If the student receives less Title IV aid than the amount earned, the school must offer a disbursement of the earned aid that was not received. This is called a post-withdrawal disbursement (PWD). If the student receives more Title IV aid than the amount earned, the school, the student, or both must return the unearned funds in a specified order.
Title IV aid to be disbursed or returned34 CFR 668.22(a)(4) or (5)
If a PWD is due, a school stops at Step 4, Box J on the worksheet. Since a school must keep written records of the post-withdrawal disbursement process, a school may use the Department's post- withdrawal disbursement tracking sheet to track the handling of PWDs, or any other alternative form developed to track PWDs.
Post-withdrawal disbursementsAny post-withdrawal disbursement due must meet the current required conditions for late disbursements. These conditions are listed in the chart Conditions and Limitations on Late Disbursements in Volume 4. For example, the Department must have processed a SAR or ISIR with an official expected family contribution (EFC) prior to the student’s withdrawal.
A school is required to make (or offer as appropriate) post- withdrawal disbursements. A post-withdrawal disbursement must be made within 180 days of the date the institution determines that the student withdrew. The amount of a post-withdrawal disbursement is determined by following the requirements for calculating earned Title IV aid and has no relationship to incurred educational costs.
The regulations do not address how a school should ensure that Title IV funds are disbursed to the proper individual. However, a school may not require a student who has withdrawn from a school (or a parent of such a student, for Direct PLUS Loan funds) to pick up a post-withdrawal disbursement in person. Because the student is no longer attending the school, he or she may have moved out of the area and may be unable to return to the school to pick up a post-withdrawal disbursement.
For a student who withdraws after the 60% point in time, even though a return of Title IV aid is not required, a school may have to complete an R2T4 calculation to determine whether the student is eligible for a post-withdrawal disbursement.
A school may not make a post-withdrawal disbursement of Title IV funds to the account or estate of a student who has died.
A post-withdrawal disbursement, whether credited to the student’s account or disbursed to the student or parent directly, must be made from available grant funds before available loan funds. Available grant or loan funds refers to Title IV program assistance that could have been disbursed to the student but was not disbursed as of the date of the institution’s determination that the student withdrew.
Disburse grants before loans34 CFR 668.22(a)(6)(i)
Example—If a student is due a post-withdrawal disbursement of $500, and the student has received $400 of $1,000 in Federal Pell Grant funds that could have been disbursed and $1,200 of the $2,000 in Federal Direct Loan funds that could have been disbursed, the available undisbursed funds are $600 in Federal Pell Grant funds and $800 in Direct Loan funds. Any portion of the $500 post-withdrawal disbursement that the school makes must be from the $600 in available Federal Pell Grant funds.
The actions a school must take before it may disburse funds from a post-withdrawal disbursement vary depending on the source of the funds.
A school must obtain confirmation from a student, or parent for a Direct Parent PLUS Loan, before making any disbursement of loan funds from a post-withdrawal disbursement.
Because the COD system will not accept requests for other than whole dollars for the Direct Loan Program, the amount a school may be required to enter on the Post-Withdrawal Tracking Sheet may have to be rounded up or down to the nearest whole dollar, not to exceed the annual or aggregate limits.
Post-withdrawal grant disbursements are either credited to a student's account to satisfy outstanding allowable charges or paid directly to the student.
Time frame for post-withdrawal disbursement of grant funds34 CFR 668.22(a)(6)(ii)(B)(1)
A school is permitted to credit a student’s account with the post- withdrawal disbursement of Title IV grant funds to cover current outstanding allowable charges without the student’s permission for tuition, fees, and room and board (if the student contracts with the school). A school must credit the student’s account with the PWD for current charges within 180 days of the date of determination.
To cover charges other than current charges, a school must obtain a student’s authorization to credit a student’s account with Title IV grant funds. A school is permitted to use a student’s authorization for crediting the student’s account for educationally related expenses that the school obtained prior to the student’s withdrawal date so long as the cash management requirements for student authorizations are met. If the school did not obtain authorization prior to the student’s withdrawal, the school would have to obtain authorization in accordance with the cash management requirements before the school could credit the student’s account for other current charges or for educationally related activities. (See Volume 4 for more information on student and parent authorizations.)
For any amount of a post-withdrawal grant disbursement not credited to the student’s account to cover allowable charges, the school must make the disbursement as soon as possible but no later than 45 days after the date of the school’s determination that the student withdrew (no confirmation from the student is required).
