[Code of Federal Regulations]

[Title 34, Volume 3]

[Revised as of July 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 34CFR668.22]



[Page 422-428]

 

                           TITLE 34--EDUCATION

 

 CHAPTER VI--OFFICE OF POSTSECONDARY 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 423]]



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 424]]



    (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 425]]



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 426]]



    (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 427]]



    (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 428]]



    (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]