 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
   Part F--General Provisions Relating to Student Assistance Programs
 
Sec. 1091b. Institutional refunds


(a) Return of title IV funds

                           (1) In general

        If a recipient of assistance under this subchapter and part C of 
    subchapter I of chapter 34 of title 42 withdraws from an institution 
    during a payment period or period of enrollment in which the 
    recipient began attendance, the amount of grant or loan assistance 
    (other than assistance received under part C of subchapter I of 
    chapter 34 of title 42) to be returned to the title IV programs is 
    calculated according to paragraph (3) and returned in accordance 
    with subsection (b) of this section.

                        (2) Leave of absence

        (A) Leave not treated as withdrawal

            In the case of a student who takes a leave of absence from 
        an institution for not more than a total of 180 days in any 12-
        month period, the institution may consider the student as not 
        having withdrawn from the institution during the leave of 
        absence, and not calculate the amount of grant and loan 
        assistance provided under this subchapter and part C of 
        subchapter I of chapter 34 of title 42 that is to be returned in 
        accordance with this section if--
                (i) the institution has a formal policy regarding leaves 
            of absence;
                (ii) the student followed the institution's policy in 
            requesting a leave of absence; and
                (iii) the institution approved the student's request in 
            accordance with the institution's policy.

        (B) Consequences of failure to return

            If a student does not return to the institution at the 
        expiration of an approved leave of absence that meets the 
        requirements of subparagraph (A), the institution shall 
        calculate the amount of grant and loan assistance provided under 
        this subchapter and part C of subchapter I of chapter 34 of 
        title 42 that is to be returned in accordance with this section 
        based on the day the student withdrew (as determined under 
        subsection (c) of this section).

       (3) Calculation of amount of title IV assistance earned

        (A) In general

            The amount of grant or loan assistance under this subchapter 
        and part C of subchapter I of chapter 34 of title 42 that is 
        earned by the recipient for purposes of this section is 
        calculated by--
                (i) determining the percentage of grant and loan 
            assistance under this subchapter and part C of subchapter I 
            of chapter 34 of title 42 that has been earned by the 
            student, as described in subparagraph (B); and
                (ii) applying such percentage to the total amount of 
            such grant and loan assistance that was disbursed (and that 
            could have been disbursed) to the student, or on the 
            student's behalf, for the payment period or period of 
            enrollment for which the assistance was awarded, as of the 
            day the student withdrew.

        (B) Percentage earned

            For purposes of subparagraph (A)(i), the percentage of grant 
        or loan assistance under this subchapter and part C of 
        subchapter I of chapter 34 of title 42 that has been earned by 
        the student is--
                (i) equal to the percentage of the payment period or 
            period of enrollment for which assistance was awarded that 
            was completed (as determined in accordance with subsection 
            (d) of this section) as of the day the student withdrew, 
            provided that such date occurs on or before the completion 
            of 60 percent of the payment period or period of enrollment; 
            or
                (ii) 100 percent, if the day the student withdrew occurs 
            after the student has completed 60 percent of the payment 
            period or period of enrollment.

        (C) Percentage and amount not earned

            For purposes of subsection (b) of this section, the amount 
        of grant and loan assistance awarded under this subchapter and 
        part C of subchapter I of chapter 34 of title 42 that has not 
        been earned by the student shall be calculated by--
                (i) determining the complement of the percentage of 
            grant or loan assistance under this subchapter and part C of 
            subchapter I of chapter 34 of title 42 that has been earned 
            by the student described in subparagraph (B); and
                (ii) applying the percentage determined under clause (i) 
            to the total amount of such grant and loan assistance that 
            was disbursed (and that could have been disbursed) to the 
            student, or on the student's behalf, for the payment period 
            or period of enrollment, as of the day the student withdrew.

     (4) Differences between amounts earned and amounts received

        (A) In general

            If the student has received less grant or loan assistance 
        than the amount earned as calculated under subparagraph (A) of 
        paragraph (3), the institution of higher education shall comply 
        with the procedures for late disbursement specified by the 
        Secretary in regulations.

        (B) Return

            If the student has received more grant or loan assistance 
        than the amount earned as calculated under paragraph (3)(A), the 
        unearned funds shall be returned by the institution or the 
        student, or both, as may be required under paragraphs (1) and 
        (2) of subsection (b) of this section, to the programs under 
        this subchapter and part C of subchapter I of chapter 34 of 
        title 42 in the order specified in subsection (b)(3) of this 
        section.

(b) Return of title IV program funds

                (1) Responsibility of the institution

        The institution shall return, in the order specified in 
    paragraph (3), the lesser of--
            (A) the amount of grant and loan assistance awarded under 
        this subchapter and part C of subchapter I of chapter 34 of 
        title 42 that has not been earned by the student, as calculated 
        under subsection (a)(3)(C) of this section; or
            (B) an amount equal to--
                (i) the total institutional charges incurred by the 
            student for the payment period or period of enrollment for 
            which such assistance was awarded; multiplied by
                (ii) the percentage of grant and loan assistance awarded 
            under this subchapter and part C of subchapter I of chapter 
            34 of title 42 that has not been earned by the student, as 
            described in subsection (a)(3)(C)(i) of this section.

