RETURN OF TITLE IV (R2T4) FUNDS
As a result of the Higher Education Act of 1998, a student who completely withdraws from classes may be required to pay a percentage of federal financial aid received. Additionally, withdrawing from classes can cause a student to lose financial aid (suspension) because of Satisfactory Academic Progress.
All students receiving federal financial aid who completely withdraw, officially or unofficially, are subject to the federal repayment law. Simply put, any federal financial aid recipient who withdraws within the first 60% of a payment period owes a portion of financial aid back to the federal government and a portion back to the school. This situation is called a Return of Title IV, or R2T4
RETURN OF TITLE IV FUNDS (R2T4) POLICY
This policy applies to all eligible students receiving Title IV funds, specifically the Federal subsidized, unsubsidized loans, PLUS loans and Pell Grants. Title IV funds are awarded to a student under the assumption that the student will attend school for the entire period, for which the assistance is awarded. When a student withdraws from their program, for any reason including medical withdrawals, they may no longer be eligible for the full amount of Title IV funds that they were originally scheduled to receive.
If the student withdraws prior to completing over 60% of a semester, they may be required to repay a portion of the federal financial aid that the student received for that term. A pro rata schedule is used to determine the amount of federal student aid funds the student will have earned at the time of the withdrawal.
Federal aid includes Federal Student Loan (subsidized and unsubsidized), Plus Loan and Pell Grants. Students earn their financial aid in proportion to the amount of time in which they are enrolled. Therefore, a student who withdraws in the second week of classes has earned less of their financial aid than a student who withdraws in the seventh week. Once 60% of the scheduled hours in a payment period are completed, a student is considered to have earned all of their financial aid and will not be required to return any funds.
Student Early Withdrawal
The policy for withdrawal of a student is the same whether the student withdraws voluntarily or is withdrawn due to some action requiring dismissal.
When a student discontinues training at The Academy, the following steps must be taken:
- The student meets with their coach and/or the owner to discuss reasons for withdrawal and attempt to resolve the challenges causing the drop.
- The student meets with the FAO to complete the exit interview.
- The Return to Title IV calculation must be completed. Deborah John and Associates (DJA) complete this process.
- Exit counseling is completed online.
- At the exit interview the student’s file will be checked for correct documentation.
Withdrawal Date
The last day of attendance/withdrawal date is the last day the student enters hours using the electronic fingerprint scanner to record hours.
Post Withdrawal Process
- The Academy will notify Deborah John & Associates (DJA), third party servicer that the student has withdrawn from a program.
- DJA will notify school what is needed to complete the student’s FA file
- The Academy will gather the requested information, complete the R2T4 clock hour form and send to DJA
- DJA will review documentation to complete the file, process accordingly and calculate the post-withdrawal disbursement based on the R2T4 form provided
- DJA will prepare and forward an award letter, indicating the PWD amount (if any), then originate, post and call in those funds to the school’s federal funds account(s)
- If a disbursement needs to be made, The Academy will then make a disbursement to the student at that time.
Disbursements during a student’s tenure at The Academy will be monitored closely, so as to prevent post-withdrawal disbursements if possible. Calculation of Return to Title IV
The Federal Return of Title IV Funds formula dictates the amount of Federal Title IV aid that must be returned to the Federal government by The Academy and/or the student. The Federal formula requires a Return of Title IV aid if the student received Federal financial assistance in the form of Direct Loans, Pell Grants or Plus direct loans and withdraws on or before completing 60% of the payment period. The percentage of Title IV aid earned is equal to the percentage of the payment period that was completed as of the withdrawal date if this occurs on or before completion of 60% of the hours in the payment period. The percentage that has not been earned is calculated by determining the complement of the percentage earned (e.g., if 40% was earned, 60% was unearned). The amount to be returned is calculated by subtracting the amount of Title IV assistance earned from the amount of Title IV aid that was or could have been disbursed as of the withdrawal date. The percentage of the payment period completed is calculated by dividing the total number of clock hours completed in the payment period by the number of completed clock hours in the payment period as of the withdrawal date. The Academy is responsible to return any funds that were dispersed to The Academy during the payment period but were not earned by The Academy.
