Return to Title IV MASFAP Spring Conference March For Discussion Purposes Only 1. Return of Title IV Funds. Theory of the Calculation

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1 Return to Title IV David A. Bartlett Federal Student Aid U.S. Department of Education MASFAP Spring 2013 Return of Title IV Funds Applies only to Title IV eligible students who begin attendance and then completely withdraw, or otherwise cease attending If student enrolled but never attended any classes: Student did not establish eligibility for any funds All Title IV aid disbursed must be returned to the programs Theory of the Calculation Student earns Title IV aid through attendance Percentage of aid earned is equal to the percentage of payment period or enrollment period completed If school has disbursed more aid than the student has earned, money is returned to the programs, or If school has disbursed less aid than the student has earned, a post-withdrawal disbursement will be calculated and if applicable funds disbursed to the student For Discussion Purposes Only 1

2 Institutional Refund Policy Your institutional refund policy has no impact on the Return of Title IV funds calculation Student still earns Title IV Aid for period attended even if school removes the charged tuition and fees R2T4 calculation supersedes your institutional refund policy Consumer Information School must provide to prospective students and current students Any refund policy with which the school must comply School s tuition refund policy Requirements of treatment of Title IV funds after withdrawal Procedures for official withdrawal R2T4 Calculation Timeframes Institutions are required to return funds to the applicable program within 45 days of the date of determination Two Main Deadlines Institutions are required to notify a student of the need for authorization to make a Post- Withdrawal Disbursement (PWD) of Title IV loan funds within 30 days of the date of determination (DOD). FSA Handbook Volume 5 For Discussion Purposes Only 2

3 Rounding Rules Dollar Amounts and Percentages Calculation - round to the nearest penny $2, x 44.6% = $1, or $1, $2, x 44.4% = $1, or $1, Disbursement or refund may be rounded to the nearest dollar $1, = $1,046 $1, = $1,042 Calculate out to 4 decimal places 45 days / 101 days = hours / 450 hours =.4422 Round to third decimal place.4455 =.446 = 44.6%.4422 =.442 = 44.2% Payment Period or Period of Enrollment Standard term-based program must use payment period Nonstandard term or nonterm program may choose either payment period or period of enrollment May choose on a program-by-program basis Must be consistent with application of method used Use consistently for each category of students who withdraw from same program of study and Attended from the beginning Re-enter during period Transfer into school during period Complete Top of Worksheet First HARRY SPRINGER X For Discussion Purposes Only 3

4 Aid That Could Have Been Disbursed (ATCHBD) Student met conditions for a late disbursement ( (g)(2)) At time student withdrew, ED had processed a SAR or ISIR with official EFC Pell ISIR with eligible EFC DL loan had been originated Promissory Note must be signed to be included as ATCHBD* TEACH grant had been originated Perkins/FSEOG funds had been awarded Perkins Loan Promissory Note must be signed to be included as ATCHBD* * The Promissory Note must be signed prior to the R2T4 Calculation being completed as described in GEN Step 1 Title IV Aid Information DL Second/Subsequent Disbursements Include as aid that could have been disbursed if student met the conditions for a late disbursement Cannot be included in any post-withdrawal disbursement [CFR (g)(4)(ii)] For Discussion Purposes Only 4

5 Date of Institution s Determination that Student Withdrew Schools required to take attendance should have a DOD no later than 14 calendar days after student s last date of attendance When did the school know of the student s withdrawal? If unofficial withdrawal, determine withdrawal date no later than 30 days after the end of the earlier of the 1. Payment period / period of enrollment, or 2. Academic year, or 3. Educational program Step 2 Withdrawal Date School Not Required to Take Attendance Use the earlier of date student began school s withdrawal process; or date student otherwise provided official notice; or midpoint in period (if student didn t notify school); or if student didn t notify due to circumstances beyond student s control, the date related to that circumstance; or Date school determines leave began (if student didn t return from approved leave of absence), or Use the last date of attendance at an academically related activity as documented by the school Approved Leave of Absence Policy (LOA) - Optional Written policy, publicized to students Student followed school s policy and was approved The leave does not involve additional charges LOA may not include more than 180 days in any 12-month period Must be a reasonable expectation of return Student allowed to complete coursework begun prior to leave at the same point they left 34 CFR (d) For Discussion Purposes Only 5

