Application of Funds

Title IV federal financial aid funds are awarded under the assumption that a student will remain in classroom attendance for the entire period (semester) for which funds were awarded. If a financial aid recipient withdraws from school after beginning attendance, the amount of Title IV grant or loan assistance earned by the student must be determined. If the amount disbursed to the student is greater than the amount the student earned, the unearned funds must be returned to the federal government. If the amount disbursed to the student is less than the amount the student earned, and for which the student is otherwise eligible, he or she is eligible to receive a post-withdrawal disbursement of the earned aid that was not received.

The Higher Education Amendments of 1998, as well as the program integrity regulations in 2010, set forth rules governing the treatment of Title IV funds when a student withdraws from an institution. In accordance, Grand Rapids Community College calculates how much federal financial aid a student has earned if that student:

  • completely withdraws, or
  • stops attending before completing the semester, or
  • does not complete all modules (courses which do not span the entire semester), or
  • does not earn any credit in the semester that aid was received, or
  • is enrolled in a Job Training (clock hour) programs and receives an unsuccessful grade of W (withdrawal) or U (unsuccessful).

Based on this calculation, students who receive federal financial aid and do not complete their classes during a semester could be responsible to repay a portion of the aid they received. Students who do not begin attendance in classes are not eligible for federal financial aid and must repay all aid received.

If a financial aid recipient, who has not officially withdrawn, fails to receive a passing grade in at least one class during the semester, the Financial Aid Office will determine if eligibility for aid awarded has been established.

Federal financial aid covered under this regulation includes the Federal Pell Grant, Iraq and Afghanistan Service Grant, Federal Supplemental Educational Opportunity Grant, Federal Direct subsidized and unsubsidized loans, and Federal Direct Parent PLUS loans. State grant and scholarship programs are not covered under this regulation but follow the college's institutional refund policy. Information regarding refund requirements is included in the GRCC Catalog and is available on the GRCC website

How is the financial aid I earn calculated?

The amount of federal financial aid a student earns is determined on a pro-rated basis. The Financial Aid Office uses the following Department of Education formula to determine the percent of unearned aid that has to be returned to the federal government:

For Students in Credit Hour Programs:

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 five consecutive days long).

The payment period for most students is the entire semester. However, for students enrolled in modules, the payment period includes the days in all module(s) in which the student initially registered, except for scheduled breaks of at least 5 consecutive days. This is true even if the institution cancels a class or withdraws a student due to lack of prerequisite or other reason.

The percent unearned is equal to 100 percent minus the percent earned.

If more than 60% of the payment period or semester has been completed by the student, no Title IV aid is required to be returned.

For Students in Job Training (Clock Hour) Programs:

For students who withdraw, the percent earned is equal to the number of hours attended divided by the total hours in the enrollment period. In each instance, if the student completed more than 60% based on the above calculations, no Title IV aid is required to be returned.

What do I need to consider when withdrawing from a module course?

A student’s sequence of withdrawal from module courses impacts return of funds calculations. If a student enrolls in two module courses but decides to withdraw from the later starting module while still attending the current module, a return of funds calculation is not required. However, a recalculation of aid based on the change in enrollment status may be required. 

If a student enrolls in two modules and completes the first module, but withdraws from or does not start a later module after the prior module has ended, a return of funds calculation would be required to be performed. Further, recalculation of aid based on this change in enrollment status must be performed before the calculation of the R2T4 amount.

If a student provides written notice to the Financial Aid Office at the time of withdrawal from a current module that she or he plans to attend a later module in the same payment period, she or he is not considered a withdrawal. If the student does not provide that written confirmation, the R2T4 recalculation of aid will be done. However, if the student does return in a later module in the same payment period, regardless of whether prior written confirmation was received, the R2T4 process will be reversed and the student will be awarded the funds that she or he is eligible to receive at the time of return.

What is the withdrawal date?

The withdrawal date used in a return of funds calculation of a student's federal financial aid is the actual date the student officially drops class(es) or the last date of attendance reported by the instructor(s), whichever is earlier. Students may officially drop classes online using the Online Student Center or in person at the GRCC Enrollment Center. If a student unofficially withdraws or stops attending classes without notifying the College, the withdrawal date will be the last date of attendance as officially reported by the instructor(s). Instructors are required to report a last date of attendance for students who have failing grades in their classes. In instances where there is no official withdrawal date or last date of attendance reported, the 50% point of the semester will be used as the withdrawal date.

