Return of Title IV Funds Policy
The NLC Financial Aid Office is required by federal statute to recalculate federal financial aid eligibility for students who withdraw, drop out, are dismissed, or take a leave of absence prior to completing 60% of a payment period or term. The federal Title IV financial aid programs must be recalculated in these situations.
If a student leaves the College prior to completing 60% of a payment period or term, the financial aid office recalculates eligibility for Title IV funds. Recalculation is based on the percentage of earned aid using the following Federal Return of Title IV funds formula:
- Percentage of payment period or term completed = the number of days completed up to the withdrawal date divided by the total days in the payment period or term. (Any break of five days or more is not counted as part of the days in the term.) This percentage is also the percentage of earned aid.
Funds are returned to the appropriate federal program based on the percentage of unearned aid using the following formula:
- Aid to be returned = (100% of the aid that could be disbursed minus the percentage of earned aid) multiplied by the total amount of aid that could have been disbursed during the payment period or term.
If a student earned less aid than was disbursed, the College would be required to return a portion of the funds and the student would be required to return a portion of the funds. When Title IV funds are returned, the student may owe a debit balance to the College.
In calculating return of funds, the College will use either U.S. Department of Education worksheet or software.
If a student earned more aid than was disbursed to him/her, the College would owe the student a post-withdrawal disbursement which must be paid within 120 days of the student's withdrawal.
The College must return the amount of Title IV funds for which it is responsible no later than 45 days after the date of the determination of the date of the student’s withdrawal.
Refunds are allocated in the following order:
- Unsubsidized Federal Stafford Loans
- Subsidized Federal Stafford Loans
- Unsubsidized Direct Stafford Loans (other than PLUS loans)
- Subsidized Direct Stafford Loans
- Federal Perkins Loans
- Federal Parent (PLUS) Loans
- Direct PLUS Loans
- Federal Pell Grants for which a Return of funds is required
- Academic Competitive Grants for which Return of Funds is required
- National Smart Grants for which a Return of Funds is required
- Federal Supplemental Opportunity Grants for which a Return of funds is required
- Other assistance under this Title for which a Return of funds is required (e.g., LEAP)