A student withdraws mid-program. What happens to the plan?

What's the first thing to settle?

The withdrawal date. Everything else is calculated from it: how much of the program was delivered, how much tuition was earned, and what the student still owes or is owed.

Use the date your policy defines, whether that's the date the student gave notice or their last day of attendance, and record it on the student's record the same day.

How do you work out what the student owes?

Three things decide it, in this order:

1. Federal aid, if any. If the student received Title IV aid and withdrew before completing more than 60% of the payment period, a Return of Title IV funds calculation comes first. It decides how much aid the school keeps and how much goes back.
2. Your refund policy. State rules and your accreditor usually set a minimum, and your enrollment agreement sets the rest.
3. What has been paid. Compare what the student has paid, deposit included, with what they owe after steps 1 and 2.

The answer is one of three things: they owe more, they're even, or they've paid too much.

What are the options for the plan?

• Stop it. If the student is even, cancel every future charge. This is the most common case and the easiest to get wrong: a forgotten scheduled charge in December is how schools end up refunding money and apologizing.
• Refund. If the student paid more than they owe, refund the difference to the method they paid with, including any card fee added to those payments. Your processor usually keeps its own fee on the original payment, so count that cost when you set your refund policy.
• Recalculate. If the student still owes money, replace the remaining schedule with a new one for the new balance. Keep the frequency the student was used to if you can.
• Split. If the balance is more than the student can manage in the payments left, spread it over more, smaller payments.

What should the student see?

A short written note with:

• the withdrawal date
• what was earned and what was paid
• what happens next: the refund amount and when it arrives, or the new schedule and its first date

Students who understand the math dispute it far less often.

What should finance record?

The withdrawal date, the refund calculation, any federal aid returned, and every change to the plan. Keep it with the student's file. Auditors and accreditors ask for exactly this.

Refund and aid rules vary by state, accreditor and program. Check yours, and ask your financial aid administrator about any Title IV calculation.