New Federal Policy about Withdrawals and Return of Financial Aid Background and Information

As part of the Higher Education Amendment of 1998, Congress passed provisions governing what must happen to students’ federal financial assistance if they fail to earn passing grades from school in any term. This change of policy went into effect at Broward Community College beginning with the Fall 2000 term. The policy governs all federal grant and loan programs, including the Federal Pell Grant, Federal SEOG, and Federal Stafford Loans. It does not affect Federal Work Study.

In general, the new law assumes that a student “earns” federal financial aid awards in direct proportion to the number of days of the term attended. If the student receives (or the college receives on the student’s behalf) more assistance than the student earns, the unearned excess funds must be returned to the Department of Education. If, on the other hand, the student receives (or the college receives on the student’s behalf) less assistance than the amount earned, the student may be able to receive those additional funds.

Return of Federal Financial Aid Calculation Method

The portion of federal grants and loans a student is entitled to receive is calculated on a percentage basis by comparing the total number of days in the term to the number of days completed before withdrawal.

For example, if 30% of the term is completed, 30% of the scheduled assistance is earned and 70% of the scheduled awards remain unearned and must be returned to the federal government. The total number of calendar days in a term excludes any scheduled breaks of more than five days. After the 60% point of the term, a student has earned all (100%) of the assistance. If withdrawal from the college occurs on or before completing 60% of the term, the student may have to repay any unearned federal money that was already disbursed. A withdrawal date will be determined by the college when one of these four instances occurs:

1. The date the student begins the college’s withdrawal process (described in the schedule of classes)
2. The date the student officially notified (verbally or in writing) the Registrar of intent to withdraw.
3. The midpoint (50%) of the term if the student withdraws without notifying the college.
4. The last due date of attendance at an academically related activity as documented by the college.

This policy was intended to provide fairness, not hardship. The law provides that if a student must repay grant funds, the amount of the repayment will be reduced by 50%. Any loan funds that the student must return will be repaid according to the terms of the promissory note. Any award money a student is required to return is designated as a federal grant overpayment. Unearned federal aid (the amount that must be returned to the appropriate program) will be returned in the following order: Federal Unsubsidized Loans, Federal Subsidized Loans, Federal Pell Grants and Federal SEOG. If the return of unearned federal assistance causes any portion of tuition and fees to become uncovered, the college will bill the student for the new balance due. The student has 45 days to pay the unearned balance. After the 45th day, the student with unpaid balances will be referred to the Department of Education.