Federal Return of Title IV Funds Refund Policy

General Information

The Office of Student Financial Aid (OSFA) may be required to reassess your financial aid and you may be required to immediately repay a portion of your aid if you withdraw from the University. OSFA has up to 45 days to return any unearned Title IV funds. You will be notified of the results within that timeframe. Please review the University of Iowa (UI) Office of the Registrar Dates by Session page for more information on withdrawal deadlines.

When a student withdraws, the tuition will be based on the UI Registrar's Office Tuition Responsibility Policy. If a tuition or housing credit is added to your bill, the Billing Office will not issue a refund until OSFA has determined the results of your financial aid. You can find this information on the Registrar's Academic Calendar.

OSFA determines the Return of Title IV funds percentage for Title IV aid. Institutions are required to determine the percentage of Title IV financial aid “earned” by the student and to return the unearned portion to the appropriate aid program. This calculation process can be viewed in the Federal Return of Financial Aid Funds Process section of this policy.

The percentage used to calculate the return of unearned state or institutional financial aid dollars will correspond to the percentage of the UI Registrar's Office Tuition Responsibility Policy. However, if the Office of the Registrar receives documentation and reduces the percentage charged for tuition, the percentage used to calculate the return of state or institutional financial aid dollars will be adjusted to correspond with the reduced percentage charged for tuition.

If the contracted charges (i.e., tuition, fees, and/or housing and food) are adjusted downward by the Registrar or University Housing & Dining after the withdrawal is finalized, any credit balance will go towards the student's University bill (U-Bill) or be refunded directly to the student.

If you drop all your courses in a semester, even if some of them haven’t started yet, we will review your financial aid to determine if you will have to return any of the funds. If we determine, based on federal guidelines that you did not earn any or all the aid disbursed, we will bill your U-Bill. You will be notified by email or by mail regarding these changes.

For examples regarding the application of the Return of Title IV Funds policy, the student should call our office at 319-335-1450 or come to 2400 University Capitol Centre.

A loan repayment grace period for Federal Unsubsidized and Subsidized Stafford Loans, Perkins Loans, and HEAL Loans will begin on the day of the student's withdrawal from the University. Students should contact their lender if they have questions regarding their grace period or repayment status.

Federal Return of Financial Aid Funds Process

The policy for the Return of Federal Financial Aid Funds follows these steps:

1. Determine the percentage of the enrollment period completed by the student. If the calculated percentage is equal to or greater than 60%, the student has “earned” all aid for the enrollment period and no adjustment in financial aid occurs.

Days Attended ÷ Days in Enrollment Period = Percentage Completed

2. Apply the percentage completed to the Title IV aid offered to determine the student's eligibility for financial aid prior to the withdrawal.

Total Aid Disbursed x Percentage Completed = Earned Aid

3. Determine the amount of unearned financial aid to be returned to the appropriate Title IV financial aid program.

Total Disbursed Aid - Earned Aid = Unearned Aid to be Returned

If the aid already disbursed equals the earned aid, no further action is required.
If the aid already disbursed is less than the earned aid, a late disbursement will be made to the student.
If the aid already disbursed is greater than the earned aid, the difference must be returned to the appropriate Title IV aid program.

4. Distribute the responsibility to return funds between the institution and the student. The return of federal financial aid is based on the type of financial aid disbursed and occurs in the following order:

Direct Unsubsidized Stafford Loan
Direct (Subsidized) Stafford Loan
Direct Graduate PLUS Loan (for graduate students)
Direct PLUS Loan (for parents of undergraduate students)
Pell Grant
SEOG (Supplemental Educational Opportunity Grant)
TEACH Grant (Teacher Education Assistance for College and Higher Education Grant)

If the type of financial aid the student is responsible for returning is a loan, the student is not required to immediately repay the amount since the grace period for the loan (generally six months) is invoked. Occasionally, a loan must be fully canceled. The canceled loan amount will appear on the student's U-Bill because loan funds will be returned to the lender on the student’s behalf.

If the type of financial aid the student is responsible for returning is a grant, the student will incur a charge on their U-Bill. Federal return of funds regulations require that the student only repay one-half of the grant amount that is unearned. Any refund or repayment obligation will be clearly outlined for the student in writing and will also appear as a charge on the U-Bill.

Official Withdrawal Within the Session

A student is considered to have officially withdrawn when the student began the official withdrawal process or officially notified the school of their intent to withdraw. The withdrawal date used for an official withdrawal is the date in which the student starts, not finishes, the withdrawal process. This date is also used to determine the percentage used in the Return of Title IV Funds calculation. OSFA is required to notify a student of their Exit Counseling Requirement within 30 days of the school determining the student officially withdrew. In addition, UI has a policy that requires a Courtesy Letter to be sent when a withdrawal is completed.

