[Code of Federal Regulations]
[Title 34, Volume 3]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR668.22]

[Page 435-441]
 
                           TITLE 34--EDUCATION
 
                         DEPARTMENT OF EDUCATION
 
PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS--Table of Contents
 
    Subpart B--Standards for Participation in Title IV, HEA Programs
 
Sec. 668.22  Treatment of title IV funds when a student withdraws.

    (a) General. (1) When a recipient of title IV grant or loan 
assistance withdraws from an institution during a payment period or 
period of enrollment in which the recipient began attendance, the 
institution must determine the amount of title IV grant or loan 
assistance (not including Federal Work-Study or the non-Federal share of 
FSEOG awards if an institution meets its FSEOG matching share by the 
individual recipient method or the aggregate method) that the student 
earned as of the student's withdrawal date in accordance with paragraph 
(e) of this section.
    (2) If the total amount of title IV grant or loan assistance, or 
both, that the student earned as calculated under paragraph (e)(1) of 
this section is less than the amount of title IV grant or loan 
assistance that was disbursed to the student or on behalf of the student 
in the case of a PLUS loan, as of the date of the institution's 
determination that the student withdrew--
    (i) The difference between these amounts must be returned to the 
title IV programs in accordance with paragraphs (g) and (h) of this 
section in the order specified in paragraph (i) of this section; and
    (ii) No additional disbursements may be made to the student for the 
payment period or period of enrollment.
    (3) If the total amount of title IV grant or loan assistance, or 
both, that the student earned as calculated under paragraph (e)(1) of 
this section is greater than the total amount of title IV grant or loan 
assistance, or both, that was disbursed to the student or on behalf of 
the student in the case of a PLUS loan, as of the date of the 
institution's determination that the student withdrew, the difference 
between these amounts must be treated as a post-withdrawal disbursement 
in accordance with paragraph (a)(4) of this section and Sec. 668.164(g).
    (4)(i)(A) If outstanding charges exist on the student's account, the 
institution may credit the student's account in accordance with 
Sec. 668.164(d)(1), (d)(2), and (d)(3) with all or a portion of the 
post-withdrawal disbursement described in paragraph (a)(3) of this 
section, up to the amount of the outstanding charges.
    (B) If Direct Loan, FFEL, or Federal Perkins Loan Program funds are 
used to credit the student's account, the institution must notify the 
student, or parent in the case of a PLUS loan, and provide an 
opportunity for the borrower to cancel all or a portion of the loan, in 
accordance with Sec. 668.165(a)(2), (a)(3), (a)(4), and (a)(5).
    (ii)(A) The institution must offer any amount of a post-withdrawal 
disbursement that is not credited to the student's account in accordance 
with paragraph (a)(4)(i) of this section to the student, or the parent 
in the case of a PLUS loan, within 30 days of the date of the 
institution's determination that the student withdrew, as defined in 
paragraph (l)(3) of this section, by providing a written notification to 
the student, or parent in the case of PLUS loan funds. The written 
notification must--
    (1) Identify the type and amount of the title IV funds that make up 
the post-withdrawal disbursement that is not credited to the student's 
account in accordance with paragraph (a)(4)(i) of this section;
    (2) Explain that the student or parent may accept or decline some or 
all of the post-withdrawal disbursement that is not credited to the 
student's account in accordance with paragraph (a)(4)(i) of this 
section; and
    (3) Advise the student or parent that no post-withdrawal 
disbursement will be made to the student or parent if the student or 
parent does not respond within 14 days of the date that the institution 
sent the notification, unless the institution chooses to make a post-
withdrawal disbursement in accordance with paragraph (a)(4)(ii)(D) of 
this section.
    (B) If the student or parent submits a timely response that 
instructs the institution to make all or a portion of

