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The law specifies how your school must
determine the amount of Federal Student
Aid (FSA) assistance that you earn if you withdraw from school. The FSA programs
that are covered by this law are: Federal Pell Grants, Stafford Loans, PLUS
Loans,
Federal Supplemental Educational Opportunity Grants (FSEOGs), Federal Perkins
Loans and in some cases, certain state grant aid (LEAP/SLEAP).
When you withdraw during your payment period or period of enrollment (your
school can define these for you and tell you which one applies) the amount of
FSA
program assistance that you have earned up to that point is determined by a
specific
formula. If you received (or your school or parent received on your behalf )
less
assistance than the amount that you earned, you may be able to receive those
additional funds. If you received more assistance than you earned, the excess
funds
must be returned by the school and/or you.
The amount of assistance that you have earned is determined on a pro rata basis.
For example, if you completed 30% of your payment period or period of
enrollment,
you earn 30% of the assistance you were originally scheduled to receive. Once
you
have completed more than 60% of the payment period or period of enrollment, you
earn all the assistance that you were scheduled to receive for that period.
If you did not receive all of the funds that you earned, you may be due a
postwithdrawal
disbursement. If the post-withdrawal disbursement includes loan funds,
you may choose to decline the loan funds so that you don't incur additional
debt.
Your school may automatically use all or a portion of your post-withdrawal
disbursement (including loan funds, if you accept them) for tuition, fees, and
room
and board charges (as contracted with the school). For all other school charges,
the
school needs your permission to use the post-withdrawal disbursement. If you do
not
give your permission (which some schools ask for when you enroll), you will be
offered the funds. However, it may be in your best interest to allow the school
to keep
the funds to reduce your debt at the school.
There are some FSA funds that you were scheduled to receive that you cannot
earn once you withdraw because of other eligibility requirements. For example,
if you
are a first-time, first-year undergraduate student and you have not completed
the first
30 days of your program before you withdraw, you will not earn any FFEL or
Direct
loan funds that you would have received had you remained enrolled past the 30th
day.
If you receive (or your school or parent receive on your behalf ) excess FSA
program funds that must be returned, your school must return a portion of the
excess
equal to the lesser of
1. your institutional charges multiplied by the unearned percentage of your
funds, or
2. the entire amount of excess funds.
The school must return this amount even if it didn't keep this amount of your
FSA
program funds.
If your school is not required to return all of the excess funds, you must
return the
remaining amount. Any loan funds that you must return, you (or your parent for a
PLUS Loan) repay in accordance with the terms of the promissory note. That is,
you
make scheduled payments to the holder of the loan over a period of time.
Any amount of unearned grant funds that you must return is called an
overpayment. The amount of a grant overpayment that you must repay is half of
the
unearned amount. You must make arrangements with your school or the Department
of Education to return the unearned grant funds.
The requirements for FSA program funds when you withdraw are separate from
any refund policy that your school may have. Therefore, you may still owe funds
to the
school to cover unpaid institutional charges. Your school may also charge you
for any
FSA program funds that the school was required to return. If you don't already
know
what your school's refund policy is, you can ask your school for a copy. Your
school can
also provide you with the requirements and procedures for officially withdrawing
from school.
If you have questions about your FSA program funds, you can call the Federal
Student Aid Information Center at 1-800-4-FEDAID (1-800-433-3243). TTY users may
call 1-800-730-8913. Information is also available on Student Aid on the Web at
www.studentaid.ed.gov.