Refund Policy for Students Who Receive Title IV Federal Financial Aid and Withdraw From School

Recipients of Federal Title IV Financial Aid who completely withdraw from classes are required to have their award recalculated.  Federal Title IV Financial Aid includes: Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Leveraging Educational Assistance Partnership Grant (LEAPP) and Federal Stafford Student Loans.

 

The Higher Education Amendments of 1998 define “withdrawal” as failure to complete the period of attendance on which federal aid eligibility was based.  Therefore, this policy affects not only those individuals who complete the formal withdrawal notification process, but also those students who simply stop attending classes.  In either case, when a recipient of Title IV funds ceases attendance during a term, MCC must calculate how much federal aid was earned and how much was unearned.  The amount of aid a student has earned for the term is based on the length of time the student remains enrolled for that term. The unearned amount must be returned to the Title IV programs. 

 

MCC will begin by determining the percentage of the term completed.  This percentage is determined by dividing the number of calendar days completed as of the date of withdrawal by the total number of calendar days in the term.

·         If the student withdraws on or before the 60 percent of the term has elapsed, the percentage of federal aid earned is equal to the percentage of the term completed.

·         If the student withdraws after 60 percent of the term has elapsed, the percentage of federal aid earned is equal to 100 percent.

The amount of federal aid earned is equal to the percentage of funds earned multiplied by the total amount of funds that was disbursed (or could have been disbursed) as of the day the student withdrew.

Repayment of the unearned amount

 MCC will return the lesser of:

·         Total amount of unearned aid or

·         Institutional charges multiplied by unearned percent

 The student will return:

·         The amount of unearned federal aid after MCC has returned its share

 Unearned funds are first applied (paid back) to any Title IV loans borrowed during the term.  Unearned funds are required to be returned to Title IV loans in the following order:

·         Federal Unsubsidized Stafford Loan

·         Federal Subsidized Stafford Loan

·         Federal PLUS Loan

 When the school must return loan funds to the lender on the student’s behalf (or parent’s in the case of a PLUS loan), the student’s account will be charged for this amount.  When the federal calculation determines, instead, that it is the student’s (or parent’s) responsibility to return funds directly to the lender, the unearned funds are repaid in accordance with the terms of the loan.

If unearned funds remain after all loans have been repaid, the remaining unearned funds must be credited to the Title IV programs in the following order:

·         Federal Pell Grant

·         Federal SEOG

·         LEAPP

 When MCC must return grant funds on the student’s behalf, the student’s account will be charged for this amount.  When the responsibility for repaying funds to the Title IV grant programs falls to the student, the student is required to return only 50 percent of the grant overpayment as calculated using the federal formula.  Grant overpayments may be collected according to arrangements satisfactory to the school, or by overpayment collection procedures prescribed by the Department of Education.