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Federal financial aid recipients who withdraw from or stop attending class prior to the end of the term are required by federal regulation to return “unearned” funds to the U. S. Department of Education (ED).   The unearned amount to be returned is calculated according to a federal formula that is based on:

  • when the student withdrew or stopped attending (i.e., the remaining percentage of the semester, minus scheduled breaks of five or more consecutive days), and
  • institutional charges such as tuition, standard fees, and books and supplies charges. 

Notes:

  • Wages earned through Federal Work Study employment are not included in the return calculation. 
  • If the student re-enrolls and begins attendance in “late-start” classes in the same semester, it may be possible to reverse the return of funds.  

Types of Withdrawals, Withdrawal Dates:

  • Official Withdrawal:  student verbally or in writing notifies the College of their intent to withdraw or is administratively dropped by the College.
    • Date of withdrawal is the date of student’s notification or the College’s action.
  • Unofficial Withdrawal:  student does not notify the College of their intent to withdraw, but does not complete the course/s.
    • Date of withdrawal is estimated based on the instructor’s indication that the student did or did not actively participate beyond the 60% point.  Examples of active participation include attending in person, submitting coursework, participating in an online discussion forum for that course, participating in a study group, submitting a quiz or exam, course-related contact with instructor.
      • Students who participated up to the 60% point will have a 50% return of funds calculation.
      • Students who participated beyond the 60% point are considered to have earned all of their aid for that semester.

Order of Funds Returned:

  1. Unearned federal financial aid is returned to ED in the following order:
  2. Unsubsidized Federal Direct Student Loan
  3. Subsidized Federal Direct Student Loan
  4. Federal PLUS loans received on behalf of a student
  5. Federal Pell Grant
  6. Federal SEOG

Funds returned to loans reduce the current outstanding balance that must ultimately be repaid.

Return of Funds: Process, Timing, and Results

As required by federal regulation, funds that must be returned by the College are forwarded to ED within 45 calendar days of the date Ivy Tech determines the student has withdrawn from all classes.  These funds are then billed to the student and the student is notified.  The balance due to Ivy Tech must be paid before a student can re-enroll or receive additional financial aid. 

Also, students who have withdrawn from or stopped attending courses are not automatically offered a student loan as part of their financial aid award for the next two years of attendance at Ivy Tech.  Those who re-enroll and wish to be considered for a student loan need to complete a separate Federal Direct Loan Request form.

Post-Withdrawal Disbursements

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Students who drop or withdraw from all classes before financial aid has been disbursed may have earned some financial aid by incurring educational costs.  The amount of the post-withdrawal disbursement will be based on:

  • the student’s original eligibility,
  • the number of credit hours he/she began attending (based on instructor reports), and
  • the date the student dropped or withdrew

Grant funds awarded post-withdrawal will be automatically applied to the student’s Ivy Tech account and any credit balance will be refunded to the student.

Loan funds eligible for post-withdrawal disbursement will be offered in writing.  The student (or parent, in the case of a PLUS loan) must respond within 14 days or the offer will expire.

Overpayments

Federal regulations require that students who withdraw before participating beyond the 60% point repay the portion of a grant (if over $50) that exceeds half of the scheduled total federal grants.  This is in addition to the calculation of funds returned by the College and billed to the student. 

If a student owes a grant overpayment, he/she will be notified by the College within 45 days of the date the school determines that he/she completely withdrew.  The notification will include the following:

  • how to remit the overpayment to the College within 45 days of the notification,
  • that, after 45 days, the College will refer the overpayment to ED, which will send the account to Collections,
  • how to remit to ED Collections after 45 days, and
  • that he/she is ineligible for additional Title IV funds until the overpayment is resolved.

Contact information for ED Collections:

U. S. Department of Education
Debt Resolution Services
P. O. Box 5609
Greenville, TX  75403
1-800-621-3115

Satisfactory Academic Progress (SAP)

Every semester, a student’s Satisfactory Academic Progress (SAP) status is evaluated, whether or not they received financial aid, and whether or not funds are returned under R2T4 regulations. For complete details, see the College’s SAP policy.  Students who are considering withdrawing from one or more classes are encouraged to speak with their Express Enrollment Center or Financial Aid Office before making the decision.