Return of Federal Financial Aid (R2T4)
Title IV funds are awarded to a student under the assumption that the student will attend school for the entire period for which the assistance is awarded. When a student withdraws from all classes and does not receive any credit for the award period, the student may no longer be eligible for the full amount of Title IV funds that student was originally awarded.
If a student completely withdraws from all enrolled classes during the first 60 percent of the semester and has received federal student funds, the institution must calculate the amount of federal funds that were “not earned.” This process is required to determine if the institution and/or the student must return funds to the federal programs.
The percentage “not earned” is the complement of the percentage of federal funds “earned.” If a student withdraws from all classes before completing 60 percent of the semester, the percentage “earned” is equal to the percentage of the semester that was completed. (Basically, this percentage is calculated by dividing the total number of days enrolled by the total number of days in the semester.) If the student has received more financial assistance than the calculated amount “earned,” the institution, the student or both must return the unearned funds to the appropriate federal programs. If the student withdraws after completing 60 percent of the semester, the student is considered to have earned 100 percent of the federal funds received.
The institution must return the lesser of the amount of federal funds that the student does not earn or the amount of institutional costs that the student incurred for the semester multiplied by the percentage of funds “not earned.” The student must return or repay, as appropriate, the remaining unearned federal funds.
Student financial aid refunds must be distributed in the following order by federal regulation:
- Unsubsidized Federal Stafford Loans
- Grad Federal Plus Loan
It should be noted that the Institutional Refund Policy and the Federal Return of Title IV Funds Policy (R2T4) are separate and distinct. Students who completely withdraw after the institution’s refund period has passed and before the 60 percent point of the semester may owe a balance to the institution that was previously covered by federal aid.
It is strongly recommended that any student receiving financial aid who is contemplating withdrawing or taking a leave of absence from the institution consult the Student Fiscal Affairs Office before initiating the withdrawal process to see how these regulations will affect their eligibility.