Brief description: Students “earn” Title IV funds by remaining enrolled for the payment period for which they have been paid federal student aid. A student who begins attendance but, before the end of the payment period, withdraws (either by officially completing the school’s withdrawal process or by unofficially dropping out) may lose some of the Title IV funds he or she received or was scheduled to receive. Depending on circumstances, the school and/or the student may be responsible for reimbursing the Title IV programs. The formula by which the amount of aid the student has earned is determined is outlined in the Law; it is separate from and independent of any institutional refund policy.
Related topics in this Index: Overawards and overpayments
Historical note: Procedures for treating withdrawn students were dramatically changed as a result of the Higher Education Amendments of 1998, enacted October 7, 1998. Previously, the law and attendant regulations controlled refunds of institutional charges and the amount of Title IV funds that could be retained by the institution to cover earned institutional charges. Current law no longer impacts an institution's refund policy; rather, it controls the amount of Title IV aid that remains available to the student, based only on length of time enrolled. The amount of Title IV aid earned by the student is independent of institutional charges. These changes were described when rules were first published in the Federal Register, 11/1/99, p. 59033. The most recent changes are described in the Federal Register, 9/2/20, pp. 54777 to 54780.
Pay No Attention to the Regulation Behind the Curtain: The Implications of the Return to Title IV (R2T4) Federal Aid Policy on Time to Degree (ProQuest Dissertations Publishing)
Return of Title IV Funds AskRegs Knowledgebase Q&As (National Association of Student Financial Aid Administrators)
Return of Title IV Funds Self-Study Guide (National Association of Student Financial Aid Administrators)
See also Withdrawal: Definition of
To determine withdrawal date if the student dropped out without notification (institutions not required to take attendance)
UPDATED Guidance for interruptions of study related to Coronavirus (COVID-19)
Proration when basis of charges differs from period used to calculate earned aid (charges cover multiple payment periods)