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| Threat of repaying grants for college dropouts |
by Danielle Haas
Staff Writer
Additional Reporting by
Kimberly A. Brehm
Assistant Editor |
Under a new rule proposed by the U. S. Department of Education, students will be forced to repay Pell Grants and other federal aid that they don’t use for educational purposes, if they don’t complete the semester for which the financial aid is rendered.
“The law requires a student to repay a portion of the grant that the student received, but didn’t earn,” said D. Jean Veta, Deputy General Counsel for the U.S. Department of Education, in a statement. This includes programs such as Federal Pell Grants, Federal Supplemental Opportunity Grants, and Federal Direct Loans.
According to Columbia’s Director of Financial Aid John Olino, this program is basically an updated version of the former Title IV Refund plan. It is now called the Return of Un-Earned Title IV Aid.
“Each semester is counted as its own separate entity,” Olino said. “If you complete the whole semester, there is no aid to pay back. If you drop out half-way through, then you have to pay back 50 percent of the federal aid.”
“Fifty percent of the aid you earned [by going to class] and 50 percent was unearned because you dropped out.” Olino said.
Students who drop out of a class will owe the amount of aid never used for class, minus a 50 percent discount offered by the U. S. Department of Education. The discount will apply to every student who withdrawals from college.
Under the new law, colleges will return any portion of student aid that doesn’t cover the period in which the student was enrolled.
Because the new law is so complex, the U. S. Department of Education will provide software and worksheets to all colleges so that it may caculate the portion of federal aid money to be returned. The new rule applies to students who withdraw from college on or after Oct. 7, 2000.
The new law was published in the Federal Register on Nov. 1. It will take effect in July 2000 but some schools will be implementing it sooner. Columbia, however, doesn’t plan on enacting the rule until early next year.
Gloria Andrews, debt management adviser at Columbia, said the old Title IV plan and the new plan differ in that the new program “requires students to immediately start repaying the unearned portion of the aid. In the old program, there was some lag time,” she said.
Andrews said the plan was implemented to curb abuse of the program by students. “We had a lot of students taking the money and using it for non-educational purposes. If they drop out of school there are no educational expenses.” Olino said: “From the calculations I’ve made, it seems to be more understandable than the old Title IV Plan.”
“I think students will also understand it better. It will be easier for institutions to calculate unearned/earned payments.” |
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