Federal Title IV Refund Requirements for Students Who Withdraw (Officially or Unofficially)

This policy applies only to students who receive Federal student financial assistance under Title IV of the Higher Education Act. Types of assistance are the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (SEOG), Teacher Education Assistance for College and Higher Education Grant (TEACH), Iraq Afghanistan Service Grant, Federal Direct Loan (subsidized and unsubsidized) and Federal Direct Parent PLUS Loan.

A student wishing to withdraw can do so online in their portal, or by visiting the Falcon Center on any campus. A student who withdrawals from or stops attending courses (considered an unofficial withdrawal) prior to completion of more than 60 percent of the semester will be required to repay all or a percentage of the federal aid received.

The college will verify enrollment with faculty 3 times during the 'semester. At the end of the add/drop period, any student marked at "not attending/not participating" will be dropped from the class and the student's enrollment status updated.

At the mid-point of the semester, faculty will report continued enrollment or the last day of class participation. Faculty are given instructions that participation in class means interaction with the faculty member (for example, class attendance, lab attendance, taking a test, turning in an assignment) and that participation does not mean just signing into the online class shell. The grade will be a W1 on the college transcript.

The faculty will report on the final grade roster the last date of attendance/participation for any student who stopped attending after the submission of the W1 grade. The final grade will be FN and is also accompanied by the last date of attendance.

The data reported by the faculty will be used in the determination of an "unofficial" withdrawal and the subsequent applicability of the federal return to Title IV refund (R2T4) policy which may result in a refund being due. The Office of Financial Aid is charged with processing all of the R2T4 calculations; informing the student of the outcome; and notifying the Office of Student Accounts so they too can update the student's account.

If a refund is due, the college will refund the balance due to the US Department of Education, and then transfer the liability to the college.

Attending Terms A/B: If a student plans to attend both the A term and the B term, and withdraws from all classes in the A term or withdraws from or stops attending all classes in the B term, he/she may be required to repay all or a percentage of the federal aid received. For example: A student who withdraws from or stops attending all A term classes prior to completion of more than 60 percent of that term, and is registered for B term classes, must confirm in writing at the time of withdrawal from the A term that he/she does intend to enroll in the B term classes. If the student does not submit this written confirmation of the intent to enroll in the B term classes at the time of withdrawal from the A term, the student will be considered withdrawn for financial aid purposes, and the student may be required to repay all or a percentage of the federal aid received. (Also, if the student completes all classes from the A term, but withdraws (or drops) from all classes from the B term, the student will also be considered withdrawn for financial aid purposes, and the student may be required to repay all or a percentage of the federal aid received.)

Withdrawal may result in the student owing a balance to the College. These funds are returned in a specific order until each program is reimbursed up to 100 percent of the amount received by the student for that term. The distribution order for the return of funds is as follows:

  • Federal Direct Unsubsidized Loan
  • Federal Direct Subsidized Loan
  • Federal Direct Parent PLUS Loan
  • Federal Pell Grant
  • Federal SEOG
  • Federal TEACH Grant
  • Iraq Afghanistan Service Grant

If determined by the calculation, the student must repay the portion of the original grant overpayment that is in excess of half of the total Title IV grant funds that he/she received or could have received. The student does not have to repay grant overpayments of $50 or less per program. Any repayment of Title IV loans is to be repaid under the conditions of the existing promissory note.

A student who owes a grant repayment remains ineligible for further Title IV financial aid until the grant is repaid, unless the student and the U.S. Department of Education agree on a satisfactory repayment arrangement. The U.S. Department of Education allows a student to retain eligibility for 45 days from the date that the institution sends the repayment notification to the student. After 45 days, the student will either have to pay the overpayment in full or make satisfactory arrangements with the U.S. Department of Education to repay the overpayment to retain eligibility for Title IV financial aid.

Unpaid balances will result in a hold on the student's records, diplomas, transcripts, and future registration activity. Furthermore, these debts may be referred to an outside collection agency and to appropriate credit bureaus. Resulting collection costs will be added to the original debt and the student must pay these costs, as well as attorney's fees, if applicable.