6 July 1, 2011 Regulatory Change Institutions not required to take attendance July 1, 2011 If the institution requires faculty to take attendance in certain circumstances, then the institution is considered required to take attendance, for example: School requires faculty to take attendance for all of a particular major, then for that major any student that withdraws from the school would be considered required to take attendance School requires faculty to take attendance during the add/drop period, then school is considered required to take attendance during add/drop period Regulatory Change: Credit Hour Program with Modules Modules are defined in (l)(6) A program is offered in modules if a course or courses in the program do not span the entire length of the payment period or period of enrollment Student may provide intent to attend a future module in writing R2T4 calculation not required if the student attends future module Future module must begin within 45 calendar days in a non-standard or nonterm program July 1, 2011 Regulatory Change: R2T4 Calculation July 1, 2011 Non-Standard terms not substantially equal in length and student has Pell and Loans Possible that student(s) withdraw during overlapping payment periods Standard terms with modules Combined enrollment in full-term courses and modules in payment period Verification For Discussion Purposes Only 6

7 Step 2 Withdrawal Date School Required to Take Attendance IF school is required to take attendance by outside entity (such as state or accrediting agency) THEN... withdrawal date is taken from attendance records NOTE: Requirement might apply only to specific groups of students Counting Calendar Days or Scheduled Clock Hours Count every day, including weekends and holidays, except: Scheduled break of five or more consecutive days when no classes are offered Days of leave of absence are not included in total days Special rule for schools that offer coursework in modules Clock Hour Calculation Numerator is clock hours scheduled to be completed as of the student s last date of attendance Scheduled hours per day times number of days of scheduled class from first day of payment period/period of enrollment to last date of attendance 6 hrs X 9 Days = 54 Denominator is clock hours scheduled to be completed in the payment period/period of enrollment Payment Period = 450 clock hrs % New regulation July 1, 2011 for program measured/reported to state/accrediting body in clock hours School must complete R2T4 calculation in clock hours For Discussion Purposes Only 7

8 Step 2 - Clock Hour Step 3 Amount of Title IV Aid Earned by Student Step 4 Aid to be Disbursed or Returned For Discussion Purposes Only 8

9 Post-Withdrawal Disbursements (PWD) When Title IV aid disbursed is less than Title IV aid earned Step 4, Box J on R2T4 Worksheet Must be made from available grant funds before available loan funds Funds that could have been disbursed PWD of Loan Funds: Notifications & Confirmations Schools Must: Notify a student, or parent (parent PLUS loan), in writing prior to making any PWD Receive confirmation from the student or parent borrower prior to disbursement Provide written notification within 30 days of date of determination of withdrawal Identifying type and amount of funds Explaining options to accept or decline some or all of funds Obligation to repay any loan funds disbursed Provide a deadline for response Post-Withdrawal Disbursement of Grant Funds No student confirmation required to credit student s account Disbursed as credit to account within 180 days after date of determination Disbursed directly to student - as soon as possible, but no later than 45 calendar days after date of determination For Discussion Purposes Only 9

10 Step 4 (cont.) Books and Supplies Step 5 Amount of Unearned Title IV Aid Due from the School Institutional Charges Title IV funds provided under assumption that they are used to pay institutional charges ahead of all other aid Are always charges assessed for entire payment period or period of enrollment prior to withdrawal May not be reduced even if other sources of aid are used to pay those charges For Discussion Purposes Only 10

