The Office of Financial Aid is required by federal statute to recalculate federal financial aid eligibility for students who withdraw, drop out, are dismissed, or take a leave of absence prior to completing 60% of a payment period or term. The federal Title IV financial aid programs must be recalculated in these situations. Students desiring to withdraw from the College must complete the withdrawal form available from the Office of the Dean of Students.
Earned Title IV Funds are federal Title IV funds used to cover education costs according to the length of time the student was enrolled before withdrawing. The amount of funds earned is directly proportional to the time enrolled, through 60% of the term. After 60%, the student is considered to have earned all aid. Unearned Title IV Funds are the amount of grant and loan assistance awarded under Title IV that has not been earned by the student and must be returned to the programs.
If a student leaves the institution prior to completing 60% of a payment period or term, the financial aid office recalculates eligibility for Title IV funds. Recalculation is based on the percentage of earned aid using the following Federal Return of Title IV funds formula:
Percentage of payment period or term completed = the number of days completed up to the withdrawal date divided by the total days in the payment period or term. (Any break of five days or more is not counted as part of the days in the term.) This percentage is also the percentage of earned aid. Funds are returned to the appropriate federal program based on the percentage of unearned aid using the following formula:
Aid to be returned = (100% of the aid that could be disbursed minus the percentage of earned aid) multiplied by the total amount of aid that could have been disbursed during the payment period or term.
If a student earned less aid than was disbursed, Allegheny College would be required to return a portion of the funds and the student would be required to return a portion of the funds. Keep in mind that when Title IV funds are returned, the student borrower may owe a debit balance to the institution. If a student earned more aid than was disbursed to him/her, Allegheny College would owe the student a post-withdrawal disbursement which must be paid within 120 days of the student’s withdrawal.
Allegheny College must return the amount of Title IV funds for which it is responsible no later than 30 days after the date of the determination of the date of the student’s withdrawal.
Return of funds are allocated in the following order:
- Unsubsidized Federal Direct Loans
- Subsidized Federal Direct Loans
- Federal Perkins Loans
- Federal Direct Parent (PLUS) Loans
- Federal Pell Grants for which a return of funds is required
- Federal Supplemental Opportunity Grants for which a return of funds is required