Return to Title IV

Return to Title IV Funds

If a recipient of an FSA grant or loan funds cancels or is dismissed from school after beginning attendance, the amount of FSA grant or loan assistance earned by the student must be determined. If the amount disbursed to the student is greater than the amount the student earned, unearned funds must be returned. If the amount disbursed to the student is less than the amount the student earned, and for which the student is otherwise eligible, s/he is eligible to receive a post dismissal/cancellation disbursement of the earned aid that was not received.

The law specifies how your school must determine the amount of Federal Student Aid (FSA) assistance that you earn if you cancel or are dismissed 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 in some cases, certain state grant aid (LEAP/SLEAP).

When you cancel 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 post dismissal/cancellation disbursement. If the disbursement includes loan funds, you may choose to decline the loan funds so that you do not incur additional debt. Your school may automatically use all or a portion of your post-dismissal/cancellation 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-dismissal/cancellation disbursement. If you do not give your permission (which some schools ask for when you enroll), you will be offered the funds.  It may be in your best interest, however, 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 cancel 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 dismissal/cancellation, 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 did not 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 cancel or are dismissed 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.

Cancellation and Refund Polices are also provided in the Enrollment Agreement.

Refer to the respective sections in this catalog on the policies for Withdrawal, Leave of Absence and Dismissal.