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Return of Title IV funds (R2T4) requirements govern the return of “unearned” federal student aid when a student withdraws from all Title IV courses before completing a term. 

When distributing student financial assistance, the federal government assumes students will complete the entire academic term for which they’ve received aid. After withdrawing, students typically become ineligible for the entire aid package that ED originally awarded them. Therefore, when a student withdraws, the institution must report it and determine how much Title IV aid that student “earned” using R2T4 calculations.


Schools determine the “earned” and “unearned” portions of Title IV aid as of the student’s withdrawal date using a prorated schedule for the first 60 percent of the term. However, if the academic term is more than 60 percent completed at the time the student withdrew, then the student has “earned” 100 percent of the Title IV funds he or she was slated to receive during that period. After calculating the student’s earned Title IV aid, the institution must return the unearned portion that the school is responsible for and notify the student of any amount that he or she must return.



In recent months, lawmakers have expressed interest in changing R2T4 requirements, promoting policies that would distribute aid in installments over the course of an academic term and hold schools more financially accountable for students who withdraw. These policies have appeared in various proposals, the most recent being the PROSPER Act (HR 4508), which Republicans on the House Committee on Education and the Workforce unveiled in December 2017.


R2T4 & Unearned Aid in the PROSPER Act

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External Resources

Department of Education



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Bryan Dickson

Director, Student Financial Services and Educational Programs



HEA Reauthorization Bill Heading to House Floor in New Year

January 04, 2018

Less than two weeks after its chair unveiled a draft, the House Education and the Workforce Committee approved a bill to reauthorize the Higher Education Act on a party-line vote. Chair Virginia Foxx (R-NC) has pledged to bring the PROSPER Act to the House floor in January.

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