[[Page 436]]

the post-withdrawal disbursement, the institution must disburse the 
funds in the manner specified by the student or parent within 120 days 
of the date of the institution's determination that the student 
withdrew, as defined in paragraph (l)(3) of this section.
    (C) If the student or parent does not respond to the institution's 
notice, no portion of the post-withdrawal disbursement that is not 
credited to the student's account in accordance with paragraph (a)(4)(i) 
of this section may be disbursed.
    (D) If a student or parent submits a late response to the 
institution's notice, the institution may make the post-withdrawal 
disbursement as instructed by the student or parent or decline to do so.
    (E) If a student or parent submits a late response to the 
institution and the institution does not choose to make the post-
withdrawal disbursement in accordance with paragraph (a)(4)(ii)(D) of 
this section, the institution must inform the student or parent 
electronically or in writing concerning the outcome of the post-
withdrawal disbursement request.
    (iii) A post-withdrawal disbursement must be made from available 
grant funds before available loan funds.
    (b) Withdrawal date for a student who withdraws from an institution 
that is required to take attendance. (1) For purposes of this section, 
for a student who ceases attendance at an institution that is required 
to take attendance, including a student who does not return from an 
approved leave of absence, as defined in paragraph (d) of this section, 
or a student who takes a leave of absence that does not meet the 
requirements of paragraph (d) of this section, the student's withdrawal 
date is the last date of academic attendance as determined by the 
institution from its attendance records.
    (2) An institution must document a student's withdrawal date 
determined in accordance with paragraph (b)(1) of this section and 
maintain the documentation as of the date of the institution's 
determination that the student withdrew, as defined in paragraph (l)(3) 
of this section.
    (3)(i) An institution is required to take attendance if an outside 
entity (such as the institution's accrediting agency or a State agency) 
has a requirement, as determined by the entity, that the institution 
take attendance.
    (ii) If an outside entity requires an institution to take attendance 
for only some students, the institution must use its attendance records 
to determine a withdrawal date in accordance with paragraph (b)(1) of 
this section for those students.
    (c) Withdrawal date for a student who withdraws from an institution 
that is not required to take attendance. (1) For purposes of this 
section, for a student who ceases attendance at an institution that is 
not required to take attendance, the student's withdrawal date is--
    (i) The date, as determined by the institution, that the student 
began the withdrawal process prescribed by the institution;
    (ii) The date, as determined by the institution, that the student 
otherwise provided official notification to the institution, in writing 
or orally, of his or her intent to withdraw;
    (iii) If the student ceases attendance without providing official 
notification to the institution of his or her withdrawal in accordance 
with paragraph (c)(1)(i) or (c)(1)(ii) of this section, the mid-point of 
the payment period (or period of enrollment, if applicable);
    (iv) If the institution determines that a student did not begin the 
institution's withdrawal process or otherwise provide official 
notification (including notice from an individual acting on the 
student's behalf) to the institution of his or her intent to withdraw 
because of illness, accident, grievous personal loss, or other such 
circumstances beyond the student's control, the date that the 
institution determines is related to that circumstance;
    (v) If a student does not return from an approved leave of absence 
as defined in paragraph (d) of this section, the date that the 
institution determines the student began the leave of absence; or
    (vi) If a student takes a leave of absence that does not meet the 
requirements of paragraph (d) of this section, the date that the student 
began the leave of absence.

[[Page 437]]

