Pop Quiz – Is a Refund Required?


A student who was scheduled to attend classes in module 1 and in module 2, attended one day of classes in module 1 and then withdrew. The student has confirmed attendance in his module 2 class; so he is not a withdrawal. Does the school have to give the student his refund now if the loan was disbursed to his account already, or can the school hold the refund until he actually begins attendance in module 2?


If Title IV federal student aid disbursed to a student's account creates a Title IV credit balance, the school must pay the credit balance directly to the student or parent as soon as possible, but no later than 14 days after:

  1. The date the balance occurred on the student's account if the balance occurred after the first day of class of a payment period, or
  2. The first day of classes of the payment period if the credit balance occurred on or before the first day of class of that payment period.

The only exception would be if the school obtains a voluntary authorization from the student (or parent, in the case of a parent PLUS loan) to hold the credit balance. However, even if you have the authorization to hold the credit balance, Title IV funds are awarded to pay current-year charges. Therefore, you must still pay any remaining balance on Title IV loan funds by the end of the loan period, and any other remaining Title IV program funds by the end of the last payment period in the award year for which they were awarded.


Publication Date: 2/2/2018

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