Financial Implications of Withdrawing

Below is an example of the school performing a Return calculation for a student who withdraws.

John Smith is a transfer student attending Bay State College, (BSC), during the fall semester.  He is registered in the evening program and his fall class schedule is as follows:

Fall semester begins September 2nd and ends December 19th.  Since John is in the evening program, his classes consist of 6 credits Term 1 (September 2nd - October 24th) and 6 credits Term 2 (October 27th – December 19th). 

John is considered a full time, (FT), student for the fall semester.  Even though he is only half time, (HT), Term 1, he is eligible for his FT financial aid as it is based on his full semester enrollment.

On September 12th BSC disburses the following aid to Johns account.

  • Full Time Pell Grant $2,888
  • Direct Subsidized Stafford Loan $1,732

On September 20th John applies for $2,000 additional loan funds.  He is awarded a net Direct Unsubsidized Stafford Loan for $1,980. 

On October 3rd John comes into the Registrar’s office and officially withdraws from BSC.  His last date of actual attendance, (LDA), is documented as September 29th.   His Unsubsidized Stafford loan had not yet disbursed to his account.

Since John did not complete his full period of enrollment for which his fall funds were awarded, BSC needs to process a Return calculation. 

Although John was eligible for his full Pell grant at time of disbursement, BSC must recalculate his eligibility for this grant since he did not begin attendance in his Term 2 classes.  His Pell grant is reduced to $1,444 to reflect the HT enrollment.  The other half is returned to the Department of Education, (DOE), by BSC.

Since John’s Unsubsidized Stafford loan had not disbursed, these funds are treated as “aid that could have been disbursed” when completing the Return calculation.

(In some instances these funds may be considered for a Post Withdrawal Disbursement.)

Step 1 of the calculation identifies disbursed funds as Pell Grant for $1,444 and Subsidized loan for $1,732.  The $1,980 Unsubsidized loan is identified as “could have been disbursed”.

Step 2 of the calculation determines the Percent of Title IV Aid Earned.  Since John completed 28 days of the 109 days in the payment period, the percent completed is 25.7.  This percent is used to determine if any aid needs to be returned by either BSC or the student and if the student is eligible for a Post Withdrawal disbursement of his Unsubsidized Stafford loan.

Step 3 of the calculation identifies the Amount of Title IV Earned by the Student.  After recalculating John’s Pell eligibility, his total disbursed and could have been disbursed aid is $5,156.  His earned amount is $5,156 X 25.7% or $1,325.

Step 4 of the calculation identifies if John is eligible for a Post withdrawal disbursement or if aid needs to be returned.  Since the amount earned identified in step 3 is lower than what was actually disbursed, he is not eligible for his Unsubsidized loan funds.  $3,176 of John’s aid was disbursed and the earned amount is $1,325.  The initial amount of funds to be returned is $1,851.

Step 5 of the calculation identifies the amount the BSC is required to return.  First BSC determines the total institutional charges initially assessed John.  (Institutional refunds are not factored in).  Since John earned 25.7% of his aid as identified in Step 2, his unearned percent is 74.3.  This percent is used to calculate the unearned charges.  John’s institutional charges are $4,522.  $4,522 X 74.3% or $3,359.85 is the amount of John’s unearned institutional charges.

Step 6 of the calculation identifies the funds BSC is required to return.  The lessor amount from either Step 4 or Step 5 must be returned.  BSC will return the Subsidized Loan in the amount of $1,732 and Pell $119.

John is not required to return any loan funds directly.