For example, if a student withdraws from all classes, the calculation of funds earned is as follows:

Semester length = 15 weeks (110 days)
# of days enrolled = 53
% of aid earned = 53/110 or 48.20%

Student's Financial Aid:

  • Federal Pell Grant = $2220
  • Subsidized Direct Loan = $2227 net
  • Unsubsidized Direct Loan = $1251 net
  • Total Title IV Aid Disbursed = $5698
  • Total of all Title IV grants = $2220
  • Total Amount of Title IV Aid Earned = $2746
  • Amount of Aid to be Returned by the School = $667 Unsubsidized Direct Loan

The portion of financial aid to be returned is determined by the percentage of financial aid not earned by the student. The percentage of earned aid is calculated according to the total Number of Calendar Days in the Term Completed by the Student divided by Total Number of Calendar Days in the Term. The percentage of unearned aid is calculated by subtracting the percentage of earned aid from 100%.

During the first 60% of the enrollment period, a student "earns" Title IV funds in direct proportion to the length of time that he or she remains enrolled. A student who remains enrolled beyond the 60% point earns 100% of the aid for the period.

A student who withdraws from the college before the 60% date may be required to return all or a portion of financial aid funds. The amount to be returned will be based on the formula stated above by calculating the financial aid funds that were used to pay the student's tuition and fees as well as the portion directly disbursed to the student.

Daytona State does not have the authority to waive or write off the repayment requirement regardless of the reason for the withdrawal, including extenuating circumstances such as illness, accident, or grievous personal loss.

A student who fails to return the unearned Federal Financial Aid funds will be referred to the U.S. Department of Education for collection and the College may withhold permission to register, to use facilities, or render services. Until the repayment issue is resolved, the student's Free Application for Federal Student Aid (FAFSA) record will be "flagged" every time a student files for aid. A student who owes a repayment is ineligible for financial aid at any other institution in the nation until it can be verified the student is in satisfactory repayment.

The college refund policy is different from that required for Title IV aid recipients. The college tuition and fee bill is due in full after the end of the add/drop period. Therefore, in the example above, if the student tuition bill was greater than $1200, the difference would need to be repaid in addition to the funds owed the Department of Education.

According to the Federal Financial Aid Handbook (Vol 5), when verification is completed before the R2T4 deadlines a school must offer any post-withdrawal disbursement of loan funds within 30 days of the date of the school's determination that the student withdrew, and return any unearned funds and make a post-withdrawal disbursement of grant funds within 45 days of that date.

If a student provides all documents required for verification after withdrawing but before the verification submission deadline, and in time for the institution to meet the 30-day R2T4 deadline, the institution performs the R2T4 calculation including all Title IV aid for which the student has established eligibility as a result of verification and for which the conditions of a late disbursement had been met prior to the student's loss of eligibility due to withdrawal. (See Volume 4 and 34 CFR 668.164(j)(2).)

When verification is not completed before the R2T4 deadlines and a student who has withdrawn does not provide the required documents in time for the school to complete the verification process and meet the R2T4 deadlines noted previously, the institution includes in the R2T4 calculation only the Title IV aid that was not subject to the verification process. For a student who failed to provide all required verification documents, the only aid that may be included in an R2T4 calculation are Direct PLUS Loan funds and Direct Unsubsidized Loan funds (verification is not required for receipt of these funds) for which the conditions of a late disbursement (as discussed under Title IV Aid that could have been disbursed, in Chapter 2) were met prior to the student's loss of eligibility due to withdrawal.

Applicable Deadlines:

Two main deadlines impact most R2T4 calculations—the 45-day time frame for the Return of Tile IV Funds (also see the discussion under Time frame for the return of Title IV funds in Chapter 2), and the 30 day required notification of the need for authorization to make a post withdrawal disbursement of FSA loan funds.

The student will be notified if a refund is necessary as soon as the college becomes aware of the withdrawal, official or unofficial, from all classes. The student will then be given 30 days to pay the required refund.

Please feel free to contact the Financial Aid Services Office at 386-506-3015 or email us at financialaid@DaytonaState.edu if you have any questions regarding financial aid.

College refund policy vs Federal Title IV refund requirements:

The college requires all students who are registered at the end of the add/drop period as described in the Academic Calendar to pay 100% of the tuition due. There are no college refund of tuition after that date.

For Title IV Financial Aid recipients who officially or unofficially withdrawn (stop attending class) the college is required to determine the amount of aid the student "earned" for their period of enrollment according to the federal regulations.

Students who have withdrawn from all classes and received a disbursement prior from excess financial aid funds, will most likely be required to return some, or all, of those funds.