Title IV Student Financial Aid Regulations

The Department of Education and office of Federal Student Aid administer Title IV federal student to students attending eligible college programs. Title IV programs include Direct Stafford Loans, Perkins Loans, Federal Work-Study, the Pell Grant, the FSEOG and National SMART Grant programs. Each year the office of Federal Student Aid publishes a handbook that assists schools and financial aid administrators in awarding financial aid packages to students. The handbook explains federal regulations and rules concerning all Title IV programs and how schools must manage these programs.

Student Eligibility

Students must have a high school diploma or equivalent (GED) or have completed a secondary homeschooling program. Any drug convictions need to have been resolved. Title IV funds are available only to students who are "regular" students in a degree-seeking or certificate program and who are enrolled at least half-time. Federal regulations define "full-time" enrollment as 12 semester or quarter hours for programs that use the semester, trimester or quarter system. Regulations also define full-time status for programs using clock hours, credit hours or nonstandard terms. To continue receiving funds, students must meet satisfactory academic progress and schools must have policies describing how academic probation and appeals are handled.

Calculating Awards

Federal regulations set the minimum weeks of instructional time and minimum clock or credit hours required for standard terms (e.g., quarters and semesters), nonstandard terms and nonterm programs. If a school's academic year doesn't coincide with these regulations, this affects Pell Grant and Direct Loan amounts and disbursements. To calculate awards, Federal Student Aid programs require a calculation of the school's cost of attendance, which can differ depending on a student's enrollment status. Also, schools must consider a student's estimated family contribution and aid from other sources, such as free room and board or tuition waivers. Each FSA program has its own formulas and established minimum and maximum award amounts administered to eligible students.

Processing Title IV Funds

Regulations specify the manner in which schools disburse FSA program funds. For example, schools must give two notices to students regarding the processing of funds: once for a general notification and a second time when the student's account is credited with the funds. Schools can send these notifications either through direct mail through the U.S. Postal Service or by electronic means to an email address. To disburse funds, schools can credit the student's account for allowable charges, issue a check, initiate an electronic funds transfer or disburse the funds in cash to the student. Most schools apply the funds to the student's account first and issue refunds for any credit balance.

Return of Title IV Funds

When a student withdraws from his program after receiving Title IV aid disbursements and prior to the end of the period of enrollment, schools must perform a "return calculation" to determine the amount of funds that need to be sent back to the government. If a student attends up through 60 percent of the period of enrollment, no funds must be sent back. If the withdrawal takes place before the 60-percent mark, the school uses a prorated schedule to determine the amount of funds to be returned. Regulations stipulate that schools must inform students about the school's refund policy, the federal return regulations and the financial consequences of withdrawal.

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