Federal Return of Funds - Southwestern Illinois College

Colleges that participate in Federal Title IV financial aid programs are required to monitor student withdrawals and determine if federal student aid funds need to be returned. A student is subject to the federal return of funds policy if he/she receives Title IV financial aid (Federal Pell Grant, FSEOG, Direct Loans), withdraws or is withdrawn by the instructor from ALL financial aid eligible hours on or before the 60 percent point in time of the enrollment period, or fails to successfully complete 49% of a payment period.

Financial Aid Refund Policy

The Return of Funds policy for financial aid recipients differs from the SWIC normal refund policy. SWIC students who are receiving Title IV financial aid (Federal Pell Grant, FSEOG, Direct Loans), who withdraw completely on or before the 60 percent point in time of the enrollment period for which they were charged, or fails to successfully complete 49% of a payment period will be subject to the Return of Funds policy. For further information, and specifics regarding the Return of Funds policy and/or examples, contact the Financial Aid, Veteran Services, and Student Employment Office, ext. 5288

Who Is Affected

Students should understand that any class drops, adds, or changes at any time during the semester can affect their financial aid. The student should check with the Financial Aid and Student Employment Office for further information before changing his/her enrollment.

The return of funds policy for financial aid recipients applies to tuition, fees, and book/supply charges. It is important to note that the return of funds policy for financial aid recipients differs from the Southwestern Illinois College (SWIC) refund policy found in the college catalog.

A student is subject to the federal return of funds policy if he/she:

  • Receives Title IV financial aid (Federal Pell Grant, FSEOG, Direct Loans)


  • Withdraws or is withdrawn by the instructor for excessive absences from ALL financial aid eligible enrolled hours or before the 60% point in time of the enrollment period.


  • Taking modular courses that do not span the entire term. If a student completes (with a passing grade) a module that represents less than 49% more of the total semester. Cases are reviewed on an individual basis.


Students not attending classes in which they have enrolled must be withdrawn; SWIC does not have a “leave of absence” policy. Southwestern Illinois College will use the final withdrawal date reported by the student to Enrollment Services or the final last date of attendance determined by the instructor.


Official withdrawals are processed by Enrollment Services. The student may initiate the withdrawal process via his/her eSTORM account or by completing a “Drop/Add/Section Change” form, available from Enrollment Services at the Belleville, Granite City, and Red Bud campuses.

When the student submits the form to Enrollment Services (either in person or by eSTORM) he/she has begun the withdrawal process; that date will be used to determine the percentage of the enrollment period the student completed.


Unofficial withdrawals occur when students stop attending classes with no formal notification to Enrollment Services. Instructors may assign a final grade of W or WF; in that event, the instructor’s record of the last date of attendance will be used to determine the percentage of the enrollment period the student completed.

Calculating the Return of Funds

The Financial Aid Office will calculate the student’s liability for the return of funds using the formula provided by the U.S. Department of Education. Students are advised to obtain an accounting of their return of funds liability from the Financial Aid and Student Employment Office before withdrawing from all classes.

The Financial Aid Office must review each student’s academic registration record to determine financial aid eligibility. The Financial Aid Office may also contact some or all instructors to verify class attendance if there is a question regarding the student’s participation and attendance and to support a last date of attendance. If an instructor indicates that a student never attended or did not participate, the Financial Aid Office will first adjust the disbursed aid if there is a resulting change in eligibility and then calculate the Return of Title IV Funds. As a result, the student may end up owing the institution for the amount of unearned aid. If the student never attended any of the registered classes in the semester, all aid will be canceled and the student billed for all outstanding charges.

Financial aid is posted to the student’s account at the start of each semester, or at the time, eligibility is established during the semester if this date is later than the start of each semester. Title IV Aid is earned by the calendar day; this includes weekends, holidays, and breaks of less than five consecutive days.

The Financial Aid Office is required to determine the amount of Title IV Aid the withdrawing student has earned and then either disburse any additional funds the student may be entitled to up to the amount earned, or return funds in excess of the amount earned which the student has already received. Earned aid is determined by taking the number of days attended before enrollment ended divided by the total number of days in the semester (first day of instruction until the last day of finals, excluding breaks of five consecutive days or more).

A student who withdraws after the 60% point of a semester or successfully completes coursework that exceeds 49% of the payment period is entitled to retain all Title IV aid for that semester. However, if the student withdraws, or is dismissed, prior to the 60% point of the semester, or fails to successfully complete 49% of a payment period, unearned Title IV funds as determined by the federal policy must be returned to the various programs. These funds must be returned even if SWIC provides no refund to the student. This means the student could owe the Southwestern Illinois College and/or the U. S. Department of Education a significant amount of money. This policy will not apply to students who drop some but not all of their classes or withdraw prior to the first day of the semester.

Return of Funds Distribution

The amount the student must return is the unearned assistance minus the amount the school returns. The distribution of any return of funds is prescribed by law and regulation*.

 The order of program funding return is as follows:

  • Direct Unsubsidized Loan
  • Direct Subsidized Loan
  • Direct PLUS Loan
  • Federal PELL Grant
  • Other Title IV aid programs

* Federal programs that the institution does not participate in are not included in the distribution.


If the student did not receive all of the funds that were earned prior to withdrawing, a post-withdrawal disbursement may be due.  If the student is eligible for a post-withdrawal disbursement of a grant, it must be disbursed within 45 days. If the post-withdrawal disbursement includes loan funds, the student must give permission before the funds can be disbursed.  Students will be notified within 30 days of the date of the withdrawal determination of any direct loan eligibility, or a parent for a Direct Parent PLUS loan eligibility.  The student and/or parent have 14 days to respond to this notification. If the student or parent does not respond to this notification within that time frame, the school is not required to make the post-withdrawal disbursement.

Southwestern Illinois College may automatically use all or a portion of the post-withdrawal disbursement of grant funds for current tuition, fees, and book charges.  Permission is required to use the post-withdrawal grant disbursement for all other school charges.  If a post-withdrawal disbursement from a loan results in a credit balance, the credit balance will be refunded to the student and/or the parent in the case of a Direct Parent PLUS loan as soon as possible, but no later than 14 days after the credit balance has occurred.  The school must return the Title IV funds within 45 days of the date the school determines the student withdrew.

Overpayments and Loss of Eligibility for Title IV Aid

Within 30 days of the determination that the student owes Title IV funds, the student will be sent a letter notifying them of the balance they owe. Students are given 45 days from the date the notification was sent to repay the debt to SWIC. Any unpaid accounts will be reported to the National Student Loan Data System (NSLDS). Any student reported to have received an overpayment is not eligible for federal financial aid at any institution until the overpayment is resolved.

Within 30 days of notification of the date of the student’s complete withdrawal from classes, SWIC will:

  • Send the student notice of liability and repayment options


  • Repay the school portion of the return of funds liability. The student will be billed for this liability.

Within 45 days of the date on the notice of liability, the student will:

  • Repay in full his/her return of funds liability to Southwestern Illinois College

After 45 days of the Notice of Liability, if the student has failed to repay the return of funds liability, it will result in the student being referred to the U.S. Department of Education and loss of federal Title IV aid eligibility.