Return of Title IV Funds (R2T4)

How a Withdrawal affects Financial Aid

Federal regulations require Title IV financial aid funds 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.

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

Based on this calculation, College for Creative Studies 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.

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 classes during the semester may be required to return some of the financial aid they were awarded.

Institutions are 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. For example, if a student completes 30% of the payment period, they earn 30% of the aid they were originally scheduled to receive. This means 70% of the scheduled awards remain “unearned” and must be returned to the federal government. 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 federal funds.

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 is the entire semester.
• The percent unearned is equal to 100% minus the percent earned.

Steps in the Return of Title IV Funds Policy

• 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.
• Will calculate the percentage of Title IV aid earned as follows: the number of calendar days completed 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 5 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.
• College for Creative Studies 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. Total Aid Disbursed × Percentage Completed = Earned Aid
• 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 that 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 College for Creative Studies will calculate a post-withdrawal disbursement.

Type of Withdrawals

For financial aid purposes there are two types of withdrawals: Official and Unofficial.

Official – an official withdrawal from College for Creative Studies by the student. For the policy and procedure of Official Withdrawals review the College for Creative Studies Catalog, Academic Policies section. Contact the Office of AARO for more information.

Unofficial – federal financial aid regulations consider a student to be an unofficial withdrawal if the student receives all F (failure) or WF (withdraw-unofficial) grades or a combination of F and W (withdraw) grades for the term.

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 College for Creative Studies, the withdrawal date will be the midpoint of the semester or the last date of academic activity determined by College for Creative Studies. Additional documentation supporting the last date of academic activity may be provided by the student if they verify a later date of attendance than determined by College for Creative Studies.

Withdrawing Prior to Completing 60% of a Term

Unless a student completes 60% 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 or unofficially withdrawn.

When a Student Fails to Begin Attendance

If a student receives financial aid, but never attends classes, College for Creative Studies will return all disbursed funds to the respective federal aid programs. If the student owes money to College for Creative Studies resulting from the return of federal funds, the student will be billed by the Business Office. If the student does not pay the funds due to College for Creative Studies, a business hold is placed on the student’s account. This means he/she will not be permitted to register for classes or receive transcripts until the balance is paid.

Students who do not Receive an Earned Grade in a Term

Financial aid is awarded under the assumption that the student will attend College for Creative Studies for the entire term for which federal assistance was disbursed. College for Creative Studies is required to have a procedure for determining whether a Title IV recipient who began attendance during a period completed the period or should be treated as a withdrawal. Students who attended class but failed to meet the academic requirements of the course are awarded a grade of F, this is an earned grade. Students who started a course but stopped attending class at some point and were given a grade of F(failure), WF (withdraw-unofficial), W(withdrawal), are considered an “unofficial” withdrawal, and will be reviewed to determine that last date of an academically related activity or the midpoint of the semester.

Repayment Calculation Process:

Once grades are posted for the student who receives either all F’s, WF’s or F and W grades, College for Creative Studies will return all unearned aid back to the federal aid programs and the student’s billing account will be charged. The Business Office will mail a bill to the student’s permanent address. The student is responsible for any balance due.

Credit Balances as a Result of a R2T4 Calculation

If an R2T4 calculation is required and the student has a pending credit balance, the school will not release the credit balance to the student or parent until the R2T4 calculation is completed.  Once the R2T4 calculation is completed and it is determined the student is entitled to a credit balance, the funds will be disbursed to the student or parent as soon as possible, but no later than 14 days after the date of the R2T4 calculation is performed.  This timeframe meets or exceeds all federal, state, or institutional cash management regulations.

If a R2T4 calculation is required and the student does not have a pending credit balance, the school will perform the R2T4 calculation.  If it is determined that a student is entitled to a credit balance due to the R2T4 calculation, the funds will be disbursed to the student or parent as soon as possible, but no later than 14 days after the date of the R2T4 calculation is performed.  This timeframe meets or exceeds all federal, state, or institutional cash management regulations.

Definition of an Academic Related Activity

Examples of College for Creative Studies 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:

• Exams or quizzes
• Tutorials
• Computer-assisted instruction
• Completion of an academic assignment, paper or project
• Participating in online discussion about academic matters
• Initiating contact with a faculty member to ask a question about the academic subject in the course

Documentation not acceptable as Proof of Participation:

• Student’s self-certification of attendance that is not supported by school documentation
• Living in the ACB or Taubman Center Housing as a College for Creative Studies student
• Participating in academic counseling or advising

Repayment of Federal Aid Programs

Federal regulations require that the following aid programs be subject to the repayment calculation if the student did not attend 60% of the term in the following order:

1. Unsubsidized Direct Stafford Loan
2. Subsidized Direct Stafford Loan
3. Direct PLUS (Parent) Loan/Direct Graduate PLUS Loan
4. Federal Pell Grant
5. Federal Supplemental Education Opportunity Grant (SEOG)

Over-Payment of Federal Grant Funds

Federal regulations provide that 50% of the unearned amount of all federal grants is protected by the federal calculation. Any federal grant money subject to repayment is returned by College for Creative Studies and that amount will be billed to the student’s billing account as a debt to the College for Creative Studies.

Additional loan information to consider when withdrawing

When a student is enrolled less than part-time, the grace period begins. The student’s grace period for loan repayments for Federal Direct Unsubsidized and Subsidized Loans will begin on the day of the withdrawal from the school. If the student is not enrolled part-time for more than 6 months, the loans will go into repayment. The student must contact the U.S. Department of Education or his/her lender(s) to make payment arrangements. Loans must be repaid by the loan borrower (student/parent) as outlined in the terms of the borrower’s promissory note. The student should contact the lender is he/she has questions regarding their grace period or repayment status.

Repayment of Unearned Funds and Consequences

Unearned funds are paid to the U.S. Department of Education by College for Creative Studies on the student’s behalf. The school will return the funds within 45 days of the calculation. If the student owes any money to College for Creative Studies resulting from the return of unearned federal financial aid, the student will be billed by College for Creative Studies. If the student does not pay the funds, a business hold is placed on the student’s account. This means he/she will not be permitted to register for classes or receive transcripts until the balance is paid.

School and Student Responsibilities in regard to the R2T4 Policy & Process

College for Creative Studies Responsibilities:

• Providing each student with the information given in this policy
• Identifying students affected by this policy and completing the R2T4 calculation
• Informing the student of the result of the R2T4 calculation and any balance owed to College for Creative Studies 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

• Becoming familiar with the R2T4 policy and how withdrawing from all courses effects eligibility for Title IV aid
• Resolving any outstanding balance owed to College for Creative Studies
• Resolving any repayment to the U.S. Department of Education as a result of an over-payment of Title IV grant funds

How a Withdrawal Affects Future Financial Aid Eligibility

Refer to the College for Creative Studies Satisfactory Academic Progress Policy to determine how a withdrawal will impact future financial aid eligibility.