## Clock & Non-term Credit Hour R2T4’s with Overlapping Loan Periods

*The 2016-17 Federal Student Aid Handbook*, Volume 5, The Return of Title IV Funds, pages 5-84 and 5-85 clarifies the amount of Title IV funds to include in the R2T4 calculation for clock hour and non-term credit hour programs with overlapping loan periods. This latest guidance requires the institution, when the loan period (LP) does not correspond with the payment period as defined in 34 CFR 668.4 and used in the R2T4 calculation, to prorate Title IV funds to determine the amount that should be attributed to the payment period from which the student withdrew.

**Example #1:**

The student attended School A and was disbursed a $1,750 subsidized (sub) loan and $3,000 unsubsidized (unsub) loan. The academic year at School A ends on 10/09/15.

The student starts School B on 8/24/15 in a 1200 clock-hour program with a 900 hour academic year, and is awarded the remaining $1,750 sub and $3,000 unsub for the 1st short LP of 8/24/15-10/09/15 due to completing the academic year at School A.

The 2nd loan is processed for a 900 hour academic year with a LP of 10/10/15 – 3/11/16 for a $1,750 sub loan and a $3,000 unsub loan.

**Title IV payment period 1 is 8/24/15 – 12/4/15, 103 days**

• 1st short LP is 8/24/15 – 10/09/15 (47 days) for $1,750 sub and $3,000 unsub

• 2nd LP is 10/10/15 – 3/11/16 (154 days) for $1,750 sub and $3,000 unsub

• First determine the number of overlapping days to prorate the loan used in the R2T4

• 56 days of the 154 days in 2nd LP fall within the 1st Pell payment period 10/10/15 – 12/4/15

• Student received $1,750 sub and $3,000 unsub of the 1st short LP

• Student received the 1st disbursements of $875 sub and $1,500 unsub of the 2nd LP

• Divide the days that fall in the 2nd LP (56) by the total days in LP (154) and multiply by each total loan amount for the 2nd LP

• Student withdraws on 11/7/15 after receiving the 1st disbursements of the 2nd LP

• The calculations: ** 56 days in payment period X $1750 = $636 sub**

** 154 days in loan period**

** 56 days in payment period X $3000 = $1091 unsub
**

**154 days in loan period**

Loan amounts used in the R2T4 calculation are $1,750 sub and $3,000 unsub from the 1st LP, and $636 sub, and $1,091 unsub from the 2nd LP for a total of $6,477 as “Disbursed”.

The actual amount received was $2,625 sub and $4,500 unsub for a total amount of $7,125. However, since the total amount disbursed from the 2nd LP was not earned, the balance of the loan funds, $239 sub and $409 unsub funds, must be returned, even if more than 100% of the funds on the R2T4 were earned.

**Example #2:**

Using most of the same information above except the student withdrew prior to receiving the 1st disbursements of the 2nd LP that was originated prior to the LDA.

Title IV payment period 1 is 8/24/15 – 12/4/15, 103 days

• 1st short LP is 8/24/15 – 10/09/15 (47 days) for $1,750 sub and $3,000 unsub

• 2nd LP is 10/10/15 – 3/11/16 (154 days) for $1,750 sub and $3,000 unsub

• First determine the number of overlapping days to prorate the loan used in the R2T4

• 56 days of the 154 days in the 2nd LP fall within the 1st Pell payment period of 10/10/15 – 12/4/15

• Student received $1,750 sub and $3,000 unsub of the 1st short LP

• Student was scheduled to receive the 1st disbursements of $875 sub and $1,500 unsub of the 2nd LP on 10/10/15

• Divide the days that fall in the 2nd LP (56) by the total days in the LP (154) and multiply by each total loan amount for the 2nd LP

• Student withdraws on 9/30/15, however, the 2nd LP was originated prior to the LDA on 9/15/15

• The calculations: **56 days in payment period X $1750 = $636 sub
**

**154 days in loan period**

** 56 days in payment period X $3000 = $1091 unsub
**

**154 days in loan period**

Loan amounts used in the R2T4 calculation are $1,750 sub and $3,000 unsub from the 1st LP as “Disbursed”, and $636 sub, and $1,091 unsub from the 2nd LP as “Could Have Been Disbursed,” for a total of $6,477.

If the results of the R2T4 indicate a Post Withdrawal Disbursement (PWD), the school may not make a PWD disbursement of funds from the 2nd LP because the student never completed the 1st LP and began the 2nd LP to establish eligibility for that loan.

**Reminder:**

For an R2T4 where the student starts the 2nd Title IV payment period but withdraws prior to the 2nd disbursement of the 2nd LP, the PWD would be calculated, but the funds cannot be disbursed and would have to be returned because the student would not be eligible for a subsequent disbursement unless the loan period had been completed.