Once the school is notified that the student withdrew, the Return of Title IV calculation is completed to determine the amount of Title IV aid the student earned. If the amount of earned aid is less than the disbursed amount, the student would be required to return Title IV aid. OSFA has 45 days to return any unearned Title IV funds to the Department of Education. If the amount of earned aid is more than the disbursed amount, as of the date the student withdrew, a Post-Withdrawal Offer will be made. OSFA is required to automatically disburse any earned grant funds in a Post-Withdrawal Offer within 30 days after the school determines the student withdrew. Federal Loans require that a student respond to a Post-Withdrawal Offer within 15 days to qualify for the post-withdrawal disbursement of loans. The 15 days is the maximum timeframe and cannot be extended. The school has 180 days to disburse loans from the student's official withdrawal date.

Some students may be selected for verification by the Department of Education. Verification documents need to be submitted and reviewed before any Title IV aid can be disbursed. If a student selected for verification withdraws before their aid is disbursed, it would be treated similarly to a Post-Withdrawal Offer. An initial calculation is done using the student's official withdrawal date and any non-need-based aid awarded at the time the student withdrew. A Post-Withdrawal offer would be made only using non-need-based types of Title IV aid. The student will have 120 days from the date the student withdrew or 120 days from the end of the semester, whichever is sooner, to submit verification documents to be considered for any need-based aid. Once the documents are reviewed, another Post-Withdrawal Offer will be sent including any need-based federal loans if the verification documents are submitted within the given timeframe. Federal grants would be disbursed automatically within 30 days of determination. The Pell Grant must be disbursed within 120 days from the official withdrawal date. Federal loans must be disbursed within 180 days from the official withdrawal date.

Unofficial Withdrawal

An unofficial withdrawal happens when a student does not receive any passing grades in their courses for the semester. At the end of each semester, an assessment must be made for all federal financial aid recipients who receive no passing grades (any combination of F, U, N, or W) to determine if the non-passing grade was earned while attending or due to no longer attending class. Instructors will indicate the last date of attendance or academic activity when submitting grades. The last date of attendance is used to determine the percentage used in the Return of Title IV Funds calculation. If the student attended at least 60% of the semester, no return of funds may be necessary. OSFA is required to determine a student's last date of attendance within 30 days after the semester ends.

Once the review of a student's last date of attendance has taken place, OSFA has another 30 days to complete the Return of Title IV funds calculation. The calculation will determine the amount of Title IV aid the student earned in the term. If the amount of earned aid is less than the disbursed amount, the student would be required to return Title IV aid. OSFA has 45 days to return any unearned Title IV funds. If the amount of earned aid is more than the disbursed amount, as of the date the student withdrew, a Post-Withdrawal Offer will be made. UI is required to automatically disburse any earned grant funds in a Post-Withdrawal Offer within 30 days after the school determines the semester ends. Federal Loans require a student to respond to a Post-Withdrawal Offer within 15 days to qualify for the post-withdrawal disbursement of loans. The school has 180 days to disburse loans from the date the school determines the student withdrew.

Students who stopped attending may be required to repay a portion of their Title IV aid for that semester based on their last date of attendance. Aid may be adjusted if it is determined that a student never began attendance in some or all their classes. This assessment must be completed within 30 days of the end of the semester. Just like an official withdrawal, OSFA has 30 days after the semester ends to notify the student of their Exit Counseling requirement.

Some students may be selected for verification by the Department of Education. Verification documents need to be submitted and reviewed before any Title IV aid can be disbursed. If a student has not submitted their verification documents before the end of the term, it would be treated similarly to a Post-Withdrawal Offer. An initial calculation is done using the student's official withdrawal date and any non-need-based aid awarded at the time the student withdrew. A Post-Withdrawal offer would be made only using non-need-based types of Title IV aid. The student will have X (to be determined by OSFA) number of days to submit verification documents to be considered for any need-based aid. Once the documents are reviewed, another Post-Withdrawal Offer will be sent including any need-based federal loans if the verification documents are submitted within the given timeframe. Federal grants would be disbursed automatically. The Pell Grant must be disbursed within 120 days from the last date of attendance, not to extend beyond the deadline date established by a Federal Register notice. Federal loans must be disbursed within 180 days from the last date of attendance, not to extend beyond the deadline date established by a Federal Register notice.

Regulations require that we notify students of their Exit Counseling requirement any time a student borrowed federal loans at UI. This must be sent to the student within 30 days after the school is notified of the withdrawal. UI has a policy that requires a Courtesy Letter to be sent when a withdrawal is completed. This Courtesy Letter contains Exit Counseling information, outstanding loan balances, estimated monthly payments, and loan servicer information based on the most recent National Student Loan Database System (NSLDS) data.