When a college accepts federal financial aid in lieu of payment directly from the student, the regulations require that the college monitor the student's completion of the courses funded by one of the Title IV programs. The college will report withdrawals and failures, if any, and, in some cases, refund the financial aid. If the financial aid is refunded, the student may incur a balance on his school account.
Official vs. Unofficial Withdrawal
Official withdrawals occur when the student follows all the steps involved in completing the withdrawal process for the college. The term unofficial withdrawal is defined by the Higher Education Amendments of 1998. According to the University of Mississippi, a withdrawal occurs when a student does not attend classes for the full time that her federal aid eligibility covered. If this occurs without the student's having gone through the college's official withdrawal process, the withdrawal is an unofficial withdrawal, and the college must determine how many days the student remained active in her course of study.
Official vs. Unofficial Withdrawal Determination
Regardless of whether the withdrawal was done officially or unofficially, the registrar of the college determines the date of withdrawal. In the case of unofficial withdrawals, the last date of attendance is set at either the midpoint of the semester or the last documented date of attendance, whichever is last. The registrar may work in conjunction with other school officials in determining the last date the student was considered in participation in their classes, if necessary. Only students who attend at least 60 percent of their semester earn exemption from having their financial aid refunded.
At the end of each semester, the financial aid office audits all failing students. If the student received financial aid through any of the Title IV funding programs, regulations require that the college refund the financial aid to the appropriate agency. The student will be notified in writing if there have been any changes to the financial aid package.
Title IV Funding Agencies
Whether you withdrew officially or unofficially affects whether your financial aid gets refunded by your college. The following Title IV funding agencies are affected by this policy: the Academic Competitiveness Grant, the Federal Pell Grant, the Federal Perkins Loan, the Federal Supplemental Educational Opportunity Grant, the FFEL program loans (Subsidized Stafford, Unsubsidized Stafford and Parent PLUS loans), the National SMART Grant and the TEACH grant. Graduate students may be subject to changes in the Federal Direct Graduate PLUS Loan. Your college may refund some of your financial aid if you withdraw from courses that were funded by these programs. The only Title IV program not affected is the Federal Work-Study program.