According to federal regulations, the Financial Aid Office must recalculate Title IV (federal) financial aid eligibility for students who withdraw, drop out, are dismissed, or take a leave of absence prior to completing 60% of a payment period or term (usually a semester). When a student does not complete 60% of a payment period or term, the financial aid office must use the Federal Return of Title IV funds formula to recalculate the student’s eligibility for Title IV funds. The formula determines the percentage of earned aid as follows:
Percentage of payment period or term completed = the number of days completed up to the withdrawal date / the total number of days in the payment period or term.
*Any break of five days or more is not counted as part of the days in the term. This percentage is also the percentage of earned aid.
If a student earned less aid than was disbursed, the institution would be required to return a portion of the funds and the student would be required to return a portion of the funds. Keep in mind that when the school returns Title IV funds to the federal processor, the student may owe a balance to the institution.