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U.S. Code as of:
01/19/04
Section 1091b. Institutional refunds
(a) Return of title IV funds
(1) In general
If a recipient of assistance under this subchapter and part C
of subchapter I of chapter 34 of title 42 withdraws from an
institution during a payment period or period of enrollment in
which the recipient began attendance, the amount of grant or loan
assistance (other than assistance received under part C of
subchapter I of chapter 34 of title 42) to be returned to the
title IV programs is calculated according to paragraph (3) and
returned in accordance with subsection (b) of this section.
(2) Leave of absence
(A) Leave not treated as withdrawal
In the case of a student who takes a leave of absence from an
institution for not more than a total of 180 days in any
12-month period, the institution may consider the student as
not having withdrawn from the institution during the leave of
absence, and not calculate the amount of grant and loan
assistance provided under this subchapter and part C of
subchapter I of chapter 34 of title 42 that is to be returned
in accordance with this section if -
(i) the institution has a formal policy regarding leaves of
absence;
(ii) the student followed the institution's policy in
requesting a leave of absence; and
(iii) the institution approved the student's request in
accordance with the institution's policy.
(B) Consequences of failure to return
If a student does not return to the institution at the
expiration of an approved leave of absence that meets the
requirements of subparagraph (A), the institution shall
calculate the amount of grant and loan assistance provided
under this subchapter and part C of subchapter I of chapter 34
of title 42 that is to be returned in accordance with this
section based on the day the student withdrew (as determined
under subsection (c) of this section).
(3) Calculation of amount of title IV assistance earned
(A) In general
The amount of grant or loan assistance under this subchapter
and part C of subchapter I of chapter 34 of title 42 that is
earned by the recipient for purposes of this section is
calculated by -
(i) determining the percentage of grant and loan assistance
under this subchapter and part C of subchapter I of chapter
34 of title 42 that has been earned by the student, as
described in subparagraph (B); and
(ii) applying such percentage to the total amount of such
grant and loan assistance that was disbursed (and that could
have been disbursed) to the student, or on the student's
behalf, for the payment period or period of enrollment for
which the assistance was awarded, as of the day the student
withdrew.
(B) Percentage earned
For purposes of subparagraph (A)(i), the percentage of grant
or loan assistance under this subchapter and part C of
subchapter I of chapter 34 of title 42 that has been earned by
the student is -
(i) equal to the percentage of the payment period or period
of enrollment for which assistance was awarded that was
completed (as determined in accordance with subsection (d) of
this section) as of the day the student withdrew, provided
that such date occurs on or before the completion of 60
percent of the payment period or period of enrollment; or
(ii) 100 percent, if the day the student withdrew occurs
after the student has completed 60 percent of the payment
period or period of enrollment.
(C) Percentage and amount not earned
For purposes of subsection (b) of this section, the amount of
grant and loan assistance awarded under this subchapter and
part C of subchapter I of chapter 34 of title 42 that has not
been earned by the student shall be calculated by -
(i) determining the complement of the percentage of grant
or loan assistance under this subchapter and part C of
subchapter I of chapter 34 of title 42 that has been earned
by the student described in subparagraph (B); and
(ii) applying the percentage determined under clause (i) to
the total amount of such grant and loan assistance that was
disbursed (and that could have been disbursed) to the
student, or on the student's behalf, for the payment period
or period of enrollment, as of the day the student withdrew.
(4) Differences between amounts earned and amounts received
(A) In general
If the student has received less grant or loan assistance
than the amount earned as calculated under subparagraph (A) of
paragraph (3), the institution of higher education shall comply
with the procedures for late disbursement specified by the
Secretary in regulations.
(B) Return
If the student has received more grant or loan assistance
than the amount earned as calculated under paragraph (3)(A),
the unearned funds shall be returned by the institution or the
student, or both, as may be required under paragraphs (1) and
(2) of subsection (b) of this section, to the programs under
this subchapter and part C of subchapter I of chapter 34 of
title 42 in the order specified in subsection (b)(3) of this
section.
(b) Return of title IV program funds
(1) Responsibility of the institution
The institution shall return, in the order specified in
paragraph (3), the lesser of -
(A) the amount of grant and loan assistance awarded under
this subchapter and part C of subchapter I of chapter 34 of
title 42 that has not been earned by the student, as calculated
under subsection (a)(3)(C) of this section; or
(B) an amount equal to -
(i) the total institutional charges incurred by the student
for the payment period or period of enrollment for which such
assistance was awarded; multiplied by
(ii) the percentage of grant and loan assistance awarded
under this subchapter and part C of subchapter I of chapter
34 of title 42 that has not been earned by the student, as
described in subsection (a)(3)(C)(i) of this section.