A school may not delay its disbursement processes while it ascertains whether a student wishes to receive the grant funds he or she is entitled to. However, while the school is processing the disbursement or notifying the student about his or her eligibility for a post-withdrawal disbursement of grant funds, the school may, at its discretion, notify the student that it may be beneficial to turn down all or a portion of the grant funds to preserve grant eligibility for attendance at another institution. Of course, if the student independently contacts the school and states that he or she does not wish to receive a grant disbursement, the school is not required to send it. (Please see GEN-12-18 for more information on a student's Pell declination process.)
A school must notify a student, or parent for a Direct Parent PLUS Loan, in writing prior to making any post-withdrawal disbursement of loan funds, whether those loan funds are to be credited to the student’s account or disbursed directly to the student (or parent). The information provided in this notification must include the information necessary for the student, or parent for a Direct Parent PLUS Loan, to make an informed decision as to whether the student or parent would like to accept any disbursement of loan funds and must be provided within 30 days of the date of a school’s determination that a student has withdrawn. In addition, the notice must request confirmation of any post-withdrawal disbursement that the student or parent, as applicable, wishes the school to make.
Time frame for notification of eligibility for post-withdrawal disbursement of loan funds34 CFR 668.22(a)(6)(iii)(A)
Cash management requirements for student and parent authorizationsThe notice must identify the type and amount of the loan funds the school wishes to credit to the student’s account or disburse directly to the student or parent, and explain that a student, or parent for a Direct Parent PLUS Loan, may accept or decline all or a portion of the funds. The notice must also explain to the student, or parent for a Direct Parent PLUS Loan, the obligation to repay the loan funds whether they are disbursed to the student’s account or directly to the borrower.
The notice must also make clear that a student, or parent for a Direct Parent PLUS Loan, may not receive as a direct disbursement loan funds that the institution wishes to credit to the student’s account unless the institution agrees to do so. If the student, or parent for a Direct Parent PLUS Loan, does not wish to accept some or all of the loan funds that the institution wishes to credit to the student’s account, the institution must not disburse those funds.
In the notification, the school must advise the student or parent that an institution may set a deadline of 14 days or more. Any deadline must apply to both confirmation of loan disbursements to the student’s account and direct disbursements of a post-withdrawal disbursement. The notification must make it clear that if the student or parent does not respond to the notification within the time frame, the school is not required to make the post-withdrawal disbursement. However, a school may choose to make a post-withdrawal disbursement based on an acceptance received from a student or parent after the school’s deadline. A student’s or parent’s response to an offer of a direct disbursement of Title IV loan funds from a PWD does not have to be in writing, but the school must document the response.
Deadline for responding to an offer of a post-withdrawal disbursement of loan funds34 CFR 668.22(a)(6)(iii)(A)(5)
A school that chooses to honor a late response must disburse all the funds accepted by the student or parent as applicable. The school cannot credit the student’s account in accordance with the student’s request but decline to disburse post-withdrawal funds accepted as a direct disbursement. If a response is not received from the student or parent within the permitted time frame, or the student declines the funds, the school must return (or redisburse to another eligible student) any earned funds that the school was holding to the Title IV programs.
If a student or parent submits a timely response accepting all or a portion of a post-withdrawal loan disbursement, per the student’s or parent’s instructions, the school must disburse the loan funds within 180 days of the date of the institution’s determination that the student withdrew. (For additional information, see the discussion under Date of the institution’s determination that the student withdrew in Chapter 1.)
If authorization from a student (or parent for a Direct PLUS Loan) is received after the deadline and the school chooses not to make a post- withdrawal disbursement of loan funds, the school must notify the student (or parent) that the post-withdrawal disbursement will not be made and why. This notification must be made in writing. If an authorization from the student (or parent for a Direct PLUS Loan) is never received, or if the school chooses to make a post-withdrawal disbursement of loan funds per the recipient’s instructions on an authorization received after the deadline, the school does not need to notify the student.
The school must document the result of the notification process and the final determination made concerning the disbursement and maintain that documentation in the student’s file.
If a school has completed the post-withdrawal loan notification process and confirmed a student’s desire for any Direct Loan funds included in the post-withdrawal disbursement, the school is permitted to credit a student’s account with the post-withdrawal disbursement without additional permission from the student (or parent, in the case of a Direct PLUS Loan) for current institutional charges as described earlier.
A school may combine providing loan counseling, obtaining authorization to credit loan funds to a student’s account for outstanding charges, and obtaining authorization to make a direct disbursement to the student.
Once a school has received confirmation from a student, or parent in the case of a Direct PLUS Loan, that he or she wants to receive the post- withdrawal disbursement of loan funds, a school must make the post- withdrawal disbursement of Title IV loan proceeds as soon as possible but no later than 180 days after the date of the school’s determination that the student withdrew.
