Treatment of Title IV Funds When a Student Withdraws

When a recipient of Title IV grant or loan assistance withdraws during a payment period, the institution must determine the amount of Title IV grant or loan assistance that the student has earned as of the student’s withdrawal date. If the total amount is less than the amount of Title IV assistance that was disbursed, the difference must be returned to the Title IV programs. If the total amount is greater than the amount disbursed, the difference must be treated as a post-withdrawal disbursement. Once the withdrawal date has been established and the calculations completed, the institution follows specified procedures for notifying the student (or parent, in the case of Parent Plus loans) and disbursing or returning funds. If any outstanding charges exist on the student’s account and the student is entitled to a post-withdrawal disbursement, the institution may use some or all of the funds to cover certain charges outstanding on the student’s account, such as tuition and fees.

As a requirement for making a post-withdrawal disbursement, an institution must offer to the student, or parent for Parent Plus loans, any amount of a post-withdrawal disbursement that is not credited to the student’s account. In addition to written notification of eligibility, in some cases institutions must also make the student or parent aware of the outcome of any post-withdrawal disbursement request. If a response is not received from the student or parent declining the funds, the institution need not make follow-up contact and may return any funds earned by the student or parent to the Title IV program. Section 668.22(a)(4)(ii)(E), however, requires an institution to notify a student or parent when the student’s or parent’s acceptance of the post-withdrawal disbursement was received after the 14-day time limit for responding has elapsed and the institution does not choose to make the post-withdrawal disbursement.