont’d

• Required notifications o Specify a deadline of at least 14 days for required response/confirmation

o If the response is late, the school may decide to not disburse

o If the school decides to not disburse, must notify the borrower in writing

o If no response from the borrower, no disbursement of the PWD – loan amount

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Unearned Funds - School’s Responsibility

• Institution MUST return funds within 45 days of the date of determination

• Title IV funds – are returned to the program accounts

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Unearned Funds - Student’s Responsibility

• Unearned Title IV funds that are the responsibility of the STUDENTo If loan funds, they can be repaid under terms of the promissory noteo If grant funds, they are subject to a 50% reduction and the student may make satisfactory arrangements to repay

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• Hold all Title IV credit balances until R2T4 calculated

• Credit balance is “Aid/Amount Disbursed” in the calculation

• Determine if credit balance changes because of a State, accreditor, or institutional refund policy

• After the R2T4 calculation - use any remaining credit balance to first repay a grant on behalf of student

• Release credit balance within 14 days

R2T4 and Title IV Credit Balances

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• School must have a process for determining if student completed

• At least one passing grade...• No passing grade, institution must document

completion of period• Grading Policy that differentiates between

Failing, Completed; and Failing, Did Not Complete

No Passing Grades

Additional Resources

Resources – www.ifap.ed.gov

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My IFAPWhat’s NewTools for SchoolsPublicationsHot TopicsHandbooksLetters & AnnouncementsRegulationsDefault PreventionTraining and Conferences

FSA Assessments

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FSA Assessments

• Self-assessment tool designed to assist schools in evaluating their financial aid policies, processes, and procedures

• Includes assessment modules regarding Students, Schools, and Campus-Based Programs

http://ifap.ed.gov/qahome/fsaassessment.html

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R2T4 on the Web (R2T4 OTW)

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Sign up for R2T4 OTW• Signup via SAIG Enrollment website

‒https://fsawebenroll.ed.gov/PMEnroll/index.jsp• The R2T4 Web Application will be available via

FAA Access‒https://faaaccess.ed.gov/FOTWWebApp/faa/faa.jsp

• Set up a simple school profile one or two popular programs and academic calendar; do not try to build costs for each program

• Track post-withdrawal disbursement notification

ED’s Free R2T4 Software on the Web

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R2T4 Software Suggestions

• Software located on SFAdownload.ed.govoaStand-alone softwareoaListed in Archives - July 11, 2000

• Quick Reference Guide• On-line Help

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R2T4 Software Suggestions

• Import demographic information from external systems

• 45-day limit alarm• 14-day PWD/Cash Management alarm• More On-Line Help

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R2T4 Software Suggestions

• Add a check box on PWD Tab for initial or subsequent disbursement indicator

• Note - if the student’s original Title IV grant overpayment is less than $25, a message box indicates “De Minimis Amount”

• Transmit R2T4 information to NSLDS and ED Collection Services

• LOA date tracking• Report writer to generate notices/letters

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Other Resources • Section 484B of the HEA

‒Enacted October 7, 1998, as part of the Higher Education Amendments of 1998

• Final Reg. published November 1, 1999 • Dear Colleague Letter GEN-00-24• Final Reg. published November 1, 2002• Dear Colleague Letter GEN-04-03• Dear Colleague Letter GEN-04-12

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Other Resources (cont’d)

• Dear Colleague Letter GEN-05-16• Final Regulation published October 29,2010• Dear Colleague Letter GEN-11-14• IFAP – Program Integrity Q’s & A’s – Return of Title

IV Funds oGeneral Questions Programs Offered in Modules Institutions Required to Take Attendance

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QUESTIONS?