Withdrawal and Return of Title IV Funds (R2T4) Policy
How a withdrawal affects financial aid
Federal regulations require Title IV financial aid funds (grant or loan) to be awarded under the assumption that a student will attend the institution for the entire period in which federal assistance was awarded. When a student withdraws from all courses for any reason, including medical withdrawals, he/she may no longer be eligible for the full amount of Title IV funds that he/she was originally scheduled to receive. The return of funds is based upon the premise that students earn their financial aid in proportion to the amount of time in which they are enrolled. A pro-rated schedule is used to determine the amount of federal student aid funds he/she will have earned at the time of the withdrawal. Once 60% of the semester is completed, a student is considered to have earned all of his/her financial aid and will not be required to return any funds.
WKU is required to determine the earned and unearned portions of Title IV aid as of the date the student ceased attendance based on the amount of time the student spend in attendance.
Federal law requires schools to calculate how much federal financial aid a student has earned if that student:
- completely withdraws, or
- stops attending before completing the semester and earns grade of "FN", or
- does not complete all modules (courses which are not scheduled for the entire semester or payment period for which he/she has registered at the time those modules began.)
Based on this calculation, Western Kentucky University (WKU) students who receive federal financial aid and do not complete their classes during a semester or term could be responsible for repaying a portion of the aid they received. Students who do not begin attendance must repay all financial aid disbursed for the term.
- Academic policies on leaving WKU are available in the on-line Catalog.
- The Western Kentucky University's tuition/fee refund policy is separate from the federal regulations to repay unearned aid. Whether or not a student receives a tuition/fee refund has no bearing on the amount he/she must repay to the federal aid programs.
How the earned financial aid is calculated
Students who receive federal financial aid must "earn" the aid they receive by staying enrolled in classes. The amount of federal financial aid assistance the student earns is on a pro-rated basis. Students who withdraw or do not complete all registered WKU classes during the semester may be required to return some of the financial aid they were awarded.
WKU is required to determine the percentage of Title IV aid ''earned" by the student and to return the unearned portion to the appropriate aid programs. Regulations require schools to perform calculations within 30 days from the date the school determines a student's complete withdrawal. The school must return the funds within 45 days of the calculation. The R2T4 calculation process and return of funds is completed by the Office of Student Financial Assistance (OSFA).
The following formula is used to determine the percentage of unearned aid that has to be returned to the federal government:
- The percent earned is equal to the number of calendar days completed up to the withdrawal date, divided by the total calendar days in the payment period (less any scheduled breaks that are at least 5 days long).
- The payment period for most students is the entire semester. However, for students enrolled in modules (courses which are not scheduled for the entire semester or term), the payment period only includes those days for the module(s) in which the student is registered.
- The percent unearned is equal to 100 percent minus the percent earned.
For students enrolled in modules: A student is considered withdrawn if the student does not complete all of the days in the payment period that the student was scheduled to complete. WKU SFA will track enrollment in each module (a group of courses in a program that do not span the entire length of the payment period combined to form a term, for example, summer sessions) to determine if a student began enrollment in all scheduled courses. If a student officially drops courses in a later module while still attending a current module, the student is not considered as withdrawn based on not attending the later module. However, a recalculation of aid based on a change in enrollment status, may still be required.
Students who provide written confirmation to the OFSA at the time of ceasing attendance that they plan to attend another course later in the same payment period are not considered to have withdrawn from the term. If the student does not provide written confirmation of plans to return to school later in the same payment period or term, WKU considers the student to have withdrawn and begins the R2T4 process immediately. However, if the student does return to WKU in the same term, even if they did not provide written confirmation of plans to do so, the student is not considered to have withdrawn after all and is eligible to receive the Title IV funds for which the student was eligible before ceasing attendance. OSFA will then reverse the R2T4 process and provide additional funds that the student is eligible to receive at the time of return.
Steps in determining Institutional Charges
Institutional charges are used to determine the portion of unearned Federal Student Aid that WKU is responsible for returning. Title IV program funds are used to pay institutional charges ahead of all other sources of aid. The institutional charges used in the calculation are always the charges that were assessed the student for the entire period of enrollment prior to the student's withdrawal. Application fees are excluded from institutional charges because they are not an educational cost. Student's institutional charges are generally defined as charges for tuition and fees, room and board and other educational expenses that are paid to the school directly.
