Treatment of Title IV Aid when a Student Withdraws

The law specifies how St. Lawrence University must determine the amount of Title IV financial aid assistance that a student earns should they withdraw from the University. The Title IV financial aid programs covered by the regulation are Federal Direct Student Loans, Federal Direct PLUS Loans, Federal Pell Grants, Federal SEOG Grants, TEACH Grants, and Iraq and Afghanistan Service Grants.

It is important to understand that even though financial aid is posted to student accounts at the start of each semester, students earn the aid as they complete the semester. If a student withdraws during the semester, the amount of Title IV financial aid they earned up to the point of withdrawing is determined by a specific formula. Depending on the withdrawal date and aid eligibility, if a student (or parent, or the school) receives less assistance than the amount the student earned, a student may be able to receive those additional funds. On the other hand, if a student received more assistance than they earned, the excess funds must be returned by the University and/or by the student.

The amount of Title IV financial aid a student earns is determined on a pro rata basis. For example, if a student completes 30% of the semester, they earn 30% of the financial aid they were originally scheduled to receive. Once a student completes more than 60% of the semester, they earn all of the financial aid they were scheduled to receive for that payment period.

If a student did not receive all of the funds that they earned, they may be due what is called a post-withdrawal disbursement. Should a post-withdrawal disbursement include loan funds, the University would need to have the student’s permission before the funds could be disbursed. The student may choose to decline some or the entire loan funds should they not want to incur additional loan debt. The University may automatically use all or a portion of a student’s post-withdrawal of grant funds for tuition, fees, room and board (on-campus housing and meal plan). The University would need the student’s permission to use the post-withdrawal grant disbursement for all other institutional charges. Should a student not provide permission, the student would be offered the funds. The student should keep in mind that it might be in their best interest to allow the University to keep the funds to reduce their debt to the school.

Note that there may be Title IV funds that the student was scheduled to receive that cannot be disbursed to the student once the student withdraws because of other eligibility requirements.

If a student (or the University or parent receives on the student’s behalf) excess Title IV funds that must be returned, the University must return a portion of the excess equal to the lesser of:

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

The University must return this amount even if it did not keep this amount of the student’s Title IV funds. If the University is not required to return all of the excess funds, the student must return the remaining amount.

Note that for any loan funds a student must return, they (or the parent for a Direct PLUS) would repay in accordance with the terms of the promissory note (making scheduled payments to the holder of the loan over a period of time).

An overpayment is defined as any amount of unearned grant funds that must be returned. The maximum amount of a grant overpayment that must be repaid is half of the grant funds received or were scheduled to receive. A student does not have to repay a grant overpayment if the original amount of the overpayment is $50 or less. The student would need to make arrangements with the University or with the Department of Education to return the unearned grant funds.

It is important to understand that the requirements for Title IV aid funds when a student withdraws are separate from the University’s refund policy. Therefore, a student may still owe funds to the University to cover unpaid institutional charges. The University may also charge the student for any Title IV funds that they had to return. Students should inquire with staff in the Student Financial Services Office for information on the University Refund policy. Students should contact the Office of Student Life should they need information regarding officially withdrawing from the University. Students may contact the Financial Aid Office if they have questions regarding the Title IV aid return policy, and may request a draft return to Title IV aid calculation to assist in determining the impact of withdrawing.