When am I eligible for a post withdrawal disbursement?

A post withdrawal disbursement may be made to a student who withdraws from all of his or her classes prior to the disbursement of federal financial aid. The amount of the disbursement (if any) is determined during the federal Return of Title IV funds calculation process. If applicable, GRCC will offer in writing a post withdrawal disbursement to an eligible student within 30 days after the college determines the withdrawal. The notice will include the type and amount of financial aid funds that make up the post withdrawal disbursement and explain that he or she may decline all or a portion of those funds. 

The student will have 14 calendar days from the date GRCC sends the notification to accept or decline the post withdrawal disbursement. If the student accepts all or a portion of the post withdrawal disbursement, GRCC will disburse the funds to the student’s account as soon as possible but no later than 180 calendar days from the date the school determined the student withdrew. If the student fails to respond to the notice or declines the post withdrawal disbursement, GRCC will not make the disbursement.

Who is responsible for returning federal funds? 

The college and the student are both responsible for returning unearned federal financial aid to the federal government. The college must return the total amount of unearned aid as determined by the R2T4 calculations. The amount of the unearned aid is determined by using the unearned percentage multiplied by either the institutional charges or the disbursed aid, whatever is less. The student must return any remaining unearned grant funds not sent back by the college after the 50% protection allowance is applied. If the amount is $25 or less, the student does not have to repay the funds.

Refunds to Title IV programs will be made in the following order: Federal Direct Unsubsidized Loan, Federal Direct Subsidized Loan, Federal Direct Parent PLUS loan, Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Iraq and Afghanistan Service Grant.

How do I repay the unearned funds?

The Grand Rapids Community College Financial Aid Office will notify students of any adjustments to their aid packages, as a result of the return of funds calculation and inform students if they owe federal funds back to the government.

Amounts that must be returned by the student will first be applied to federal loans. The student will be permitted to repay loans based on the terms of the Master Promissory Note. Any grant amounts the student has to return to the federal government must be repaid within 45 days after the student receives notification from the Financial Aid Office. If the grant overpayment cannot be paid in full, a satisfactory repayment plan may be arranged with the U.S. Department of Education. 

If the student owes any money to the college resulting from the return of federal funds used to cover tuition and fees, the student will be billed by the Grand Rapids Community College Cashier’s Office.

What happens if I don't repay?

If a student does not repay the grant funds that are owed to the government within the 45 days, the account will be turned over to the U.S. Department of Education as an overpayment of federal funds. Students who owe an overpayment of Title IV funds are ineligible for further disbursements from the federal financial aid programs at any institution until the overpayment is paid in full or payment arrangements are made with the U.S. Department of Education.

A hold will be placed on a student’s account if he or she fails to pay any tuition and fee balance owed to the College, as a result of the College returning unearned federal funds. Students will not be permitted to register for classes (or, in some cases, remain enrolled) or receive transcripts until the balance is paid.

Is it always necessary to complete a return of funds calculations if I completely withdraw?

Return of funds calculations do not need to be performed when a student’s only source of federal aid is college work study, a student drops classes but does not completely withdraw, a student drops all of their classes before the classes have begun, or when the college cannot document at least one day of class attendance.

What is the timeframe for returning funds?

The college returns their portion of the unearned funds to the U.S. Department of Education via the Common Origination and Disbursement system, as well as the G5 federal system, within 45 days of the withdrawal. Students are given 45 days to pay the college the amount of their overpayment.  Payment can be made using cash, personal check, cashier’s check, credit card or debit card. If the student does not pay the college within this timeframe, the Financial Aid Office reports the student overpayment information to both the US Department of Education using the Overpayment Referral Form and electronically to NSLDS. 

Are restrictions placed on my records if I do not repay the overpayment?

A hold will be placed on the student’s school records and account until the amount due to the school for returned funds OR an amount due for an overpayment is resolved. The financial aid office will remove the hold when the student’s obligation has been satisfied.

How do I regain my financial aid eligibility?

The Financial Aid Office will use data from the National Student Loan Data System (NSLDS) to update and/or correct overpayment information for students. A copy of an official letter from the U.S. Department of Education stating that the overpayment has been resolved will also be accepted. Successful resolution will result in reinstatement of federal aid eligibility.