Financial Aid Return of Title IV Funds and Refund Policy
Office of Origin: Financial Aid
Date Reviewed: 10-30-2018
Last Date Modified & Approved: 02-05-19
The federal government mandates that students who withdraw from all classes may only keep aid earned up to the time of withdrawal. Title IV funds disbursed in excess of the earned amount must be returned to the federal government by the college and/or the student. A student could owe these funds to the college, the federal government, or both.
The Financial Aid Return of Title IV Funds and Refund Policy applies once the semester begins to all students withdrawing or taking a leave of absence for any reason, including disciplinary action. If a student withdraws or takes a leave of absence before the first day of classes for a semester, all charges and financial aid for that semester are canceled. If a student withdraws or takes a leave of absence on or after the last day to add/drop a course for a semester, aid will be recalculated in accordance with this policy. If after these recalculations a balance is owed to the student, a refund check will be issued after the student withdraws from all classes in a semester. Any balance due the College after application of this refund policy is still the responsibility of the student.
Lake Michigan College's refund policy assumes that:
- a student and/or parent PLUS borrower will not receive a refund/return of funds in an amount greater than the student and/or parent PLUS borrower or fund has paid; and
- refunds/return of funds are first paid according to federal policies on the return of Title IV funds, then to other aid programs, then to the student and/or parent PLUS borrower.
If a student with federal aid withdraws from the College during a semester the Financial Aid Office is required to complete a special calculation called a Federal Return of Title IV Funds calculation to determine how much federal aid was earned during that semester based on the length of time the student spent enrolled.
Please note that the College’s calculation to determine the amount of tuition, room and board charges for which the student is responsible is separate from the federal calculation of how much federal aid the student can retain to pay those charges.
Lake Michigan College (LMC) determines the Return of Title IV calculation based on one of the following dates:
- Official Withdrawal Date
The date the College determined that a student has withdrawn. In other words, when LMC becomes aware that a student has withdrawn. This date triggers the timeframe for when LMC is required to complete the Return of Title IV calculation and notify the student of the result of the calculation. This date determines the amount of aid a student has earned and can potentially keep. The official withdrawal date is:
- The student began the official withdrawal process, or the date the student provided official notice of her/his intent to withdraw, whichever is later, or
- The date LMC began the paperwork for a health leave, or
- The date LMC became aware the student had ceased attendance.
- Unofficial Withdrawal Date
If the College determined that the student did not begin the official withdrawal process or otherwise notifies the college of the intent to withdraw due to illness, accident, grievous personal loss, or other circumstances beyond the student’s control, the withdrawal date is the date the college determines that the student ceased attendance because of the aforementioned applicable event. The unofficial withdrawal date is:
- The date LMC began the paperwork for a health leave, or
- If the student earned all E grades, either
- The last day of attendance at an academic related event if available, or
- The mid-point of the semester
The amount of Title IV assistance a student has earned is calculated by first determining the percentage of assistance the student has earned and can potentially keep, and then by applying that percentage to the total amount of Title IV assistance that was disbursed, or could have been disbursed, to the student.
The percentage of Title IV assistance that has been earned is equal to:
- The percentage of the semester* which the student completed as of the withdrawal date, if the withdrawal date occurred before the 60th percent of the semester
- 100% if the withdrawal date occurred after the 60th percent of the semester
* The percentage of the semester is determined by dividing the total number of calendar days in the semester into the number of calendar days the student completed as of the withdrawal date. The total number of calendar days includes all days within the semester, except scheduled breaks of at least five consecutive days, or days in which the student was on an approved leave of absence.
Disbursement of Aid After Withdrawal
If the Return of Title IV calculations shows that LMC can pay additional federal aid funds to the student we will send notice of this additional aid option to the student and/or parent in the case of a Federal Parent PLUS Loan, within 30 days of when the College determined the student withdrew. The notice will include information that:
- Requests confirmation of any post-withdrawal disbursement of grant and/or loan funds for which the student may be eligible.
- Explains that the student and/or parent PLUS loan borrower, who does not confirm that a post-withdrawal disbursement of loan funds may be credited to the student’s account may not receive any of those loan funds.
- Advises the student and/or parent PLUS borrower that no post-withdrawal disbursement will be made if the student and/or parent PLUS borrower does not respond within 14 days of the date the College sent the notification.
- If the student and/or parent PLUS borrower, responds within 14 days that they do wish to receive all or a portion of a post-withdrawal disbursement the College will disburse the funds within 120 days of when we determined the student withdrew.
- If the student and/or parent PLUS borrower does not respond to the notice from the College, no portion of the loan funds may be credited to the student’s account or disbursed directly to the student and/or parent PLUS borrower.
Return of Title IV funds
If LMC determines that we need to return some portion of federal aid funds, federal funds will be returned in the following order:
- Federal Unsubsidized Direct Loans
- Federal Subsidized Direct Loans
- Federal Direct PLUS (Parent) Loan
- Federal Pell Grant
- Federal Supplemental Educational Opportunity Grant (FSEOG)
Financial aid funds from states or other external agencies are returned following the requirements of the agency awarding the funds.
Responsibility: Director, Financial Aid
References: Tuition Refund Policy