Return of Title IV Financial Aid

The Higher Education Amendments of 1998 changed the formula for calculating the amount of aid a student and school can retain when the student totally withdraws from all classes. If a student withdraws from Kentucky State University, the school, the student, or both may be required to return some or all of the federal funds awarded to the student for that semester. A student who withdraws from all classes prior to completing 60% of the enrollment term is subject to having his/her eligibility adjusted based on the percentage of the term completed.

  • For example, a student who withdraws from all classes after completing only 10% of term only earns 10% of aid disbursed or received on his/her account. As a result, the school or student must return 90% of the disbursed/received aid that was not earned.

This policy applies to all Title IV federal aid recipients with disbursed aid from any of the following Federal programs:

  • Federal Direct Stafford Loans (un-subsidized and subsidized)
  • Federal Perkins Loan
  • Federal Direct PLUS Loans (Graduate and Parent)
  • Federal Pell Grant
  • Federal Supplemental Education Opportunity Grant (SEOG)
  • TEACH Grant.

The formula used in the federal Return to Title IV (R2T4) calculation divides the aid disbursed to student accounts into “earned aid” and “unearned aid”.

  • During the first 60% of the period of enrollment (semester), students “earn” Title IV funds in direct proportion to the length of time the student remains enrolled. If a student remains enrolled beyond the 60% point, then aid is considered earned for the period.
  • “Unearned” aid is the amount of disbursed Title IV aid that exceeds the amount of aid earned under the formula.

Students contemplating withdrawal from all classes PRIOR to completing 60% of the term should contact the Student Financial Aid Office to discuss how this will affect their financial aid. It is in the student’s best interest to talk with the Student Financial Aid Office regarding their options of withdrawing from classes, especially if they received any federal financial aid assistance.

The percentage of the period a student remains enrolled is derived by dividing the number of days attended by the number of calendar days in a term/semester (excluding breaks of 5 consecutive days or more). This is referred to as the percentage completed (% completed).

EARNED aid is calculated as follows:

  • Total aid disbursable multiplied by % completed.
  • If EARNED aid equals disbursed aid, no action is required.
  • If EARNED aid exceeds disbursed aid and the student still has aid that has not disbursed, the university must calculate a post-withdrawal disbursement. The student is notified by letter, email, or phone regarding the aid to be disbursed to the student account and to verify whether the student wants funds disbursed for the term. The student will be given 14 days from the offer to respond to the inquiry. The Student Financial Aid Office has up to 180 days to disburse funds after the withdrawal date has been determined.
  • If EARNED aid is less than disbursed aid, the university must calculate the difference to be returned by the university and by the student. The calculation is as follows:
  • [A] UNEARNED aid: Total aid disbursable minus EARNED aid
  • [B] Percentage of UNEARNED aid (% UNEARNED): 100 minus % completed
  • The university’s share of the “unearned” aid is the lesser of the total amount of “UNEARNED aid” [A] or the school charges multiplied by the “Percentage of UNEARNED aid” [B]. This amount must be returned by the university.
  • The student’s share is the difference between the total unearned amount and the university’s share. UNEARNED aid minus university’s share equals student’s share. This amount must be returned by the student.

The Student Financial Aid Office must complete the R2T4 withdrawal calculation within 45 days from the date the university determines the student withdrew.

If the Financial Aid Office determines a student owes a return of financial aid funds, the student will be sent a new statement of account by the Bursar’s Office or the student can view their account on WIRED. This is the student’s financial obligation to the university. The Return to Title IV funds calculation is separate from the University’s Tuition/Fee Reduction schedule. Please refer to the Registrar’s Office published refund/withdrawal calendar (aka: tuition/fee reduction period).