    (2)(i)(A) An institution may allow a student to rescind his or her 
official notification to withdraw under paragraph (c)(1)(i) or (ii) of 
this section by filing a written statement that he or she is continuing 
to participate in academically-related activities and intends to 
complete the payment period or period of enrollment.
    (B) If the student subsequently ceases to attend the institution 
prior to the end of the payment period or period of enrollment, the 
student's rescission is negated and the withdrawal date is the student's 
original date under paragraph (c)(1)(i) or (ii) of this section, unless 
a later date is determined under paragraph (c)(3) of this section.
    (ii) If a student both begins the withdrawal process prescribed by 
the institution and otherwise provides official notification of his or 
her intent to withdraw in accordance with paragraphs (c)(1)(i) and 
(c)(1)(ii) of this section respectively, the student's withdrawal date 
is the earlier date unless a later date is determined under paragraph 
(c)(3) of this section.
    (3)(i) Notwithstanding paragraphs (c)(1) and (2) of this section, an 
institution that is not required to take attendance may use as the 
student's withdrawal date a student's last date of attendance at an 
academically-related activity provided that the institution documents 
that the activity is academically related and documents the student's 
attendance at the activity.
    (ii) An ``academically-related activity'' includes, but is not 
limited to, an exam, a tutorial, computer-assisted instruction, academic 
counseling, academic advisement, turning in a class assignment or 
attending a study group that is assigned by the institution.
    (4) An institution must document a student's withdrawal date 
determined in accordance with paragraphs (c)(1), (2), and (3) of this 
section and maintain the documentation as of the date of the 
institution's determination that the student withdrew, as defined in 
paragraph (l)(3) of this section.
    (5)(i) ``Official notification to the institution'' is a notice of 
intent to withdraw that a student provides to an office designated by 
the institution.
    (ii) An institution must designate one or more offices at the 
institution that a student may readily contact to provide official 
notification of withdrawal.
    (d) Approved leave of absence. (1) For purposes of this section 
(and, for a title IV, HEA program loan borrower, for purposes of 
terminating the student's in-school status), an institution does not 
have to treat a leave of absence as a withdrawal if it is an approved 
leave of absence. A leave of absence is an approved leave of absence if-
-
    (i) The institution has a formal policy regarding leaves of absence;
    (ii) The student followed the institution's policy in requesting the 
leave of absence;
    (iii) The institution determines that there is a reasonable 
expectation that the student will return to the school;
    (iv) The institution approved the student's request in accordance 
with the institution's policy;
    (v) The leave of absence does not involve additional charges by the 
institution;
    (vi) The number of days in the approved leave of absence, when added 
to the number of days in all other approved leaves of absence, does not 
exceed 180 days in any 12-month period;
    (vii) Except for a clock hour or nonterm credit hour program, upon 
the student's return from the leave of absence, the student is permitted 
to complete the coursework he or she began prior to the leave of 
absence; and
    (viii) If the student is a title IV, HEA program loan recipient, the 
institution explains to the student, prior to granting the leave of 
absence, the effects that the student's failure to return from a leave 
of absence may have on the student's loan repayment terms, including the 
exhaustion of some or all of the student's grace period.
    (2) If a student does not resume attendance at the institution at or 
before the end of a leave of absence that meets the requirements of this 
section, the institution must treat the student as a withdrawal in 
accordance with the requirements of this section.
    (3) For purposes of this paragraph--
    (i) The number of days in a leave of absence is counted beginning 
with the

[[Page 438]]