A school is permitted to use a student’s or parent’s authorization for crediting the student’s account for educationally related expenses that the school obtained prior to the student’s withdrawal date so long as that authorization meets the cash management requirements for student or parent authorizations. If the school did not obtain authorization prior to the student’s withdrawal, the school would have to obtain authorization in accordance with the cash management requirements before the school could credit the student’s account for other current charges for educationally related activities. (See Volume 4 for more information on student and parent authorizations.)
An institution should not request Title IV funds for a post withdrawal disbursement unless, and until, it has determined that it can disburse any post-withdrawal disbursement within three business days of receiving the funds.
The requirements for the treatment of Title IV funds when a student withdraws must still adhere to the cash management requirements for disbursing Title IV funds. An institution must obtain a student’s (or parent's where applicable) authorization to credit a student’s account with Title IV funds for charges other than current charges for tuition, fees, and room and board (if the student contracts with the school.) (See Volume 4 and Appendix F—Institutional Reporting and Disclosure Requirements.)
Outstanding charges on a student’s account are charges for which the institution will hold the student liable after the application of any applicable refund policy. These are the institutional charges, after any adjustment, that reflect what the student will owe for the current term after his or her withdrawal, any other current charges, plus any permitted minor prior year charges.
Outstanding Charges Example—Consider a student who is due a post-withdrawal disbursement of $800. The institutional charges that the student was originally assessed by the school totaled $2,300. However, under the institution’s refund policy, the institution may only keep $600 of those institutional charges. No funds had been paid toward the institutional charges at the time the student withdrew. In addition, the student owes $150 for a bus pass. The outstanding charges on the student’s account that would be entered in Box 2 of the post-withdrawal Disbursement Tracking Sheet are $750 (the $600 in institutional charges plus the $150 owed for the bus pass). A portion of the $800 the institution must disburse under the post-withdrawal disbursement provisions may (with authorization if they are loan funds) be used to satisfy the outstanding balance. If the student has provided written authorization to credit Title IV funds to his account and use them for noninstitutional educational charges, the school may credit $750 to institutional charges and offer $50 to the student. If the student has not provided (and does not provide) written authorization to use the funds for noninstitutional educational charges, the school may only credit $600 to institutional charges and must offer $200 to the student.
A school may credit a student’s account for prior award year charges in accordance with the cash management requirements (see Volume 4). Schools should make every effort to explain to a student that all or a portion of his or her post-withdrawal disbursement has been used to satisfy any charges from prior award years.
Example of the post-withdrawal disbursement requirementsMichael drops out of school on November 5. On November 10, the school becomes aware that Michael has ceased attending. The school determines that Michael is due a post-withdrawal disbursement of $900. When Michael withdrew, only $600 of the $1,000 in Federal Pell Grant funds that could have been disbursed had been disbursed. Of the $500 in Direct Loan funds that could have been disbursed, none had been disbursed. The school determines that Michael has $50 in outstanding tuition charges and $100 in outstanding library fines for the payment period. The school obtained permission from Michael at the beginning of the term (prior to his withdrawal) to credit his account for educationally related charges other than tuition, fees, and contracted room and board. Because available grant funds must be used before available loan funds to make a post-withdrawal disbursement, the school credits Michael’s account with $150 of his Federal Pell Grant funds. On November 12 (the last date the school could have sent the funds was December 25th—45 days after the date of the school’s determination that the student withdrew), the school sends the remaining $250 in Pell Grant funds to Michael. On the same day (the last date the school could have sent the notification was December 10th—30 days after the school’s determination that the student withdrew), the school sends a notification to Michael stating that:
He is due a post-withdrawal disbursement of $500 in Direct Loan funds to be disbursed directly to him.
Michael may accept all, a portion, or none of the $500 in Direct Loan funds. Any Direct Loan funds that Michael accepts will have to be repaid.The school is obligated to make a post-withdrawal disbursement of loan funds only if Michael accepts the funds by November 26, which is 14 days after the school sent the notification.
Note that a school may allow more than 14 days for a response.
Michael responds on November 19 and informs the school that he is accepting $250 of the $500 in Direct Loan funds. The school has until May 9 (180 days after November 10—the date the school determined that the student withdrew) to make the $250 disbursement (34 CFR 668.22(a)(6)(iii)(C)). The school must document the notification and final determination (whether the student accepts a partial or full disbursement or declines the entire disbursement (34 CFR 668.22(a)(6)(iv))).