Return of Title IV Funds

When federal Title IV grants or loan assistance is disbursed and the recipient withdraws, drops out, fail all classes or takes a leave of absence, the law requires that UTPA calculate the amount that must be returned by the school and/or student to Title IV programs.

The Title IV programs that are covered by this law are: Federal Pell Grants, Stafford Loans, PLUS Loans, Federal Supplemental Educational Opportunity Grants (FSEOG), Federal Perkins Loans, Academic Competitiveness Grant (ACG), and the National SMART grant. Even though Federal Work-Study is a Title IV program, it is exempt from the Return of Title IV calculation. The student is able to keep all Federal Work-Study earnings up to the time of withdrawal, but is ineligible to work after the withdrawal date.

Official Withdrawal

The date the student initiates the withdrawal is used for calculating the percentage used in the formula for Return of Title IV funds. The number of days from the first class day to the withdrawal date divided by the number of days in the payment period (semester) equals the percentage of Title IV funds earned. If the withdrawal date is after the 60 percent point of the semester, the student has earned 100 percent of the Title IV funds.

Unofficial Withdrawals

If a student fails to earn a passing grade in at least one class, UT Pan American is required to calculate the amount for Return of Title IV funds based on the last day of enrollment. If last day of attendance cannot be determined, UTPA may use the midpoint of the period (in lieu of an official withdrawal date) as documentation of the student’s last date of attendance. Unless the student can provide acceptable documentation that shows the student was enrolled more than 60 percent of the semester, the student will be responsible for returning the unearned funds. The student will be notified of the responsibility to repay unearned funds to the appropriate program and/or to UTPA.

Unearned Title IV aid shall be returned to the following Programs in the following order:

• Unsubsidized Federal Stafford Loan
• Subsidized Federal Stafford Loan
• Federal Perkins Loans
• Federal Graduate PLUS Loan
• Federal Parent (PLUS) Loans
• Federal Pell Grant
• Federal Academic Competitiveness Grant (ACG)
• National Science and Mathematics Access to Retain Talent Grant (National SMART Grant)
• Federal Supplemental Opportunity Grant
• Other Title IV aid

Post-withdrawal Disbursement Process

If the amount disbursed to the student is less than the amount the student earned, the amount may be considered a post-withdrawal disbursement. Post-withdrawal eligibility can be used to credit outstanding charges on a student’s account. UTPA has 30 days from the date that the University determined the student withdrew to offer any amount of the post-withdrawal disbursement to the student. The student may accept or decline some or all of the post-withdrawal disbursement that is not credited to the student’s account. The student must respond within 14 days from the date that the University sends the notification to be eligible to receive the post-withdrawal disbursement. If the student does not respond to the University’s notice, no portion of the post-withdrawal disbursement that is not credited to the students account may be disbursed. UTPA is required to contact a withdrawn student prior to making a post-withdrawal disbursement of loan funds and explain to the student (or the parent in case of a parent PLUS loan) his or her obligation to repay the funds if the funds are disbursed, and to confirm that any loan funds are still required by the student.

U.S. Department of Education

Federal Withdrawal Policy: Treatment of Federal Student Aid When a Student Withdraws
U.S. Department of Education

The law specifies how your school must determine the amount of Federal Student Aid (FSA) assistance that you earn if you withdraw from school. The FSA programs that are covered by this law are: Federal Pell Grants, Stafford Loans, PLUS Loans, Federal Supplemental Educational Opportunity Grants (FSEOGs), Federal Perkins Loans and the new Academic Competitiveness Grant (ACG) and National SMART Grant programs.

When you withdraw during your payment period or period of enrollment (your school can define these for you and tell you which one applies) the amount of FSA program assistance that you have earned up to that point is determined by a specific formula. If you received (or your school or parent received on your behalf ) less assistance than the amount that you earned, you may be able to receive those additional funds. If you received more assistance than you earned, the excess funds must be returned by the school and/or you.

The amount of assistance that you have earned is determined on a pro rata basis. For example, if you completed 30% of your payment period or period of enrollment, you earn 30% of the assistance you were originally scheduled to receive. Once you have completed more than 60% of the payment period or period of enrollment, you earn all the assistance that you were scheduled to receive for that period.

If you did not receive all of the funds that you earned, you may be due a postwithdrawal disbursement. If the post-withdrawal disbursement includes loan funds, you may choose to decline the loan funds so that you don't incur additional debt.

Your school may automatically use all or a portion of your post-withdrawal disbursement (including loan funds, if you accept them) for tuition, fees, and room and board charges (as contracted with the school). For all other school charges, the school needs your permission to use the post-withdrawal disbursement. If you do not give your permission (which some schools ask for when you enroll), you will be offered the funds. However, it may be in your best interest to allow the school to keep the funds to reduce your debt at the school.

There are some FSA funds that you were scheduled to receive that you cannot earn once you withdraw because of other eligibility requirements. For example, 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 FFEL or Direct Loan funds that you would have received had you remained enrolled past the 30th day.

If you receive (or your school or parent receive on your behalf ) excess FSA program funds that must be returned, your school must return a portion of the excess equal to the lesser of

1. your institutional charges multiplied by the unearned percentage of your funds, or
2. the entire amount of excess funds.

The school must return this amount even if it didn't keep this amount of your FSA program funds.

If your school is not required to return all of the excess funds, you must return the remaining amount. Any loan funds that you must return, you (or your parent for a PLUS Loan) repay in accordance with the terms of the promissory note. That is, you make scheduled payments to the holder of the loan over a period of time.

Any amount of unearned grant funds that you must return is called an overpayment. The amount of a grant overpayment that you must repay is half of the unearned amount. You must make arrangements with your school or the Department of Education to return the unearned grant funds.

The requirements for FSA program funds when you withdraw are separate from any refund policy that your school may have. Therefore, you may still owe funds to the school to cover unpaid institutional charges. Your school may also charge you for any FSA program funds that the school was required to return. If you don't already know what your school's refund policy is, you can ask your school for a copy. Your school can also provide you with the requirements and procedures for officially withdrawing from school.

If you have questions about your FSA program funds, you can call the Federal Student Aid Information Center at 1-800-4-FEDAID (1-800-433-3243). TTY users may call 1-800-730-8913. Information is also available on Student Aid on the Web at www.studentaid.ed.gov.