Return of Title IV (Federal) Financial Aid

Return of Title IV (Federal) Financial Aid
When a student withdraws during a term, the amount of federal financial aid earned by the student is determined on a pro-rata basis up to the end of 60% of the term. For example, if the student has completed 30% of the term, he or she has earned 30% of the aid originally scheduled to be received. Once a student has completed more than 60% of the term, he or she has earned all of his or her federal financial aid. (Federal Work Study funds are excluded from the return of Title IV funds requirements.)

If a student has received excess funds, the College must return a portion of the excess equal to the lesser of:

• the student's institutional charges multiplied by unearned percentage of funds, or
• the entire amount of the excess funds.

If the aid to be returned is in the form of a loan that has been released to the student (or parent) borrower, the student (or parent) can repay the loan in accordance with the terms of the promissory note over a period of time.

If the aid to be returned is in the form of grant funds, the law provides that the student may repay 50% of the grant rather than 100%.

Order of Funds to be Returned
The funds must be credited to outstanding loan balances or to any amount awarded for the term in which a return of funds is required in the following order:

1. Unsubsidized Federal Direct Stafford Loans
2. Subsidized Federal Direct Stafford Loans
3. Federal Perkins Loans
4. Federal PLUS Loans received on behalf of the student
5. Federal Pell Grants
6. Academic Competitiveness Grants
7. National Smart Grants
8. Federal SEOG Grants

Refund of Funds from the Illinois Student Assistance Commission Monetary Award Program (MAP)
Per the rules of the Illinois Student Assistance Commission, if a MAP recipient withdraws after the census date (the end of the second week of the term), the student may receive MAP grant payment for the costs incurred up to the term award provided the college’s tuition refund policy indicates that the student has incurred charges in the amount of the claim.

Refund of Institutional Financial Aid
Institutional financial aid consists of Knox Grant, Knox Scholarships and Knox Loans. The refund/cancellation of institutional financial aid follows the pro-rata policy for the cancellation of institutional charges. When a student withdraws by the end of 60% of a term, a pro-rated portion of her or his institutional financial aid is returned to the program(s) from which the student received funds. After 60% of a term has been completed, there is no cancellation of financial aid.

Refund of Private Scholarships, Grants and Loans
Unless otherwise requested by the donor or a private scholarship, grant or loan award, the refund/cancellation of private financial assistance follows the pro-rata policy for the cancellation of institutional charges and institutional financial aid.

Example of a Refund and Return of Title IV Financial Aid

Student enrolls for spring term, beginning on March 25, 2009 and ending on June 2, 2009 (70 days). Student withdraws from all courses on April 13, 2009.

Refund Calculation
Total Charges for Tuition, Fees, Room and Board $12,411
March 25 to April 13 (withdrawal date)
     = 20 days/70 days in term = 28.6% of the term
Pro-rata charges: 28.6% x $12,411 = $3,550
Refund/cancellation of charges = $12,411 - $3,550 = $8,861

Return of Title IV Aid Calculation
Step 1. Title IV Aid Disbursed on March 30, 2009:
   Subsidized Direct/Stafford Loan $ 1,161
   Perkins Loan $666
   Pell Grant $1,527
   SEOG Grant $ 350
   Total Title IV aid disbursed $3,704

Step 2. Percentage of Title IV Aid Earned:
  20 days of enrollment/70 days in term = 28.6%

Step 3. Amount of Title IV Aid Earned: 28.6% x $3,704 = $1,059

Step 4. Total Title IV Aid to be Returned: $3,704 - $1,059 = $2,645

Step 5. Amount of Unearned Title IV Aid Returned by the School:
   Subsidized Direct/Stafford Loan $1,161
   Perkins Loan $666
   Pell Grant $817
   Total Title IV aid returned to federal programs $2,644