11 Institutional Charges Include tuition, fees, room and board (if contracted with school) and other educationally-related expenses assessed For nonterm, credit hour programs use costs associated with number of courses student is expected to complete in period for which aid is awarded If student withdraws, institutional charges must include all courses student was initially expected to complete Institutional Charges When to Prorate: 34 CFR (g)(3) For nonterm-based programs where return calculation based on payment period but school charges for period of enrollment Institutional charges for payment period are prorated down from longer period If school has retained Title IV in excess of prorated amount, including allocating costs for equipment and supplies to the beginning of the program, funds retained are attributed to that payment period Step 5 Books and Supplies For Discussion Purposes Only 11

12 Step 6 Return of Funds by School Law specifies order of Title IV programs to which funds must be returned Never return more money than was received from a Title IV program Return of Funds by School Return funds to program(s) as soon as possible, but no later than 45 calendar days after the date of determination of withdrawal Calculation must be completed within 30 calendar days of the date of determination of withdrawal Step 6 For Discussion Purposes Only 12

13 Step 7 Return of Funds by Student Step 8 Repayment of Student s Loans Repayment of Student s Loans Student is responsible to repay any loan funds not returned by the school Loans are repaid in accordance with terms of the promissory note For Discussion Purposes Only 13

14 Step 9 Calculating Grant Overpayment - Example ,200 1, , Step 10 Return of Funds by Student Law specifies order of Title IV programs to which funds must be returned Student is obligated to return any Title IV overpayment in the same order that is required for schools Step 10 For Discussion Purposes Only 14

15 Grant Overpayment and Notifications Within 30 days of determining that a student who withdrew must repay all or part of a Title IV grant, school must provide notification that: student owes an overpayment eligibility for Title IV funds will end after 45 day period student must repay using one of the positive action steps Positive Action Steps to Retain Eligibility Student retains Title IV eligibility for 45 days During that time, student must either: repay in full to school make satisfactory arrangements to repay with school (school s option-not required) make satisfactory arrangements to repay with Department of Education Receipt of Additional TIV Funds During the 45-day Period of Extended Eligibility If student fails to return the overpayment or comply with action steps: student becomes ineligible for Title IV funds following 45 day period funds received during this period do not have to be returned unless student withdrew failure to comply with negotiated repayment arrangements, student immediately becomes ineligible for additional Title IV funds For Discussion Purposes Only 15

16 R2T4 Reporting Processes for Grant Overpayments For payments received on a currentyear overpayment make appropriate COD entry For payments received on previous year s grants, make same entry in COD, and electronic refund function in G5 R2T4 Reporting Processes for Direct Loan Program: Payments and Reductions If student has received an overpayment of Direct Loan funds school should reduce student s award/disbursements by making a downward adjustment in COD school then returns funds to the Department using the Electronic Refund function in G5 Reporting Overpayments to NSLDS A school may report an overpayment to NSLDS any time after student has had the opportunity to pay off overpayment in full to the school, OR indicate their intent to negotiate repayment arrangements with Debt Resolution Services Overpayments not paid in full within 45 days of the institution s determination of the withdrawal must be reported to NSLDS For Discussion Purposes Only 16

17 Referring Overpayments to the Department Referring overpayments for collection vs. reporting overpayments to NSLDS referring is the process of turning over a student s debt to Debt Resolution Services reporting is the process of creating within NSLDS a record of a student s overpayment. Resources FSA Handbook, Volume 5 34 CFR Program Integrity Information Questions and Answers Preamble to the Final Regulations 10/29/ GEN July 20, 2011: Implementation of Program Integrity Regulations FSA Coach Additional Resources Dear Colleague Letter GEN (February 2004) Dear Colleague Letter GEN (November 2004) R2T4 Demo Site available at R2T4 website available via FAA Access to CPS Online FSA Assessments For Discussion Purposes Only 17

18 QUESTIONS? 52 David Bartlett U.S. Department of Education Federal Student Aid Presentation Evaluation I would appreciate if you would take the time to submit an evaluation of this presentation. A paper evaluation is attached. Thanks much! For Discussion Purposes Only 18