                  (2) Responsibility of the student

        (A) In general

            The student shall return assistance that has not been earned 
        by the student as described in subsection (a)(3)(C)(ii) of this 
        section in the order specified in paragraph (3) minus the amount 
        the institution is required to return under paragraph (1).

        (B) Special rule

            The student (or parent in the case of funds due to a loan 
        borrowed by a parent under part B or C of this subchapter) shall 
        return or repay, as appropriate, the amount determined under 
        subparagraph (A) to--
                (i) a loan program under this subchapter and part C of 
            subchapter I of chapter 34 of title 42 in accordance with 
            the terms of the loan; and
                (ii) a grant program under this subchapter and part C of 
            subchapter I of chapter 34 of title 42, as an overpayment of 
            such grant and shall be subject to--
                    (I) repayment arrangements satisfactory to the 
                institution; or
                    (II) overpayment collection procedures prescribed by 
                the Secretary.

        (C) Requirement

            Notwithstanding subparagraphs (A) and (B), a student shall 
        not be required to return 50 percent of the grant assistance 
        received by the student under this subchapter and part C of 
        subchapter I of chapter 34 of title 42, for a payment period or 
        period of enrollment, that is the responsibility of the student 
        to repay under this section.

                (3) Order of return of title IV funds

        (A) In general

            Excess funds returned by the institution or the student, as 
        appropriate, in accordance with paragraph (1) or (2), 
        respectively, shall be credited to outstanding balances on loans 
        made under this subchapter and part C of subchapter I of chapter 
        34 of title 42 to the student or on behalf of the student for 
        the payment period or period of enrollment for which a return of 
        funds is required. Such excess funds shall be credited in the 
        following order:
                (i) To outstanding balances on loans made under section 
            1078-8 of this title for the payment period or period of 
            enrollment for which a return of funds is required.
                (ii) To outstanding balances on loans made under section 
            1078 of this title for the payment period or period of 
            enrollment for which a return of funds is required.
                (iii) To outstanding balances on unsubsidized loans 
            (other than parent loans) made under part C of this 
            subchapter for the payment period or period of enrollment 
            for which a return of funds is required.
                (iv) To outstanding balances on subsidized loans made 
            under part C of this subchapter for the payment period or 
            period of enrollment for which a return of funds is 
            required.
                (v) To outstanding balances on loans made under part D 
            of this subchapter for the payment period or period of 
            enrollment for which a return of funds is required.
                (vi) To outstanding balances on loans made under section 
            1078-2 of this title for the payment period or period of 
            enrollment for which a return of funds is required.
                (vii) To outstanding balances on parent loans made under 
            part C of this subchapter for the payment period or period 
            of enrollment for which a return of funds is required.

        (B) Remaining excesses

            If excess funds remain after repaying all outstanding loan 
        amounts, the remaining excess shall be credited in the following 
        order:
                (i) To awards under subpart 1 of part A of this 
            subchapter for the payment period or period of enrollment 
            for which a return of funds is required.
                (ii) To awards under subpart 3 of part A of this 
            subchapter for the payment period or period of enrollment 
            for which a return of funds is required.
                (iii) To other assistance awarded under this subchapter 
            and part C of subchapter I of chapter 34 of title 42 for 
            which a return of funds is required.

(c) Withdrawal date

                           (1) In general

        In this section, the term ``day the student withdrew''--
            (A) is the date that the institution determines--
                (i) the student began the withdrawal process prescribed 
            by the institution;
                (ii) the student otherwise provided official 
            notification to the institution of the intent to withdraw; 
            or
                (iii) in the case of a student who does not begin the 
            withdrawal process or otherwise notify the institution of 
            the intent to withdraw, the date that is the mid-point of 
            the payment period for which assistance under this 
            subchapter and part C of subchapter I of chapter 34 of title 
            42 was disbursed or a later date documented by the 
            institution; or

            (B) for institutions required to take attendance, is 
        determined by the institution from such attendance records.

                          (2) Special rule

        Notwithstanding paragraph (1), if the institution determines 
    that a student did not begin the withdrawal process, or otherwise 
    notify the institution of the intent to withdraw, due to illness, 
    accident, grievous personal loss, or other such circumstances beyond 
    the student's control, the institution may determine the appropriate 
    withdrawal date.

