Withdrawals Implications for Students Who Receive Federal Title IV Financial Aid (R2T4 Policy)

General Information

The US Department of Education requires institutions to apply the Return to Title IV Funds policy for students withdrawing from a college who receive Title IV financial aid. The Title IV programs include: Federal Pell Grants, Iraq and Afghanistan Service Grants, Direct Loans, Direct PLUS Loans and Federal Supplemental Educational Opportunity Grants (FSEOGs).

The requirements for Title IV program funds when you withdraw are separate from any refund policy that your school may have. Therefore, you may still owe funds to the school to cover unpaid institutional charges. NMC will charge the student for any Title IV program funds that NMC was required to return.

A student who withdraws after the 60% point of a semester is entitled to retain all Title IV aid for that semester. However, if the student withdraws prior to the 60% point, unearned Title IV funds as determined by the federal policy must be returned to the various programs. These funds must be returned even if NMC provides no refund to the student. This means the student could owe NMC and/or the U.S. Department of Education a significant amount of money.

Post Withdrawal Disbursement

If the student did not receive all of the funds that were earned prior to withdrawing, a post-withdrawal disbursement may be due. If the post-withdrawal disbursement includes loan funds, the student must give permission before the funds can be disbursed. NMC may automatically use all or a portion of the post-withdrawal disbursement of grant funds for tuition, fees, and room and board charges. Permission is required to use the post-withdrawal grant disbursement for all other school charges. Students will be notified of post-withdrawal disbursement eligibility within 30 days of the date of withdrawal determination. The school must return the Title IV funds within 45 days of the date the school determines the student withdrew.

A credit balance that occurs as a result of a post-withdrawal disbursement will be refunded to the  student or parent (PLUS loans) as soon as possible, but no later than 14 days after the credit  balance occurs on the student account. Students may set up direct deposit in NMC Self-Service,  Student Billing, Student Account Center, eRefunds, otherwise a check will be mailed to the address  on record. 

Documenting Attendance

Before processing a Return to Title IV Funds, NMC must verify the student began attendance in all classes used to determine financial aid eligibility. NMC will contact all instructors to verify class attendance. If a faculty member indicates that a student never attended, NMC will first adjust the disbursed aid if there is a resulting change in eligibility and then calculate the Return of Title IV Funds. As a result, the student may end up owing the institution for the amount of unearned aid. If the student never attended any classes, all aid will be canceled.

Determining Earned Aid

Though your aid is posted to your account just after the start of each semester, you earn the funds as you complete the semester. Title IV financial aid is earned by the calendar day, not class day. This includes weekends, holidays, and breaks of less than five consecutive days. NMC is required to determine the amount of Title IV aid the withdrawing student has earned and then either disburse any additional funds the student may be entitled to up to the amount earned, or return funds in excess of the amount earned which the student has already received.

If you withdraw during your enrollment period, the amount of Title IV program assistance that you have earned up to that point is determined by a specific formula. If you received (or your school or parent received on your behalf) less assistance than the amount that you earned, you may be able to receive those funds. If you received more assistance than you earned, the excess funds must be returned by NMC.

When a student receiving Federal Title IV financial aid withdraws from NMC during the enrollment period, the amount of the Title IV funds (not including Federal Work Study) that the student earned during the enrollment period is calculated as of the student's withdrawal date. The withdrawal date used in the calculation is the date you officially withdrew (dropped all courses), or the date you notified NMC Enrollment Services of your intent to withdraw.

Title IV funds are earned at a fixed rate on a per day basis up to the 60% point in the enrollment period. Title IV funds are 100% earned if the withdrawal date is after the 60% point in that period.

If the date a student withdraws from NMC is prior to or on the 60% point of the semester, NMC is required to determine the portion of the aid disbursed that was "earned" by the student before the withdrawal date. The "unearned" Title IV funds must be returned to the respective federal aid programs. Unearned aid is the amount of disbursed Title IV aid that exceeds the amount of Title IV aid earned based on attendance in the enrollment period.

For example: If $1,000 in federal aid is disbursed, and the student withdraws at the 30% point of the term, approximately $700 of the aid is unearned and needs to be returned to the identified aid program.

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 is the entire semester. 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. NMC uses an R2T4 Freeze Date (RFD), which means that we include days which the student:
    • Was enrolled or registered in the module as of the RFD; or
    • The student attended at least one day in a module in which the student was not
      enrolled as of the RFD.
  • NMC’s R2T4 freeze Date is the same as the Pell Recalculation Date, which is 9 days after the 100% Refund Deadline for the main session in the term.
  • The percent unearned is equal to 100% minus the percent earned.

Order of Aid to be Returned

In accordance with federal regulations, if you are eligible for a refund of tuition and fees and housing/meal plan costs, and you are a Title IV aid recipient for the enrollment period, the refund will be returned to the student aid programs. Returned Title IV Funds are allocated in the following order:

  • Unsubsidized Direct Loans (other than Direct PLUS Loans)
  • Subsidized Direct Loans
  • Direct PLUS Loans
  • Federal Pell Grants
  • Iraq and Afghanistan Service Grant

Grant Overpayment

Any amount of unearned grant funds that the student must return is called an overpayment. The maximum amount of a grant overpayment the student must repay is half the grant funds that were received or scheduled to receive. The student does not have to repay a grant overpayment if the original amount of the overpayment is $50 or less. Arrangements must be made with NMC or the Department of Education to return the unearned grant funds. The student will be notified of any grant overpayment within 30 days of the date the school determined the student withdrew.

Notification to student

Once the Return to Title IV Funds calculation has occurred, the Enrollment Services Office will notify the student of the results of the calculation, the aid that was returned, and any outstanding balance now due to NMC as a result.

Unofficial withdrawals

Title IV aid recipients who fail to officially withdraw but stop attending class are considered unofficial withdrawals. The Return to Title IV Funds policy requires NMC to calculate the "earned" amount based on the last day of attendance of the semester. If the student stopped attending prior to the 60% point of the term, the student will be billed for the outstanding charges as a result of the Return of Title IV Funds. Unofficial withdrawals are processed within 30 days of determining the student had an unofficial withdrawal.

An unofficial withdrawal date is the last documented date of attendance at an academically related activity. The last date of attendance is provided by instructors when they enter a grade of 0.0 to any student who has not officially withdrawn. At any time that NMC Enrollment Services Office receives more accurate information about the last date of attendance, the refund may be recalculated.