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13 Federal Policy on Return of Title IV Student Aid |
| Federal Policy on Return of Title IV Student Aid The law tells a school how to calculate the amount of Federal Student Aid (FSA) you earn if you withdraw from school. That means the financial aid office at Phillips Hairstyling Institute is required by federal statute to recalculate federal financial aid eligibility for you if you withdraw, drop out, or are dismissed prior to completing 60% of a payment period or other period of enrollment. (Although the law does allow for a leave of absence to be taken without requiring that your aid be recalculated, if you take a leave of absence that does not meet certain criteria you might also be subject to a reduction in your aid.) The Federal Student Aid Programs which are covered by this law are: Federal Pell Grants, Stafford Loans, PLUS Loans, Federal Supplemental Educational Opportunity Grants (FSEO's) Federal Perkins Loans and in some cases, certain state grant aid. If you leave the institution prior to completing 60% of a payment period or period of enrollment, the schoo's financial aid office recalculates your eligibility for Title IV funds. Recalculation is based on something called ?the percentage of earned aid that has been earned? using the Federal Return of Title IV funds formula. This formula basically calls for a proration of your aid based on the time you attended school. In this formula (for credit hour schools), the percentage of the payment period or period of enrollment completed is equal to the number of days completed (up to the withdrawal date) divided by the total days in the payment period or period of enrollment. (Any break of five days or more is not counted as part of the days in the term.) For clock hours schools, the clock hours completed (or scheduled to be completed if you have completed 70% or more of what you were scheduled to complete) is divided by the clock hours in the payment period or period of enrollment. This percentage of the payment period or period of enrollment completed is equal to the percentage of aid that has been earned. If you earned less aid than the aid that was disbursed to you, your institution would be required to return a portion of the funds to the Federal government. The portion of funds the institution would be required to return is equal to the lesser of 1) your institutional charges multiplied by the unearned percentage of your funds, or 2) the entire amount of the unearned funds. I's important to understand something here, though. Phillips Hairstyling Institute may end up charging you for any FSA program funds it was required to return, if the return of those funds causes you to owe the school money to cover charges that were formerly covered (paid for) by the Title IV Funds. In other words, if the school is required to return less than 100% of the unearned funds to the government (based on the above noted rule), YOU will be required to return the balance of those unearned funds. However to the extent that you have any outstanding Title IV loan balances, you may return any amounts you are required to return in accordance with the conditions of your promissory note. That is, you can make monthly payments on those loan balances in the same way you would have done, if you had not withdrawn early from school. If you earned more aid then was the aid that was disbursed, your institution may owe you a post-withdrawal disbursement. But if that post-withdrawal disbursement consists of a loan, you can decline those loan funds if you do not wish to incur additional debt. (And it may be in your best interest to do so.) There are some FSA funds that you might be scheduled to receive that you cannot earn because of eligibility requirements. For instance if you are a first-time, first year undergraduate student and you have not completed the first 30 days of your program (before you withdraw) you will not earn any of the FFEL or Direct Loan funds, you would have received if you had remained in school past your 30th day. Also keep in mind that the requirements for FSA program funds (when you withdraw) are separate from any refund policy which your school or the state may have. If you do't know what the school or stat's refund policy is ask for a copy at the financial aid office. The financial aid office can also answer any questions you have and provide you with requirements and procedures for officially withdrawing from school. If the school has to return some of the aid, it will return money first to your loan programs to pay down your student debt. |
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Phillips Hairstyling Institute 709 E. Genesee Street Syracuse, New York 13210 315.422.9656 |