(d) Percentage of the payment period or period of enrollment completed

    For purposes of subsection (a)(3)(B)(i) of this section, the 
percentage of the payment period or period of enrollment for which 
assistance was awarded that was completed, is determined--
        (1) in the case of a program that is measured in credit hours, 
    by dividing the total number of calendar days comprising the payment 
    period or period of enrollment for which assistance is awarded into 
    the number of calendar days completed in that period as of the day 
    the student withdrew; and
        (2) in the case of a program that is measured in clock hours, by 
    dividing the total number of clock hours comprising the payment 
    period or period of enrollment for which assistance is awarded into 
    the number of clock hours--
            (A) completed by the student in that period as of the day 
        the student withdrew; or
            (B) scheduled to be completed as of the day the student 
        withdrew, if the clock hours completed in the period are not 
        less than a percentage, to be determined by the Secretary in 
        regulations, of the hours that were scheduled to be completed by 
        the student in the period.

(e) Effective date

    The provisions of this section shall take effect 2 years after 
October 7, 1998. An institution of higher education may choose to 
implement such provisions prior to that date.

(Pub. L. 89-329, title IV, Sec. 484B, as added Pub. L. 102-325, title 
IV, Sec. 485(a), July 23, 1992, 106 Stat. 619; amended Pub. L. 103-208, 
Sec. 2(h)(26), (27), Dec. 20, 1993, 107 Stat. 2477; Pub. L. 105-244, 
title IV, Sec. 485, Oct. 7, 1998, 112 Stat. 1737.)

                       References in Text

    Title IV, referred to in subsecs. (a) and (b), means title IV of the 
Higher Education Act of 1965, Pub. L. 89-329, which is classified 
generally to this subchapter and part C (Sec. 2751 et seq.) of 
subchapter I of chapter 34 of Title 42, The Public Health and Welfare. 
For complete classification of title IV to the Code, see Tables.


                            Prior Provisions

    Prior sections 1091b to 1091f were repealed, effective Sept. 30, 
1976, by Pub. L. 94-482, title I, Sec. 151(a)(2), (b), Oct. 12, 1976, 90 
Stat. 2151.
    Section 1091b, Pub. L. 89-329, title V, Sec. 503, as added Pub. L. 
90-35, Sec. 2(c), June 29, 1967, 81 Stat. 83; amended Pub. L. 92-318, 
title IV, Sec. 451(a), June 23, 1972, 86 Stat. 344, authorized the 
Commissioner to appraise and annually report on existing and future 
education personnel needs.
    Section 1091c, Pub. L. 89-329, title V, Sec. 504, as added Pub. L. 
90-35, Sec. 2(c), June 29, 1967, 81 Stat. 83; amended Pub. L. 90-575, 
title II, Sec. 231(a), Oct. 16, 1968, 82 Stat. 1039; Pub. L. 92-318, 
title I, Sec. 141(a)(1)(B), (c)(1)(B), June 23, 1972, 86 Stat. 284, 285, 
authorized the Commissioner to make grants or contracts with State or 
local educational agencies for attracting qualified persons to the field 
of education.
    Section 1091d, Pub. L. 89-329, title V, Sec. 505, as added Pub. L. 
90-35, Sec. 2(c), June 29, 1967, 81 Stat. 84, required the Commissioner 
to consult with the National Science Foundation and the National 
Foundation on the Arts and the Humanities in development and review of 
programs.
    Section 1091e, Pub. L. 89-329, title V, Sec. 506, as added Pub. L. 
90-35, Sec. 2(c), June 29, 1967, 81 Stat. 84, authorized transfer of 
funds for programs for education professions development.
    Section 1091f, Pub. L. 89-329, title V, Sec. 507, as added Pub. L. 
90-35, Sec. 2(c), June 29, 1967, 81 Stat. 84, authorized employment of 
experts and consultants and set forth provisions for compensation and 
travel expenses.


                               Amendments

    1998--Pub. L. 105-244 amended section catchline and text generally. 
Prior to amendment, section consisted of subsecs. (a) to (c) requiring 
each institution of higher education participating in a program under 
this subchapter and part C of subchapter I of chapter 34 of title 42 to 
have in effect a fair and equitable refund policy for refunding unearned 
tuition, fees, room and board, and other charges to students or parents 
who received grant or loan assistance under this subchapter or part C of 
subchapter I of chapter 34 of title 42.
    1993--Subsec. (a). Pub. L. 103-208, Sec. 2(h)(26), substituted 
``grant or loan assistance'' for ``grant, loan, or work assistance'' in 
introductory provisions.
    Subsec. (b)(3). Pub. L. 103-208, Sec. 2(h)(27), substituted 
``subsection (c) of this section'' for ``subsection (d) of this 
section''.


                    Effective Date of 1998 Amendment

    Amendment by Pub. L. 105-244 effective Oct. 1, 1998, except as 
otherwise provided in Pub. L. 105-244, see section 3 of Pub. L. 105-244, 
set out as a note under section 1001 of this title.


                    Effective Date of 1993 Amendment

    Amendment by Pub. L. 103-208 effective as if included in the Higher 
Education Amendments of 1992, Pub. L. 102-325, except as otherwise 
provided, see section 5(a) of Pub. L. 103-208, set out as a note under 
section 1051 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 1092, 1094 of this title; 
title 42 section 12604.
