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Withdrawal and Return of Title IV Loan Funds

The Michigan School of Psychology (MSP) adheres to the refund policy of the U.S. Department of Education for students who are recipients of Title IV funds. MSP is responsible for providing each student with the information given in this policy, identifying students who are affected by this policy and completing the Return of Title IV Funds calculation for students.

The term “Title IV Funds” refers to the Federal financial aid programs authorized under the Higher Education Act of 1965 (as amended) and at MSP includes the Federal Direct Unsubsidized Loan and Federal Direct Graduate PLUS Loan programs. The date of withdrawal is a driving factor in determining the amount of Title IV funds that may have to be returned to the Department of Education for the semester. A withdrawal calculation must be performed when a student ceases attending or withdraws from all of his/her courses for a semester.  MSP will determine the student’s withdrawal date based on one of the following conditions:

  • the date the student initiated the official withdraw process through the Registrar’s Office.
  • the student’s last date of attendance at an academically related activity (to include class attendance).
  • the midpoint of the semester if the student ceases attending without notifying MSP (unofficial withdrawal where no last date of attendance can be determined).

During a semester in which as student has begun attendance and received federal Title IV loan(s) (Direct Loan), and the student is considered to have withdrawn as described above, MSP is required to determine the amount of earned and unearned Title IV loan funds. The return is determined on a pro-rata basis. A student is only eligible to retain the percentage of Title IV loan disbursed that is equal to the percentage of the semester that was completed by the student. The unearned Title IV loan must then be returned to the appropriate federal aid program(s) within 45 days of the determination that the student withdrew. If more than 60% of the semester has been completed by the student, no Title IV loan funds are required to be returned. After the 60% point, Title IV assistance is viewed as 100% earned. A copy of the worksheet used for this calculation can be requested from the Financial Aid Office.

If a student did not receive all of the loan funds that were earned, the student may be eligible for a post-withdrawal disbursement.  Loan funds require additional confirmation by the student borrower to authorize any post-withdrawal disbursement.  The student may choose to decline some or all of the loan funds so that the student does not incur additional debt.

Unearned Title IV loan funds will be returned to federal programs in the following order:

  • Federal Direct Graduate PLUS Loan
  • Federal Direct Unsubsidized Loan

MSP will return all unearned loan funds to the applicable federal program. The student will be responsible to pay to their MSP account any balance created by the return. Payment is due to MSP within 60 days.  The student is responsible to complete loan exit counseling at StudentLoans.gov. Per MSP billing, disbursement and refund policy, any credit balance occurring on a student account will be refunded to the student in 14 days or less.

The following is an example of a Title IV return calculation.  This example does not represent all return possibilities, but is presented here to illustrate the process in a simple format.

Institutional charges (tuition/fees): $9,832
Federal Direct Unsubsidized Loan: $6,000
Federal Direct Graduate PLUS Loan: $4,000
Total Federal Direct Loan: $10,000

Student withdraws on the 45th day of a 103 day semester:
Percent Earned 45/103 = 44%
Percent Unearned 100% – 44% = 56%
Unearned loan funds $10,000 x 56% = $5,600
MSP returns $4,000 Federal Direct Graduate PLUS Loan funds, and $1,600 Federal Direct Unsubsidized Loan funds to federal programs
Within 60 days the student is responsible for paying to MSP any bill this creates

The requirements for Title IV program funds when a student withdraws or stops attending are separate from MSP’s refund policy for tuition.  This policy supersedes any previously published version and is subject to change at any time, in order to comply with federal regulations.


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