Dropping Credits
- Students may be billed for a portion or all of their financial aid awards if they drop credits or do not carry the minimum number of credits required for aid eligibility.
- View the enrollment chart at finaid.msu.edu/references/enrollment-chart to determine if particular grants or scholarships will be reduced when dropping credits. Students will be billed for aid adjustments caused by changes in enrollment status.
Return of Funds Policy for Federal Financial Aid Recipients Who Withdraw
When a student who received federal financial aid, referred to as Title IV aid, withdraws from a term, the Office of Financial Aid is required to perform a calculation to see what portion of the disbursed aid must be returned by the school and/or the student, and to determine if any undisbursed aid can still be released.
There are three types of withdrawals that fall under the return to Title IV (R2T4) regulations:
- Official Withdrawals – student contacts the Registrar’s Office or their advisor to initiate an official withdrawal for a semester, or the student drops all of their courses using the online enrollment system.
- Unofficial Withdrawals - student begins to attend class but stops attending prior to the end of the term without providing official notification to the University. For Title IV purposes, the withdrawal date for students who unofficially withdraw is the midpoint of the semester unless a documented last date of attendance can be determined. If the University determines that a student did not provide official notice of the intent to withdraw due to illness, accident, grievous personal loss or other circumstances beyond the student’s control, the University may use a date that is related to that circumstance. Requests for retroactive withdrawals after the term is over will not supersede the determination of an unofficial withdrawal for aid purposes.
- Modular withdrawals – If a student is enrolled in a course that does not run the full length of a term they are considered to be enrolled in a module and may be subject to the modular withdrawal rules. If they cease attendance at any point prior to completing the period of enrollment they may be considered a withdrawal unless they have met one of three exceptions, or unless the school obtains written confirmation from the student at the time of the withdrawal that they will attend a module that begins later in the same period of enrollment. The exceptions are 1) if the student has met degree requirements to graduate, 2) the student has already passed a half-time credit load for their program in the term or 3) the student has passed a class or classes that are at least 49% of the length of the period of enrollment. If written confirmation of future attendance is received from the student but the student does not return as scheduled, the student is considered to have withdrawn and the student’s withdrawal date will be the date that would have been used had the student not provided notification.
When a student is considered to have withdrawn, as described above, during an enrollment period in which they have begun attendance and received federal Title IV financial aid, Michigan State University is required to determine the amount of earned and unearned Title IV aid. A student is only eligible to retain the percentage of Title IV aid disbursed that is equal to the percentage of the enrollment period that was completed by the student (calculated daily). The unearned Title IV aid must then be returned to the appropriate federal aid programs. If more than 60% of the enrollment period has been completed by the student, no Title IV aid needs to be returned.
The following steps will be followed when determining the amount of Title IV aid to be returned upon withdrawal:
- Determine percentage of enrollment period completed by student. Divide the number of days attended by the number of days in the enrollment period. If the calculated percentage exceeds 60%, or meets other exemptions as described above, then the student has earned all Title IV aid for the enrollment period.
- Calculate the amount of earned Title IV aid. Multiply the percentage of the enrollment period completed by the total Title IV aid disbursed (or could have been disbursed as defined by late disbursement rules).
- Determine amount of unearned aid to be returned to Title IV aid program accounts. Subtract the amount of earned federal aid from the total amount of federal aid disbursed. The difference must be returned to the appropriate Title IV aid program(s).
- Return of Title IV funds by institution and student:
- MSU will return unearned Title IV aid up to an amount that is equal to the total institutional charges for the payment period multiplied by the percentage of the Title IV aid that was unearned. Generally, a student’s tuition and fee refund and/or University Housing refund will satisfy this liability. On occasion, however, particularly when the student remains in University Housing beyond the withdrawal date, a bill will result.
- The student will be responsible for the balance of unearned Title IV aid. In most cases, this will be the amount of federal aid funds a student received in the form of a refund for non-institutional expenses multiplied by the percentage of Title IV aid that was unearned.
- If the student’s portion of aid to be returned is a loan, then the student is not immediately required to repay the loan. The terms of the original loan repayment agreement will apply.
- If the student’s portion of aid to be returned is an overpayment of a grant, the student is required to only repay the amount exceeding 50% of the total grants. MSU will return the grant funds to the appropriate federal account, with a resulting charge to the student’s account. The student will be responsible for repaying MSU for the grant overpayment.
- Unearned Title IV Funds will be returned to federal programs in the following order:
- Federal Direct Unsubsidized Loans
- Federal Direct Subsidized Loans
- Federal Direct Grad Plus
- Federal Direct Parent Loan (PLUS)
- Federal Pell Grants
- Iraq and Afghanistan Service Grant
- Federal Supplemental Educational Opportunity (FSEOG)
- TEACH Grants
A student may be eligible for a post-withdrawal disbursement if, prior to withdrawing, the student earned more federal financial aid than was disbursed. If a student is eligible for a post-withdrawal disbursement of federal grants, it will be processed for the student and any refund due to the student will be issued within 14 days of the credit balance.
If the post-withdrawal disbursement includes loan funds, Michigan State University must get the student’s permission before it can disburse the loan. Students may choose to decline some or all of the loan funds so that s/he does not incur additional debt. A notice will be sent out to the student via their campus email. The student will need to respond to that email within 14 days if they want the loan. Michigan State University may automatically use all or a portion of the post-withdrawal disbursement of grant funds for tuition and fees. However, the school needs the student’s permission to use the post-withdrawal grant disbursement for all other school charges. If the student does not give his/her permission, the student will be offered the funds. However, it may be in the student’s best interest to allow the school to keep the funds to reduce the student’s debt at the school.
It is also important to understand that accepting a post-withdrawal disbursement of student loan funds will increase a student’s overall student loan debt that must be repaid under the terms of the Master Promissory Note. Additionally, accepting the disbursement of grant funds will reduce the remaining amount of grant funds available to the student should the student continue his/her education at a later time.
Example of a Title IV return of funds calculation:
Institutional Charges $5,000
Title IV Loans $2,000
Title IV Grants $1,000
Total Title IV Aid $3,000
Student withdrew on 35th day of a 110-day enrollment period.
Percent Earned 35/110 = 32%
Percent Unearned 100% - 32% = 68%
Amount of Title IV aid unearned $3,000 x 68% = $2,040
MSU is responsible for returning the lesser of unearned Title IV aid ($2,040 from above) or unearned institutional charges ($5,000 x 68% = $3,400). MSU will return aid as follows:
Title IV Loans $2,000 (students remaining loan debt = 0)
Title IV Grants $40
The student’s responsibility is amount of aid unearned ($2,040) less school responsibility ($2,040), which is zero.
The example shown above does not reflect every student refund situation that may exist. Questions regarding this policy should be addressed to the Office of Financial Aid.
The University reserves the right to amend this policy at any time in order to comply with Federal regulations.