What is Title IV funding?

What is Title IV funding?

It is the federal student aid authorized by Title IV of the Higher Education Act of 1965. The general rules for schools that take part are in 34 CFR part 668. Section 668.1(c) lists the Title IV programs. They include:

• Federal Pell Grants
• Federal Supplemental Educational Opportunity Grants (FSEOG)
• Federal Work-Study
• William D. Ford Federal Direct Loans, including PLUS loans
• TEACH Grants

Which schools and programs can use it?

The school has to be an eligible institution, which includes proprietary (for-profit) schools and postsecondary vocational schools (34 CFR 668.1(b)). Each program has to be an eligible program too.

At a for-profit school, most undergraduate programs need at least 600 clock hours and 15 weeks of instruction. Shorter programs of 300 to 599 clock hours over at least 10 weeks can qualify for Direct Loans only, with extra conditions (34 CFR 668.8(d)). Some programs of 150 to 599 clock hours, over 8 to under 15 weeks, can qualify for Pell Grants as workforce programs (34 CFR 690.92).

How does the money reach the school?

The school credits Title IV funds to the student's ledger account for allowable charges in the current payment period. Those are tuition, fees and school-provided room and board, plus books and supplies the student authorizes (34 CFR 668.164(c)).

If the aid credited is more than those charges, the student has a credit balance. The school must pay it to the student no later than 14 days after it occurs, or 14 days after the first day of class if it occurs before then (668.164(h)).

Where does a tuition payment plan fit?

A plan usually covers what aid doesn't. A worked example: a $14,800 program, $8,000 of it covered by aid credited to the student's account, leaves $6,800 for the student to pay. That could be a deposit and a schedule of payments. Figures here are only an illustration.

What rules come with Title IV?

• Withdrawals. When a student with Title IV aid withdraws, the school must run the R2T4 calculation. Aid is earned in proportion to the period completed up to the 60% point, and all of it after that (34 CFR 668.22).
• 90/10. A for-profit school must get at least 10% of its revenue from non-federal sources each fiscal year (34 CFR 668.28). See the 90/10 rule.
• Disclosures. A school must make its cost of attendance, any refund policy it must follow, its withdrawal procedures and a summary of the R2T4 rules readily available to students (34 CFR 668.43).

The Department of Education's FSA Handbook explains each of these in detail for schools.

General information, not legal or compliance advice.