Volume 5

Withdrawals and the Return of Title IV Funds

Introduction

An overpayment occurs when the student receives more aid than they were eligible to receive. One kind of overpayment, traditionally called an overaward, results from changes in the student’s aid package; a second occurs when a student completely withdraws from a payment period or period of enrollment. This volume covers how a school should respond when a student withdraws.


Throughout the Federal Student Aid Handbook (FSA) we use “college,” “school,” and “institution” interchangeably unless a more specific use is given. Similarly, “student,” “applicant,” and “aid recipient” are synonyms. “Parents” in this volume refers to the parents of dependent students, and “you” refers to the primary audience of the Handbook: financial aid administrators at colleges. “We” indicates the U.S. Department of Education (the Department, ED), and “FSA funds” and “Title IV aid” are synonymous terms for the federal financial aid offered by the Department.

We appreciate any comments that you have on the FSA Handbook. We revise the text based on questions and feedback from the financial aid community, so please reach out to us about how to improve the Handbook through the “Contact Customer Support” feature in our Partner Connect Help Center and clicking on “FSA Handbook” under the Topic section.

Changes for 2024–2025

There were no major regulatory changes or updates to Volume 5 in the 2024-25 award year Federal Student Aid Handbook.

Throughout Chapter 1 and Chapter 2, R2T4 examples have been renamed and ordered in such a way as to identify the example more quickly in question by volume, chapter and number. In addition, where appropriate, terms and definitions have been updated to conform to the new terminology associated with FAFSA Simplification (i.e. SAI replacing EFC, etc.)

In Chapter 1, under the “consumer information” section, inserted new or enhanced consumer information requirements as prescribed under the October 31, 2023 final federal register notice in order to provide adequate financial aid counseling.

We added guidance under the “maximum time frame for an LOA” section in Chapter 1 explaining when a new LOA begins if the current LOA runs over the initial 12-month time period.

In Chapter 1, under the “institutional versus noninstitutional charges” section, added a new noninstitutional charges category of refundable housing deposits.

Under the “Returning Direct Loan funds” section and the “Return of Title IV Funds Requirements and Deadlines” chart in Chapter 2-part 2, we updated notification guidance for students who have any portion of their Direct Loan funds returned by the school.

The R2T4 worksheets in the Volume 5 appendix were not altered in any way. Though the Iraq Afghanistan Service Grant no longer exists as a separate program in 2024-25, we kept it in the order of funds to return in step 6 and step 10 in the R2T4 worksheets due to crossover periods and nonstandard or non-term payment periods that start in 2023-24 but may end later in the 2024-25 award year. We will remove references to the Iraq Afghanistan Service Grants within next year’s R2T4 worksheets.

Occasionally the Department publishes additional questions and answers to the Program Integrity - Return of Title IV Funds Question & Answer (Q&A) section of the Department’s website. We recommend periodically checking for new information and guidance.

Last Modified: 05/15/2024 • Published: 03/28/2021