WKU does not include books, supplies, equipment, and materials as institutional charges because students are able to purchase these materials at convenient locations not affiliated with WKU (see attached list) and WKU provides financial aid funds in a way and at a time that makes it possible for students to purchase the materials in a timely manner. WKU students, who have completed their financial aid requirements, receive their refund by the Friday before the first day of classes.
Generally, the higher the institutional charges, the greater the amount of unearned aid that is to be returned by the school.
Steps in the return of Title IV funds policy
Step 1: Student's Title IV information
OSFA will determine:
- The total amount of Title IV aid disbursed for the semester in which the student withdrew. A student's Title IV aid is counted as aid disbursed in the calculation if it has been applied to the student's account on or before the date the student withdrew.
- The total amount of Title IV aid disbursed plus the Title IV aid that could have been disbursed for the semester in which the student withdrew.
Step 2: Percentage of Title IV aid earned
OSFA will calculate the percentage of Title IV aid earned as follows:
The number of calendar days completed by the student divided by the total number of calendar days in the semester in which the student withdrew. The total number of calendar days in a semester shall exclude any scheduled breaks of more than five days.
Days Attended ÷ Days in Enrollment Period = Percentage Completed
If the calculated percentage completed exceeds 60%, then the student has "earned" all the Title IV aid for the enrollment period.
Step 3: Amount of Title IV aid earned by the student
OSFA will calculate the amount of Title IV aid earned as follows:
The percentage of Title IV aid earned (Step 2) multiplied by the total amount of Title IV aid disbursed or that could have been disbursed for the term in which the student withdrew (Step 1-A).
Total Aid Disbursed x Percentage Completed = Earned Aid
Step 4: Amount of Title IV aid to be disbursed or returned
- If the aid already disbursed equals the earned aid, no further action is required.
- If the aid already disbursed is greater than the earned aid, the difference must be returned to the appropriate Title IV aid program.
Total Disbursed Aid – Earned Aid = Unearned Aid to be Returned
- If the aid already disbursed is less than the earned aid, then OSFA will calculate a post-withdrawal disbursement.
Types of withdrawals
For financial aid purposes there are two types of withdrawals: Official and Unofficial.
- Official withdrawal from WKU by the student. The current academic year's policy for a Complete Withdrawal can be found in The WKU on-line General Catalog.
- Federal financial aid regulations consider a student to be an unofficial withdrawal if the student receives all failure due to non-attendance (FN) grades and withdraw (W) grades for the term. School must make this determination as soon as possible, but no later than 30 days after the end of the earlier period of enrollment.
Determination of the withdrawal date
The withdrawal date used in the return calculation of a student's federal financial aid is the actual date indicated on the official drop form. If a student stops attending classes without notifying WKU, the withdrawal date will be the latest date reported by the instructor.
In order to document attendance for distance education courses, simply logging into an online class is not sufficient. The student must demonstrate he/she participated in class or was otherwise engaged in an academically related activity (contributing to an online discussion or initiating contact with a faculty member to ask a course-related question).
Withdrawing prior to completing 60 percent of a term
Unless a student completes 60 percent of the term in which federal aid was disbursed, the student will be required to return all or part of the financial aid disbursed in the term. This applies to students who have officially (including medical), or unofficially withdrawn.
When a student fails to begin attendance
If a student receives financial aid, but never attends classes, the OSFA must return all disbursed funds to the respective federal and institutional aid programs.
Students who receive all FN grades at the end of the term
Financial aid is awarded under the assumption that the student will attend WKU for the entire term for which federal assistance was disbursed. When the student has earned a grade of FN in each class for the term, a return will be processed based on the latest date reported by an instructor. WKU will return the calculated amount to the federal program and the student's bursar account will be charged the amount and the student will be responsible for any balance due.
If the student can prove to have participated in a WKU class or academic-related activity past the 60% date, the student will not be required to return any disbursed financial aid. The student's bursar account will be updated and the student will be responsible for any other charges that may have been applied to their account.
