Return to Title IV (R2T4)/Overpayment Policy


Federal Title IV financial aid funds are granted with the expectation that students will remain enrolled for the entire semester for which they received these funds. These funds encompass the Federal Pell Grant, Federal Direct Loan Funds, and the Federal Supplemental Educational Opportunity Grant (FSEOG).

Financial aid is a valuable resource for many students, but it is essential to be aware of the potential for overpayments. An overpayment in financial aid refers to the receipt of more funds than you are entitled to under the program’s guidelines. It can occur due to a variety of factors, such as eligibility changes, external scholarships, changes in enrollment-student withdrawal from school, administrative errors – either student error or institutional.

When a student withdraws from all courses, regardless of the reason, they may no longer be eligible for the entire amount of Title IV aid originally awarded. The return of funds to the federal government is based on the premise that a student earns financial aid in proportion to the length of time during which he/she remains enrolled. The Return of Title IV (R2T4) calculation procedure determines the prorated amount of financial aid a student has earned based on the percentage of time they were enrolled in classes. Please note-scholarship funds, Federal Work Study, and Cal Grant funds are exempt from R2T4 calculations.

Frequently Asked Questions (FAQ)

Return of Unearned Funds (R2T4)

If a student withdraws from ALL their courses before completing more than 60% of the semester, their financial aid eligibility will be reassessed based on the percentage of the semester they completed. When a recipient of Title IV grant or loan funds withdraws from their school after beginning attendance, it becomes necessary to determine the amount of Title IV grant or loan assistance they have earned.

In cases where the amount disbursed to the student exceeds what they earned, the excess, representing unearned funds, must be returned. Conversely, if the disbursed amount is less than what the student earned, and they are otherwise eligible, they can receive a post-withdrawal disbursement of the earned aid that they did not initially receive.

Should it be determined that a student did not earn all the funds for the payment period (semester) that were disbursed, a repayment of funds may be required. The student will be informed of the amount owed to the institution (Institutional Liability) and/or the amount owed to the Department of Education (Student Portion Liability). In cases where students are required to return Title IV aid, in addition to the portion of aid the school is required to return, a 50% protection allowance applies only to unearned Title IV student grants. However, loans would need to be repaid in full.

Order of Return of Title IV Funds

R2T4 calculations require the return of funds in the following order:

  • Unsubsidized Loans
  • Subsidized Loans
  • Federal Pell Grants
  • Iraq & Afghanistan Service Grant (IASG)
  • Federal Supplemental Educational Opportunity Grant (FSEOG)

Pell Recalculation Date (PRD)

Each semester will have a Pell Recalculation Date (PRD) otherwise known as a “freeze date” to determine each student’s enrollment level (number of units enrolled) and verify FSA program eligibility and award amounts. We will adjust (increase or decrease) FSA amounts to reflect enrollment level as of the PRD. For more information, please see our Freeze Date/Pell Recalculation Policy.

Post-Withdrawal Disbursement (PWD)

If the student received less financial aid funds than the amount earned based on the R2T4, Palomar College will offer a Post-Withdrawal Disbursement (PWD). Federal Pell grants will be disbursed without written confirmation; however, a student may decline or reduce their PWD to preserve grant eligibility. Loan proceeds will require written confirmation from the student for disbursement. Palomar College may use all or a portion of a student’s PWD (including student loan funds, if accepted) to offset any eligible, outstanding tuition and fees.


Failure to Begin Attendance

If a student receives financial aid, but never attends any class meetings, the Financial Aid Office must return all disbursed funds to the respective federal, state and institutional aid programs, which will result in an Institutional Portion Liability*. Any funds received by the student are considered unearned and will be required to be repaid by the student.



When a student withdraws, the student may no longer be eligible for the full amount of aid that the student was originally scheduled to receive. The Financial Aid Office is required by regulation to complete a Return of Title IV (R2T4) calculation for any student that withdraws from or ceases to attend all classes during a semester. The purpose of the calculation is to determine the earned and unearned amounts of federal student aid that the otherwise eligible student is entitled to receive. The R2T4 calculation is based on the number of days attended established on an official or unofficial withdrawal date.

Official Withdrawal

An official withdrawal is initiated by the student via the student’s MyPalomar account or by notifying the Admissions office.