(2) Responsibility of the student
(A) In general
The student shall return assistance that has not been earned
by the student as described in subsection (a)(3)(C)(ii) of this
section in the order specified in paragraph (3) minus the
amount the institution is required to return under paragraph
(1).
(B) Special rule
The student (or parent in the case of funds due to a loan
borrowed by a parent under part B or C of this subchapter)
shall return or repay, as appropriate, the amount determined
under subparagraph (A) to -
(i) a loan program under this subchapter and part C of
subchapter I of chapter 34 of title 42 in accordance with the
terms of the loan; and
(ii) a grant program under this subchapter and part C of
subchapter I of chapter 34 of title 42, as an overpayment of
such grant and shall be subject to -
(I) repayment arrangements satisfactory to the
institution; or
(II) overpayment collection procedures prescribed by the
Secretary.
(C) Requirement
Notwithstanding subparagraphs (A) and (B), a student shall
not be required to return 50 percent of the grant assistance
received by the student under this subchapter and part C of
subchapter I of chapter 34 of title 42, for a payment period or
period of enrollment, that is the responsibility of the student
to repay under this section.
(3) Order of return of title IV funds
(A) In general
Excess funds returned by the institution or the student, as
appropriate, in accordance with paragraph (1) or (2),
respectively, shall be credited to outstanding balances on
loans made under this subchapter and part C of subchapter I of
chapter 34 of title 42 to the student or on behalf of the
student for the payment period or period of enrollment for
which a return of funds is required. Such excess funds shall be
credited in the following order:
(i) To outstanding balances on loans made under section
1078-8 of this title for the payment period or period of
enrollment for which a return of funds is required.
(ii) To outstanding balances on loans made under section
1078 of this title for the payment period or period of
enrollment for which a return of funds is required.
(iii) To outstanding balances on unsubsidized loans (other
than parent loans) made under part C of this subchapter for
the payment period or period of enrollment for which a return
of funds is required.
(iv) To outstanding balances on subsidized loans made under
part C of this subchapter for the payment period or period of
enrollment for which a return of funds is required.
(v) To outstanding balances on loans made under part D of
this subchapter for the payment period or period of
enrollment for which a return of funds is required.
(vi) To outstanding balances on loans made under section
1078-2 of this title for the payment period or period of
enrollment for which a return of funds is required.
(vii) To outstanding balances on parent loans made under
part C of this subchapter for the payment period or period of
enrollment for which a return of funds is required.
(B) Remaining excesses
If excess funds remain after repaying all outstanding loan
amounts, the remaining excess shall be credited in the
following order:
(i) To awards under subpart 1 of part A of this subchapter
for the payment period or period of enrollment for which a
return of funds is required.
(ii) To awards under subpart 3 of part A of this subchapter
for the payment period or period of enrollment for which a
return of funds is required.
(iii) To other assistance awarded under this subchapter and
part C of subchapter I of chapter 34 of title 42 for which a
return of funds is required.
(c) Withdrawal date
(1) In general
In this section, the term "day the student withdrew" -
(A) is the date that the institution determines -
(i) the student began the withdrawal process prescribed by
the institution;
(ii) the student otherwise provided official notification
to the institution of the intent to withdraw; or
(iii) in the case of a student who does not begin the
withdrawal process or otherwise notify the institution of the
intent to withdraw, the date that is the mid-point of the
payment period for which assistance under this subchapter and
part C of subchapter I of chapter 34 of title 42 was
disbursed or a later date documented by the institution; or
(B) for institutions required to take attendance, is
determined by the institution from such attendance records.
(2) Special rule
Notwithstanding paragraph (1), if the institution determines
that a student did not begin the withdrawal process, or otherwise
notify the institution of the intent to withdraw, due to illness,
accident, grievous personal loss, or other such circumstances
beyond the student's control, the institution may determine the
appropriate withdrawal date.
(d) Percentage of the payment period or period of enrollment
completed
For purposes of subsection (a)(3)(B)(i) of this section, the
percentage of the payment period or period of enrollment for which
assistance was awarded that was completed, is determined -
(1) in the case of a program that is measured in credit hours,
by dividing the total number of calendar days comprising the
payment period or period of enrollment for which assistance is
awarded into the number of calendar days completed in that period
as of the day the student withdrew; and
(2) in the case of a program that is measured in clock hours,
by dividing the total number of clock hours comprising the
payment period or period of enrollment for which assistance is
awarded into the number of clock hours -
(A) completed by the student in that period as of the day the
student withdrew; or
(B) scheduled to be completed as of the day the student
withdrew, if the clock hours completed in the period are not
less than a percentage, to be determined by the Secretary in
regulations, of the hours that were scheduled to be completed
by the student in the period.
(e) Effective date
The provisions of this section shall take effect 2 years after
October 7, 1998. An institution of higher education may choose to
implement such provisions prior to that date.
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