Don’t withdraw from classes if you receive Title IV funds!

So you’ve decided to go to college. And, naturally, you applied for federal aid, also known as Title IV funds. Many students go to college, complete their courses uneventfully, and hit no bumps in the road on the way to graduation. Others are not so lucky. Sometimes, a student needs to withdraw from school. This could be due the death of a grandparent, a sick child, the loss of transportation, etc. There are many reasons that you might find that you need to withdraw from all your courses.

Withdrawal Policy

Figuring out how to pay for college can be as challenging as deciding what to study in college. If you are receiving Title IV funds, you need to be aware that you will likely be liable for some or all of the tuition and other college expenses for which Title IV funds were already dispersed. In simple terms, if you withdraw from your university, you still have to pay some or all of the cost of those courses. If you live for a while in the dormitory and eat on the meal plan, you will owe for those services also–even if you don’t complete the semester.

Here’s the way it works: Around the time you start your classes, the university you are attending receives Title IV funds to cover your tuition and other expenses. When those expenses have been covered, you may find yourself with a check for incidentals like books, etc. If you withdraw from one all your classes, the university will have to return the Title IV funds it received on your behalf to the federal government.

No big deal, you might be thinking. Think again. The university does not like to be held holding the bag and will bill you for some or all of the amount they had to repay to the federal government. If your aid was in the form of a grant, you now have to pay the sum of the grant that was expended on your education so far. If your aid was a loan, you may find that you are now liable for a portion of your semester expenses, payable upon receipt. Different universities have different policies concerning what happens when students bail on their classes, but you can generally assume that the university will take steps to get its money. And, instead of being able to pay your loan back in small doses, you will now owe the entire amount at once. Not only that, but now you are paying for an education you did not receive.

The return of Title IV funds does not apply to students who only drop some of their courses, but if you fall below the full-time threshold, that can make you ineligible for further federal assistance.
This does not mean that you have to pass a class to keep your Title IV aid; it means that you have to attend the class and do sixty percent of the work for the class. At the point that you’ve completed sixty percent of the course, the federal government considers that you have completed the course, and the university can keep your Title IV funds.

If you withdraw having completed less than sixty percent of the course, the university will prorate the amount of Title IV funds that they must return and then bill you for that amount. Let’s take the University of California at Davis as an example. If you drop out of your classes after attending for seven days, the university has to refund one hundred percent of your Title IV funds. You can then expect to receive a bill for that amount.

It’s easy to see that, in most cases, the best decision is to tough it out in all your classes, even if they are hard or you don’t like them. Here are some simple pointers for safeguarding your interests:

Don’t just quit going to class and hope for the best. Many schools ask faculty to report the last day of attendance of any student who fails the course. The school then uses that last day of attendance to calculate what amount of Title IV funds have to be returned and what amount to bill you. Many schools also require professors to report any student who misses two solid weeks or more of class. You can be administratively dropped from the class by missing two weeks of class or more at one time. An administrative drop is the same as if you withdrew from the course voluntarily. Title IV funds have to be returned, and you are billed for what you owe.

Don’t drop a course just because you are failing. If you are failing a course, it may seem like the best option is to withdraw, but you should carefully consider how that will affect your Title IV disbursement and your future eligibility for aid. Many schools will allow you to repeat a failed course for a better grade, so failing a course may be better than withdrawing, depending on your financial situation.

Negotiate with your professors. If you just disappear from your classes, your professors can, at any time, report you as having informally withdrawn from your courses. If you have a legitimate emergency–a sick family member or a death in the family, for instance–it’s very important to tell your professor immediately and explain how long you think you will be away. If you discuss your absence in advance, your professor will be much less likely to drop you for non-attendance. He or she may even give you an extension on your due dates.

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