Students who are able to verify attendance beyond WKU's records may submit supporting documentation to OSFA. The student must submit supporting documentation within 30 days from the last date of the term. Recalculations for aid eligibility will not be performed for documentation received after that date.
Repayment calculation process
Once grades are posted for the student who receives all failing grades, OSFA will return all unearned aid back to the federal and institutional programs and the student's bursar account will be charged. The OSFA will mail a notification letter with the repayment amount(s) to the student's permanent address. The student's bursar account will be updated, and the student will be responsible for any balance due. A statement reflecting these charges will be sent to the student by the Bursar's Office.
Definition of an academic related activity
Examples of academic-related activities include but are not limited to physically attending a class where there is an opportunity for direct interaction between the instructor and students.
Proof of participation (but not limited too):
- Physically attending a WKU class where there is opportunity for direct interactions between students and instructor;
- Submitted academic assignments
- Taking an exam, interactive tutorial or computer-assisted instruction
- Attending a WKU required study group
- Participating in an online discussion about academic matters
- Initiating contact with a faculty member to ask a question about the academic subject studied in the course
Documentation not acceptable as proof of participation:
- Student's self-certification of attendance that is not supported by school documentation
- Logging into an online class without active participation
- Living in WKU housing
- Participating in the school's meal plan
- Participating in academic counseling or advising
Return of Title IV funds for students enrolled in modules
(Generally summer sessions) – Effective July 1, 2011
These new regulations aim to provide for consistent and equitable treatment of students who withdraw from a program measured in credit hours, regardless of whether courses in the program span the entire term or consist of shorter modules.
Program integrity principles
- Title IV funds are awarded to a student to attend an entire payment period or period of enrollment, and the funds are intended to cover the student's educational and living expenses for the entire period.
- Federal law specifies that a student earns Title IV funds on a pro-rated basis through 60 percent of a period based on the actual days completed. For the purposes of federal aid programs, WKU must be able to document a student's active participation in an academic activity.
- A student is considered to have withdrawn from a payment period or period of enrollment in which the student began enrollment if the student ceased attendance in all scheduled courses without completing all of the days the student was scheduled to complete in the period.
- However, if a student provides written confirmation to WKU before ceasing attendance that the student plans to attend another course later in the same period, the student is not considered to have withdrawn. For a nonstandard-term or non-term program, the next course the student plans to attend during the period must begin within 45 days after the end of the course the student ceased or failed to attend in order for the student not to be considered withdrawn. If a student does not resume attendance within the scheduled timeframe, the student is considered to have withdrawn as of the date on which attendance ceased.
- If a student does not provide written confirmation of plans to return to school later in the same period, a school considers the student to have withdrawn and performs a return of Title IV funds (R2T4) calculation to determine if any funds must be returned. However, if the student does return to school in the same period — even if the student did not provide written confirmation of plans to do so — the student is not considered to have withdrawn and is eligible to receive Title IV funds for which the student was eligible before ceasing attendance. WKU must reverse the R2T4 process and provide any additional funds the student is eligible to receive at the time of return.
- If a student enrolled in a term-based, credit hour program offered in modules who withdrew without confirming intent to return to a module later in the period of enrollment re-enters the same program prior to the end of the period of enrollment, the student is treated as he/she did not cease enrollment.
- This new rule replaces prior guidance provided in Dear Colleague Letter GEN-00-24 regarding student withdrawals in term-based programs that include courses shorter than the length of an entire term.
- The rule impacts all programs offering courses shorter than an entire term, including semester-based programs with a summer term consisting of two consecutive six-week summer sessions.
Repayment calculation of unearned aid as a result of a withdrawal
As a result of a withdrawal, students who received federal funds will be required to repay "unearned" aid. The repayment calculation is performed by the OSFA.
Student notification of repayment
A notification letter outlining the amount returned to the federal and institutional program(s) will be mailed to the student's permanent address from OSFA. WKU will return funds on the student's behalf to the appropriate federal and institutional aid program(s) and subsequently will bill the student's bursar account. A statement reflecting these charges will be sent to the student. The Bursar's office will send an email notification to the student's University account if the semester has not ended and will send a letter to the student's permanent address if the semester has ended. The student is responsible for all charges and overpayments resulting from a Return of Title IV calculation.
Repayment to federal and institutional aid programs
Federal regulations and Institutional policy require that the following aid programs be subject to the repayment calculation if the student did not attend 60% of the term:
- Federal Direct Loans: Unsubsidized and Subsidized
- Federal Perkins Loans
- Federal Direct Grad PLUS Loans
- Federal Direct Parent PLUS Loans
- Federal Pell Grant
- Iraq and Afghanistan Service Grant
- Federal Supplemental Educational Opportunity Grant (FSEOG)
- TEACH Grant
FWS funds are not included
School and student responsibility for return of unearned federal funds
The WKU OSFA is responsible for returning unearned federal financial aid to the federal government via COD. The student will be billed for any amount due as a result of the return of federal aid funds (R2T4) calculation. If the student owes any money to WKU resulting from the return of federal funds, the student will be billed by the WKU Bursar's Office.
If the student owes any money to the UA resulting from the return of federal or institutional funds, the student will be billed by the WKU Bursar's Office.
If a student does not pay funds due to WKU to cover their Bursar balance, the student's records will have a Bursar's Office hold placed on his/her account. This means he/she will not be permitted to register for classes, receive transcripts or submit a financial aid appeal for Title IV until the balance is paid.
School and Student responsibilities in regard to the R2T4 policy & process
WKU's responsibilities in regard to the Return of Title IV funds:
- Providing each student with the information given in this policy;
- Identifying students affected by this policy and completing the Return of Title IV Funds (R2T4) calculation;
- Informing the student of the result of the R2T4 calculation and any balance owed to WKU as a result of a required return of funds;
- Returning any unearned Title IV aid that is due to the Title IV programs and, if applicable, notifying the borrower's holder of federal loan funds of the student's withdrawal date;
- Notifying student and/or Plus borrower of eligibility for a Post-Withdraw Disbursement, if applicable.
Student's responsibilities in regard to the Return of Title IV funds
- Becoming familiar with the Return of Title IV Funds (R2T4) policy and how withdrawing from all courses effects eligibility for Title IV aid;
- Resolving any outstanding balance owed to the WKU resulting from a required return of unearned Title IV aid;
- Resolving any repayment to the U.S. Department of Education as a result of an overpayment of Title IV grant funds.
WKU must include a statement of:
- WKU refund policy
- Requirements for the treatment of Title IV funds when a student withdraws
- Requirements and procedures for officially withdrawing from WKU
How institutional grant aid is affected by a withdrawal
All institutional aid provided by the WKU is based on need and/or academic achievement. Any change in enrollment status may cause the amount of the award to be recalculated. Credit balances will not be released to a student until institutional aid has been repaid.
Steps in determining a Post-withdrawal disbursement
Any undisbursed Title IV aid for the period that WKU uses as the basis for the return calculation is counted as aid that could have been disbursed as long as the following were met before the date the student became ineligible-
- For all programs, the Department processed a SAR or ISIR with an official EFC for the student
- For an FSEOG award, WKU made the award to the student
- For a DL, WKU certified or originated the loan
- For Perkins loan, WKU made the award to the student
A promissory note must be signed for a loan to be included as "Aid that could have been disbursed" in the return calculation.
WKU is required to make Post-withdrawal disbursements within 180 days of the date WKU determines a student withdraws. The disbursement must be made from available grant funds before available loan funds. WKU cannot require a student who has withdrawn to pick up a Post withdrawal disbursement in person. WKU must obtain confirmation from a student or parent for PLUS before making any disbursement of loan funds from a post-withdrawal disbursement. Without obtaining students' permission, Title IV grant funds from post-withdrawal disbursement are credited to their account to pay for tuition, fees, room and board or disbursed directly to the student. This is allowed up to the amount of outstanding charges.
WKU must notify a student or parent for PLUS loan, in writing before making any post-withdrawal disbursements within 30 days of the date WKU determines a student withdrew. (See FSA HB June 2012 5-85 for information WKU must provide). The response does not have to be in writing, but WKU must document the response.
WKU may not disburse the proceeds of a PLUS loan taken out by a parent who has died, even though student for whose benefit the loan was intended remains alive and otherwise eligible.
WKU must maintain written records of post withdrawal disbursements.