Student Reservists and Return of Title IV Funds

     The National Association of Student Financial Aid Administrators (NASFAA) has recently received requests from financial aid administrators for clarification of the Department of Education's (ED) guidance regarding the return of Title IV funds when student military reservists are called up to active duty.  The following clarifications are provided by NASFAA.

 "In September 2001 the Department issued Dear Colleague Letter GEN-01-13 which encouraged schools to provide a full refund of tuition and fees, or some other comparable credit for future charges, when a student is forced to withdraw from school as a result of military mobilization.  Even though ED encourages schools to refund 100% of institutional charges for reservists called to active duty, the return of Title IV funds provisions still apply to the student.

    That is, the school must determine whether Title IV funds must be returned to the Title IV programs and/or FFEL lender or whether the student is due a post-withdrawal reimbursement.

    If Title IV funds must be returned, the school must use the amount of the institutional charges the student incurred as of the date of the student's withdrawal when calculating the portion that the school is responsible for returning.  Any amount calculated as the school portion must be returned by the school.  Should the calculation of the student portion indicate an overpayment of Title IV grant funds, the Letter states that the school is not required to contact the student or to collect the overpayment.  Furthermore, the school is not required to notify NSLDS of the overpayment or to refer the overpayment to the Department for collection.

    Should the school decide to eliminate or reduce the student's charges, the return of Title IV funds calculations should be performed using the amount of the student's charges before they were reduced or eliminated."

    Any questions related to this Bulletin should be directed to the UHEAA Policy and Training Department at 801.321.7166 or by e-mail at mjohnson@utahsbr.edu.