first day of the student's initial leave of absence in a 12-month 
period.
    (ii) A ``12-month period'' begins on the first day of the student's 
initial leave of absence.
    (iii) An institution's leave of absence policy is a ``formal 
policy'' if the policy--
    (A) Is in writing and publicized to students; and
    (B) Requires students to provide a written, signed, and dated 
request, that includes the reason for the request, for a leave of 
absence prior to the leave of absence. However, if unforeseen 
circumstances prevent a student from providing a prior written request, 
the institution may grant the student's request for a leave of absence, 
if the institution documents its decision and collects the written 
request at a later date.
    (e) Calculation of the amount of title IV assistance earned by the 
student. (1) General. The amount of title IV grant or loan assistance 
that is earned by the student is calculated by--
    (i) Determining the percentage of title IV grant or loan assistance 
that has been earned by the student, as described in paragraph (e)(2) of 
this section; and
    (ii) Applying this percentage to the total amount of title IV grant 
or loan assistance that was disbursed (and that could have been 
disbursed, as defined in paragraph (l)(1) of this section) to the 
student, or on the student's behalf, for the payment period or period of 
enrollment as of the student's withdrawal date.
    (2) Percentage earned. The percentage of title IV grant or loan 
assistance that has been earned by the student is--
    (i) Equal to the percentage of the payment period or period of 
enrollment that the student completed (as determined in accordance with 
paragraph (f) of this section) as of the student's withdrawal date, if 
this date occurs on or before completion of 60 percent of the--
    (A) Payment period or period of enrollment for a program that is 
measured in credit hours; or
    (B) Clock hours scheduled to be completed for the payment period or 
period of enrollment for a program that is measured in clock hours; or
    (ii) 100 percent, if the student's withdrawal date occurs after 
completion of 60 percent of the--
    (A) Payment period or period of enrollment for a program that is 
measured in credit hours; or
    (B) Clock hours scheduled to be completed for the payment period or 
period of enrollment for a program measured in clock hours.
    (3) Percentage unearned. The percentage of title IV grant or loan 
assistance that has not been earned by the student is calculated by 
determining the complement of the percentage of title IV grant or loan 
assistance earned by the student as described in paragraph (e)(2) of 
this section.
    (4) Total amount of unearned title IV assistance to be returned. The 
unearned amount of title IV assistance to be returned is calculated by 
subtracting the amount of title IV assistance earned by the student as 
calculated under paragraph (e)(1) of this section from the amount of 
title IV aid that was disbursed to the student as of the date of the 
institution's determination that the student withdrew.
    (5) Use of payment period or period of enrollment. (i) The treatment 
of title IV grant or loan funds if a student withdraws must be 
determined on a payment period basis for a student who attended a 
standard term-based (semester, trimester, or quarter) educational 
program.
    (ii)(A) The treatment of title IV grant or loan funds if a student 
withdraws may be determined on either a payment period basis or a period 
of enrollment basis for a student who attended a non-term based 
educational program or a nonstandard term-based educational program.
    (B) An institution must consistently use either a payment period or 
period of enrollment for all purposes of this section for each of the 
following categories of students who withdraw from the same non-term 
based or nonstandard term-based educational program:
    (1) Students who have attended an educational program at the 
institution from the beginning of the payment period or period of 
enrollment.

[[Page 439]]

    (2) Students who re-enter the institution during a payment period or 
period of enrollment.
    (3) Students who transfer into the institution during a payment 
period or period of enrollment.
    (f) Percentage of payment period or period of enrollment completed. 
(1) For purposes of paragraph (e)(2)(i) of this section, the percentage 
of the payment period or period of enrollment completed is determined--
    (i) In the case of a program that is measured in credit hours, by 
dividing the total number of calendar days in the payment period or 
period of enrollment into the number of calendar days completed in that 
period as of the student's withdrawal date; and
    (ii) In the case of a program that is measured in clock hours, by 
dividing the total number of clock hours in the payment period or period 
of enrollment into the number of clock hours--
    (A) Completed by the student in that period as of the student's 
withdrawal date; or
    (B) Scheduled to be completed as of the student's withdrawal date, 
if the clock hours completed in the period are not less than 70 percent 
of the hours that were scheduled to be completed by the student as of 
the student's withdrawal date.
    (2)(i) The total number of calendar days in a payment period or 
period of enrollment includes all days within the period, except that 
scheduled breaks of at least five consecutive days are excluded from the 
total number of calendar days in a payment period or period of 
enrollment and the number of calendar days completed in that period.
    (ii) The total number of calendar days in a payment period or period 
of enrollment does not include days in which the student was on an 
approved leave of absence.
    (g) Return of unearned aid, responsibility of the institution. (1) 
The institution must return, in the order specified in paragraph (i) of 
this section, the lesser of--
    (i) The total amount of unearned title IV assistance to be returned 
as calculated under paragraph (e)(4) of this section; or
    (ii) An amount equal to the total institutional charges incurred by 
the student for the payment period or period of enrollment multiplied by 
the percentage of title IV grant or loan assistance that has not been 
earned by the student, as described in paragraph (e)(3) of this section.
    (2) For purposes of this section, ``institutional charges'' are 
tuition, fees, room and board (if the student contracts with the 
institution for the room and board) and other educationally-related 
expenses assessed by the institution.
    (3) If, for a non-term program an institution chooses to calculate 
the treatment of title IV assistance on a payment period basis, but the 
institution charges for a period that is longer than the payment period, 
``total institutional charges incurred by the student for the payment 
period'' is the greater of--
    (i) The prorated amount of institutional charges for the longer 
period; or
    (ii) The amount of title IV assistance retained for institutional 
charges as of the student's withdrawal date.
    (h) Return of unearned aid, responsibility of the student. (1) After 
the institution has allocated the unearned funds for which it is 
responsible in accordance with paragraph (g) of this section, the 
student must return assistance for which the student is responsible in 
the order specified in paragraph (i) of this section.
    (2) The amount of assistance that the student is responsible for 
returning is calculated by subtracting the amount of unearned aid that 
the institution is required to return under paragraph (g) of this 
section from the total amount of unearned title IV assistance to be 
returned under paragraph (e)(4) of this section.
    (3) The student (or parent in the case of funds due to a PLUS Loan) 
must return or repay, as appropriate, the amount determined under 
paragraph (h)(1) of this section to--
    (i) Any title IV loan program in accordance with the terms of the 
loan; and
    (ii) Any title IV grant program as an overpayment of the grant; 
however, a student is not required to return 50 percent of the grant 
assistance that is the responsibility of the student to repay under this 
section.

[[Page 440]]

    (4)(i) A student who owes an overpayment under this section remains 
eligible for title IV, HEA program funds through and beyond the earlier 
of 45 days from the date the institution sends a notification to the 
student of the overpayment, or 45 days from the date the institution was 
required to notify the student of the overpayment if, during those 45 
days the student--
    (A) Repays the overpayment in full to the institution;
    (B) Enters into a repayment agreement with the institution in 
accordance with repayment arrangements satisfactory to the institution; 
or
    (C) Signs a repayment agreement with the Secretary, which will 
include terms that permit a student to repay the overpayment while 
maintaining his or her eligibility for title IV, HEA program funds.
    (ii) Within 30 days of the date of the institution's determination 
that the student withdrew, an institution must send a notice to any 
student who owes a title IV, HEA grant overpayment as a result of the 
student's withdrawal from the institution in order to recover the 
overpayment in accordance with paragraph (h)(4)(i) of this section.
    (iii) If an institution chooses to enter into a repayment agreement 
in accordance with paragraph (h)(4)(i)(B) of this section with a student 
who owes an overpayment of title IV, HEA grant funds, it must--
    (A) Provide the student with terms that permit the student to repay 
the overpayment while maintaining his or her eligibility for title IV, 
HEA program funds; and
    (B) Require repayment of the full amount of the overpayment within 
two years of the date of the institution's determination that the 
student withdrew.
    (iv) An institution must refer to the Secretary, in accordance with 
procedures required by the Secretary, an overpayment of title IV, HEA 
grant funds owed by a student as a result of the student's withdrawal 
from the institution if--
    (A) The student does not repay the overpayment in full to the 
institution, or enter a repayment agreement with the institution or the 
Secretary in accordance with paragraph (h)(4)(i) of this section within 
the earlier of 45 days from the date the institution sends a 
notification to the student of the overpayment, or 45 days from the date 
the institution was required to notify the student of the overpayment;
    (B) At any time the student fails to meet the terms of the repayment 
agreement with the institution entered into in accordance with paragraph 
(h)(4)(i)(B) of this section; or
    (C) The student chooses to enter into a repayment agreement with the 
Secretary.
    (v) A student who owes an overpayment is ineligible for title IV, 
HEA program funds--
    (A) If the student does not meet the requirements in paragraph 
(h)(4)(i) of this section, on the day following the 45-day period in 
that paragraph; or
    (B) As of the date the student fails to meet the terms of the 
repayment agreement with the institution or the Secretary entered into 
in accordance with paragraph (h)(4)(i) of this section.
    (vi) A student who is ineligible under paragaraph (h)(4)(v) of this 
section regains eligibility if the student and the Secretary enter into 
a repayment agreement.
    (i) Order of return of title IV funds. (1) Loans. Unearned funds 
returned by the institution or the student, as appropriate, in 
accordance with paragraph (g) or (h) of this section respectively, must 
be credited to outstanding balances on title IV loans made to the 
student or on behalf of the student for the payment period or period of 
enrollment for which a return of funds is required. Those funds must be 
credited to outstanding balances for the payment period or period of 
enrollment for which a return of funds is required in the following 
order:
    (i) Unsubsidized Federal Stafford loans.
    (ii) Subsidized Federal Stafford loans.
    (iii) Unsubsidized Federal Direct Stafford loans.
    (iv) Subsidized Federal Direct Stafford loans.
    (v) Federal Perkins loans.
    (vi) Federal PLUS loans received on behalf of the student.
    (vii) Federal Direct PLUS received on behalf of the student.