Refund and Repayment Compliance Requirements
A student, who withdraws prior to completion of 60% of the payment period, may be required to repay some of the Federal funds that were received for the payment period. The R2T4 included with the Institutional Refund will outline any charges the student must return to the Department of Education.
The following Title IV refund distribution is used for all Federal Title IV aid that must be returned to the Federal government or the lending institution by The Academy and/or the student:
- Federal Unsubsidized Direct Loan
- Federal Subsidized Direct Loan
- Federal Plus Direct Loan
- Federal Pell Grant
All refunded Title IV funds that are due to the Department of Education by The Academy are made within 45 days of the date The Academy determined the student withdrew.
Any student who is not on financial aid; monies due are issued to the party responsible for tuition payments.
A student, who withdraws prior to completion of 60% of the payment period, may be required to repay some of the Federal funds that were received for the payment period.
The R2T4 included with the Institutional Refund will outline any charges the student must return to the Department of Education.
The following Title IV refund distribution is used for all Federal Title IV aid that must be returned to the Federal government or the lending institution by The Academy and/or the student:
- Federal Unsubsidized Direct Loan
- Federal Subsidized Direct Loan
- Federal Plus Direct Loan
- Federal Pell Grant
All refunded Title IV funds that are due to the Department of Education by The Academy, are made within 45 days of the date The Academy determined the student withdrew.
Any student who is not on financial aid; monies due are issued to the party responsible for tuition payments.
Institutional and student responsibility in regard to the Federal Return of Title IV Funds Policy The FAO’s responsibilities in regard to the Return of Title IV Funds policy include:
- Providing each student with the information given in this policy;
- The Academy’s refund policy is in the enrollment contract and The Academy catalog.
- Identifying students affected by this policy and completing the Return of Title IV Funds calculation;
- DJA will do the calculations and inform The Academy.
- Inform the student of the result of the Return of title IV Funds calculation and any balance owed to The Academy as a result of a required return of funds;
- Returning any unearned Title IV aid that is due to the Title IV program and if applicable, notifying the borrower’s holder of federal loan funds of the student’s withdrawal date;
- Notifying student of eligibility for a Post-Withdrawal Disbursement, if applicable;
- If a student fails to attend the exit interview, a letter or email will be sent to the student. It will explain the responsibilities of repaying the loan and where to get information concerning their loan.
- A student can contact the financial aid office at any time ifthey have questions concerning their loan or need information concerning loan consolidation.
The student’s responsibilities in regard to the Return of Title IV Funds policy include:
Becoming familiar with the Return of Title IV Funds policy and how withdrawing effects eligibility for Title IV aid:
- Resolving any outstanding balance owed to City Pointe Beauty Academy resulting from a required return of unearned Title IV aid.
The following is one example of an R2T4 process:
Student begins training September 11, 2012. The student misses on October 19 and 20. On November 10 the student stops coming to The Academy but has not notified The Academy they are officially withdrawing from the program. The Academy waits 10days (November 13 – November 23) and determines on November 23 that the student is not returning to The Academy and completes an R2T4.
The student receives $2600 in Pell, $1750 in Subsidized Direct Loans and $2800 in Unsubsidized Direct Loans. The number of scheduled hours the student could have earned is 301 hours (43 days x 7 hours a day – this includes dates in which the student was not present).
- In a payment period there are 450 hours that can be earned. The student completed 301 or 66.8% of the total hours. Therefore, all money paid out has been earned and The Academy is not required to return any funds. The student is now liable for the unpaid difference on the Subsidized Direct Loans and Unsubsidized Direct Loans according to the agreement in the master promissory note to the Department of Education.