Unofficial Withdrawal

Palomar College follows a post-census certification policy, meaning it does not track attendance. Students who do not officially withdraw and complete zero (0) units will be considered unofficially withdrawn. The midpoint of the payment period (semester) will be used as the effective withdrawal date to determine earned and unearned aid amounts for students who unofficially withdraw from the college.

Combination of Official and Unofficial Withdrawals

Students who have official and unofficial withdrawals in one payment period (semester) will be calculated on the date of the withdrawal or the midpoint date (50%), whichever is greater.

Earning a grade of FW OR F

FW is given to students who fail due to unofficial withdrawals. F is awarded to students who complete the course but do not meet course objectives. Students who earn at least one grade of F will be considered to have completed a course and will not be subject to an R2T4 calculation unless the F is earned in a course that represents less than 49% of a payment period (short-term course). F grades for course(s) not representing 49% of a payment period may be subject to an R2T4 calculation.


Changes in Enrollment Level

Changes in enrollment level, whether through reducing the unit load (dropping classes) or withdrawing from individual courses, can impact Federal Student Aid (FSA) eligibility. In cases of unit load reduction before the semester’s completion, a Return to Title IV (R2T4) calculation is not mandated. However, FSA eligibility and award amounts may be adjusted, potentially leading to an overpayment where the student must return excess funds.

In instances where a student withdraws from a course but remains enrolled in at least one other course, a complete R2T4 calculation is not required since the student has not entirely withdrawn. Nevertheless, when a student changes their enrollment status, their financial aid will be recalculated based on the new status as of the published freeze date each semester.

Short-Term Classes

Short-term courses are courses that do not span the entire length of the semester. If a student withdraws and does not attend a subsequent short-term class, it is considered a complete withdrawal and an R2T4 calculation must be completed. However, if at the time of withdrawal, the student intends to enroll in another short-term course within the same semester, it is not classified as a withdrawal.

Federal Regulations mandate that the Financial Aid must request written confirmation or an email from the student within 5 days, indicating their plan to attend an upcoming short-term course. This confirmation is required, even if the student was previously registered for future courses prior to withdrawing. This provision is applicable only if the course commences within 45 days from the day the student withdraws from all other courses.

Types of Liability

There are two types of liabilities that a student may incur. The determination of student liability and institutional is based on a combination of federal regulations, institutional policies, and the specific circumstances surrounding the overpayment. It is possible for students to have a combination of both Institutional and Student liabilities.

Student Liability

Student liability represents a debt owed to the Department of Education. Upon notification, the student will have 45 days to pay back the student liability to Palomar College. This debt CANNOT be paid with a personal check or credit card.  Payment can only be made with cash or in the form of a Money Order or Cashier’s Check made payable to Palomar College.   This payment can be made in-person at the Cashier’s Office or if paying by Money Order/Cashier’s Check it can be mailed to the Cashier’s Office: Palomar College Cashiers Office: 1140 West Mission Rd, San Marcos, CA 92069

Once the 45 days have passed, the student liability will no longer remain with Palomar College and will be forwarded to the Department of Education’s Debt Resolution Services (DRS) and reported on the National Student Loan Data System (NSLDS) as an “overpayment”. Once the debt is transferred to the DRG, payments can no longer be accepted by the institution. At that moment, the student will no longer be eligible for Title IV aid, until the overpayment is paid in full, or a payment plan arrangement has been created with DRS.

DRG Contact Information
Phone: 1-800-621-3115
Mail: U.S. Department of Education Default Resolution Group P.O. Box 5609 Greenville, TX 75403

Institutional Liability

Palomar College is responsible for promptly addressing a Pell or FSEOG overpayment for which it holds liability within the program account. Palomar College will return this amount to the government and will charge the debt on the student’s account for repayment. Students with an institutional liability owe the debt to Palomar College. Students in this scenario will have a hold placed on their academic records, preventing them from registering for subsequent semesters until the balance is paid in full or a payment plan is established with the Palomar College Cashiers Office.

Refund Policy/Institutional Policy

Students should be aware that though our school refund policy determines the charges students will owe after withdrawing, the refund policy will not affect the amount of Title IV aid the student earned under the Return calculation. Mandatory fees including enrollment, health, student center and nonresident fees will be included in the Return calculation.

Please refer to Palomar College’s Refund Policy for more information.

Other Resources Available

Department of Education

Debt Resolution Services (defaulted loans and overpayment issues)

Helpful Links

U.S. Department of Education

Federal Student Aid information Center

Last modified on April 10, 2024