Federal Return to Title IV Policy
We encourage students to read all the information below prior to making a decision to withdraw.
If you received financial aid, a withdrawal will affect your current financial aid, future financial aid eligibility, and personal finances.
Federal regulations require Martin Luther College to award Title IV financial aid funds under the assumption that a student will attend school for the entire period during which federal assistance was awarded. When a student withdraws from courses for any reason, the student may no longer be eligible for the full amount of Title IV funds originally awarded.
Martin Luther College (MLC) students who receive federal financial aid and do not complete their classes during a semester or term could be responsible for repaying a portion of the aid they received. Students who do not begin attendance must repay all financial aid disbursed for the term.
All Title IV funds must be returned to the Department of Education within 45 days of the determination that the student withdrew.
Determination of Last Date of Attendance
- For financial aid purposes there are two types of withdrawals: Official and Unofficial.
- Official withdrawal – leaving MLC by dropping all classes for the term or by going through the formal withdrawal from college process.
- Unofficial withdrawal – the student discontinues class attendance without going through the formal withdrawal from college process
- Since MLC is a required attendance institution, the last date of attendance (for both official and unofficial withdrawals) is determined by the date the student last attended any class.
Leave of Absence
A student must meet the requirements for a leave of absence as outlined in the Academics Policies section of this catalog. MLC’s financial aid policies and federal regulations do not view a student on leave as an enrolled student. Students that do not return from a scheduled leave of absence will be reported to ED as withdrawn with the effective date of withdrawal being their last date of class attendance.
How the Unearned Financial Aid is Calculated
- Students who receive federal financial aid must “earn” the aid they receive by staying enrolled in classes. The amount of federal financial aid assistance the student earns is on a prorated basis. Students who withdraw or do not complete all registered classes during the semester may be required to return some of the financial aid they were awarded based on the Return of Title IV (R2T4) Calculation. Once 60% of the semester is completed, a student is considered to have earned all of his/her financial aid and will not be required to return any federal funds. R2T4 calculations will be completed within 14 days after completion of the student withdrawal process.
- The following formula is used to determine the percentage of unearned aid that has to be returned to the federal government:
- The percent earned is equal to the number of calendar days completed up to the withdrawal date, divided by the total calendar days in the payment period (less any scheduled breaks that are at least 5 days long)
- The payment period for most students is the entire semester. However, for students enrolled in modules (courses which are not scheduled for the entire semester or term), the payment period only includes those days for the module(s) in which the student is registered.
- The percent unearned is equal to 100 percent minus the percent earned
- Institutional funds are earned and recalculated based on policies outlined in the MLC Financial Aid policy manual. Fund recalculation varies by award. Students will be notified of how each institutional fund is earned/retained/forfeited during their exit interview with the Financial Aid Office. Students that do not complete the exit interview with the Financial Aid Office will be notified via their MLC financial statement after adjustments have been made.
- State funds are earned and recalculated based on policies outlined in the Minnesota Office of Higher Education State Grant Manual.
Credit Balances Created by Recalculation of Title IV Funding
- If the recalculation of Title IV aid results in a credit balance on the student account, students (or parents in the case of an undergraduate PLUS loan) will be notified via email from the Financial Services Office. The appropriate Federal Title IV Student/Parent Authorization Form will be included in the email. If the student (or parent) chooses to complete the Authorization Form and replies to the email, Title IV funds will be applied to non-allowable charges. If a reply is not received by the due date listed within the email, the excess Title IV funds will be returned to the student (or parent) within 14 days of receipt of the Title IV funds.
Post Withdrawal Disbursements
- If the student did not receive all of the funds that were earned, they may be due a post-withdrawal disbursement. If the student’s post-withdrawal disbursement includes loan funds, MLC must get the student’s permission before it can disburse them. The student may choose to decline some or all of the loan funds so that they do not incur additional debt.
- The student’s school may automatically use all or a portion of the student’s post-withdrawal disbursement of grant funds for tuition, fees, and room and board charges (as contracted with MLC).
- MLC needs the student’s permission, to use the post-withdrawal grant disbursement for school charges other than tuition, fees and room and board. If the student does not give permission, they will be offered, within 14 days, the funds as a refund. Students (or parents in the case of an undergraduate PLUS loan) will be notified via email from the Financial Services Office when there are excess Title IV funds on the student account. The appropriate Federal Title IV Student/Parent Authorization Form will be included in the email. If the student (or parent) chooses to complete the Authorization Form and replies to the email, Title IV funds will be applied to non-allowable charges. If a reply is not received by the due date listed within the email, the excess Title IV funds will be returned to the student (or parent) within 14 days of receipt of the Title IV funds.
- MLC will return, to ED, any Pell funds within 45 days of the determination that the student withdrew and return any Title IV loan funds within 180 days.
MLC Responsibility for Returning Unearned Aid
- MLC will return all unearned funds back to the aid program and the student will be responsible for any balance this creates.
Student Responsibility for Returning Unearned Aid
- If MLC is not required to return all of the excess funds, the student must return the remaining amount. For any loan funds that must be returned, the student (or the student’s parent for a PLUS Loan) must repay in accordance with the terms of the promissory note. That is, the student must make scheduled payments to the holder of the loan over a period of time. The requirements for Title IV program funds when the student withdraws are separate from any refund policy that MLC may have.
- Therefore, the student may still owe funds to MLC to cover unpaid institutional charges.
- MLC will also charge the student for any Title IV program funds that MLC is required to return. If the return of the funds creates a balance due on the student account, the student will be responsible to pay the balance on their account.
Order of Return of Title IV Funds
- A school must return Title IV funds to the programs from which the student received aid during the payment period or period of enrollment as applicable, in the following order, up to the net amount disbursed from each source:
- Federal Unsubsidized Direct loans
- Federal Subsidized Direct loans
- Federal Parent PLUS Direct loans
- Federal Pell Grants for which a Return is required
- Federal Supplemental Educational Opportunity Grants (FSEOG) for which a return of funds is required
- Federal TEACH Grants for which a Return is required
- Iraq and Afghanistan Service Grant for which a Return is required
- Any federal or state work-study funds that the student has earned prior to their withdrawal are theirs to keep and will not be returned.
Other Important Information: