Return of Federal (Title IV) Financial Aid

The federal government mandates that students who withdraw from all classes may keep only aid earned up to the time of withdrawal. The federal policy for calculating earned aid will also be applied to institutional aid. Title IV funds disbursed in excess of the earned amount must be returned to the federal government by the university and/or the student. A student could owe these funds to the university, the federal government, or both.

The Office of Financial Aid is notified by the Registrar when a student has officially withdrawn from U-M. The calculation for Return of Title IV funds is based on when a student initiates the withdrawal process by speaking with an academic advisor, a member of the Registrar’s staff or completing the university’s withdrawal form. Students who withdraw may be asked to document participation in their courses. Failure to do so will result in cancellation of all aid for that semester.

If a student does not officially withdraw but stops attending the course(s), the Office of Financial Aid will be notified of the last date of participation by the instructor(s) when grades are reported at the semester's end. This date will determine any need to reduce aid initially offered, as well as complete the Return of Title IV aid calculation described below. To make this calculation, we divide the number of calendar days the student has attended classes by the number of calendar days in the semester (minus any scheduled breaks of five days or more). The resulting percentage is multiplied by total federal funds disbursed to the student account or check or direct deposit for the semester. 

This calculation determines the amount of aid earned that a student may keep. For example, if a student attended 25% of the term, 25% of the aid disbursed will be earned. The remainder, or unearned amount, must be returned. The Office of Financial Aid will notify and provide instructions to students who are required to return funds to the government.

Students who have withdrawn will be reviewed to ensure all aid for which the student is eligible is included in the calculation. Students for which an eligible loan was not disbursed will be contacted to see if they wish to have that portion disbursed. Students participating in a study abroad program for which no attendance is reported will have a maximum of 15 days after grades are reported  to provide documentation of course participation to the office of financial aid.  Aid will be adjusted after the 15 days, including any federal, state, and/or institutional funding provided.

Allocation of Returned Federal Funds

Funds returned to the federal government are used to reimburse individual federal programs. Financial aid returned (by the university and/or the student/parent) is allocated, in the following order, up to the net amount disbursed from each source:

  1. Federal Unsubsidized Direct Loan Federal Subsidized
  2. Federal Subsidized Direct Loan
  3. Federal Direct PLUS (Parent) Loan or Grad PLUS Loan
  4. Federal Pell Grant
  5. Federal Supplemental Educational Opportunity Grant (FSEOG)
  6. Other Federal Loan or Grant Assistance