To:Owners and Directors of Title IV Approved Proprietary Schools
From:Mary Jayne Fay, Coordinator
C:Brian Devine, Administrator
Date:August 2007
Re:Refund Policies

The Massachusetts Department of Education's (Department) has been working with the U.S. Department of Education (USDOE) to understand the intent of the USDOE's Federal Return to Title IV (R2T4) policy so we may assist schools and their students in determining the appropriate policy to employ (R2T4 and/or M.G.L. c. 255, § 13K).

As you are aware, the Commonwealth of Massachusetts requires all schools to use the refund policy set forth in M.G.L. c. 255, § 13K. It has been the Department's policy that Title IV approved schools apply the Federal Return to Title IV (R2T4) policy for those students receiving funds from Title IV programs and apply the Massachusetts refund policy to all other students. After reviewing the 2006 Common Manual1 , the federal regulations, and consulting with the USDOE, it is our collective opinion that schools may apply the state refund policy without regard to the R2T4 policy.

Briefly, the federal policy is for purposes of determining how much Title IV aid the student earned for the period of time he/she was in attendance and does not affect how much schools are allowed to charge students for that same period of time under the state-mandated refund policy. According to the USDOE, the R2T4 policy also does not prevent schools from pursuing students for unpaid charges due after the school applies its state-mandated refund policy.

The 2006-2007 Federal Student Aid Handbook, page 5-99 states:

The requirements for Title IV program funds when you withdraw are separate from any refund policy that your school may have. Therefore, you may still owe funds to the school to cover unpaid institutional charges. Your school may also charge you for any Title IV program funds that the school was required to return. If you don't already know what your school's refund policy is, you can ask your school for a copy. Your school can also provide you with the requirements and procedures for officially withdrawing from school.

Therefore, Massachusetts' schools may amend their enrollment contracts to reflect the use of R2T4 in addition to the state-mandated refund policy. We encourage schools to use the following language on their enrollment contracts:

"REFUND POLICY (AS PER M.G.L. CHAPTER 255, SECTION 13K):

  1. You may terminate this agreement at any time.
  2. If you terminate this agreement within five days you will receive a refund of all monies paid, provided that you have not commenced the program.
  3. If you subsequently terminate this agreement prior to the commencement of the program, you will receive a refund of all monies paid, less the actual reasonable administrative costs described in paragraph 7.
  4. If you terminate this agreement during the first quarter of the program, you will receive a refund of at least seventy-five percent of the tuition, less the actual reasonable administrative costs described in paragraph 7.
  5. If you terminate this agreement during the second quarter of the program, you will receive a refund of at least fifty per cent of the tuition, less the actual reasonable administrative costs described in paragraph 7.
  6. If you terminate this agreement during the third quarter of the program, you will receive a refund of at least twenty-five percent of the tuition, less the actual reasonable administrative costs described in paragraph 7.
  7. If you terminate this agreement after the initial five day period, you will be responsible for actual reasonable administrative costs incurred by the school to enroll you and to process your application, which administrative costs shall not exceed fifty dollars or five percent of the contract price, whichever is less. A list of such administrative costs is attached hereto and made a part of this agreement.
  8. If you wish to terminate this agreement, you must inform the school in writing of your termination, which will become effective on the day, such writing is mailed.
  9. The school is not obligated to provide any refund if you terminate this agreement during the fourth quarter of the program.

In addition, any students receiving funds from Title IV programs are subject to the U.S. Department of Education's Federal Return to Title IV (R2T4) policy. The return of your funds to Title IV is separate from any refund policy that your school may have. Therefore, you may still owe funds to the school to cover unpaid institutional charges. The school may also charge you for any Title IV program funds that the school was required to return."

As with all prospective amendments to Department-approved materials, please submit any proposed changes to your enrollment contracts to the Department for review.

If you have any questions, please contact us.


 


1 Common Manual: Unified student loan policy, Fall 2006.