Investigating the scope and implications of Return to Title IV funds

What was the challenge?

Nearly 11 million undergraduate students received Title IV aid during the 2019-20 school year.¹ Students who receive Title IV aid and withdraw from college prior to completing the academic term are subject to a Return to Title IV (R2T4) calculation, which could require the student or college to pay back any unearned Title IV funds to the federal government.² Owing financial aid can make students ineligible for future federal aid, and may shape students’ subsequent decisions to re-enroll in college, preventing them from returning and earning a degree. Moreover, the U.S. Department of Education (ED)’s office of Federal Student Aid (FSA) has identified R2T4 calculations as a possible source of improper payments in two high-priority programs (Pell Grants and Direct Loans). Despite the potential influence R2T4 may have on students, colleges and the payment accuracy of federal financial aid, little is known about the dollar amounts associated with R2T4 calculations, what students are subject to these calculations, the influence of these calculations on their degree progress, and how colleges implement this process.

What did we do?

The overarching goal of this evaluation was to build foundational descriptive evidence that documents the landscape and scope of R2T4, in terms of students and colleges affected by the policy as well as associated aid amounts due and returned. The analysis relied on a specific data query in the Common Origination and Disbursement (COD) system. Using the COD tool for R2T4 reporting is entirely optional for colleges. Thus, the first goal of the analysis was to better understand the characteristics of colleges that opt to use the COD tool. Among the colleges using COD, the data query included individual student-level R2T4 calculations reported by colleges to FSA. Using these data, we examined how R2T4 calculations differ by college characteristics, by further examining who reports, how much of their student population is subject to these calculations, and some typical patterns in the reporting of student withdrawals.

What did we learn?

The findings from this descriptive evaluation are documented in the U.S. Department of Education Evaluation Report NCEE 2023-0006.

Read the full report.

Notes:

1. Federal Student Aid, “Aid Recipient Summary”.
2. Federal Student Aid, “Return of Title IV Funds,” Students who do not receive Title IV funds, who do not begin the term, or who withdraw between terms, are not subject to R2T4.

Verify the upload date of our Analysis Plan on GitHub.