[[Page 441]]

    (2) Remaining funds. If unearned funds remain to be returned after 
repayment of all outstanding loan amounts, the remaining excess must be 
credited to any amount awarded for the payment period or period of 
enrollment for which a return of funds is required in the following 
order:
    (i) Federal Pell Grants.
    (ii) Federal SEOG Program aid.
    (iii) Other grant or loan assistance authorized by title IV of the 
HEA.
    (j) Timeframe for the return of title IV funds. (1) An institution 
must return the amount of title IV funds for which it is responsible 
under paragraph (g) of this section as soon as possible but no later 
than 30 days after the date of the institution's determination that the 
student withdrew as defined in paragraph (l)(3) of this section. The 
timeframe for returning funds is further described in Sec. 668.173(b).
    (2) An institution must determine the withdrawal date for a student 
who withdraws without providing notification to the institution no later 
than 30 days after the end of the earlier of the--
    (i) Payment period or period of enrollment, as appropriate, in 
accordance with paragraph (e)(5) of this section;
    (ii) Academic year in which the student withdrew; or
    (iii) Educational program from which the student withdrew.
    (k) Consumer information. An institution must provide students with 
information about the requirements of this section in accordance with 
Sec. 668.43.
    (l) Definitions. For purposes of this section--
    (1) Title IV grant or loan funds that ``could have been disbursed'' 
are determined in accordance with the late disbursement provisions in 
Sec. 668.164(g).
    (2) A ``period of enrollment'' is the academic period established by 
the institution for which institutional charges are generally assessed 
(i.e. length of the student's program or academic year).
    (3) The ``date of the institution's determination that the student 
withdrew'' is--
    (i) For a student who provides notification to the institution of 
his or her withdrawal, the student's withdrawal date as determined under 
paragraph (c) of this section or the date of notification of withdrawal, 
whichever is later;
    (ii) For a student who did not provide notification of his of her 
withdrawal to the institution, the date that the institution becomes 
aware that the student ceased attendance;
    (iii) For a student who does not return from an approved leave of 
absence, the earlier of the date of the end of the leave of absence or 
the date the student notifies the institution that he or she will not be 
returning to the institution; or
    (iv) For a student whose rescission is negated under paragraph 
(c)(2)(i)(B) of this section, the date the institution becomes aware 
that the student did not, or will not, complete the payment period or 
period of enrollment.
    (v) For a student who takes a leave of absence that is not approved 
in accordance with paragraph (d) of this section, the date that the 
student begins the leave of absence.
    (4) A ``recipient of title IV grant or loan assistance'' is a 
student for whom the requirements of Sec. 668.164(g)(2) have been met.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1091b)

[64 FR 59038, Nov. 1, 1999, as amended at 67 FR 67073, Nov. 1, 2002]