Managing Finances

What is Title IV Authorization, and how does it affect my student’s financial aid?

Financial Aid can be a confusing subject, but it is essential to understand how your student’s Financial Aid package will be applied. While this will vary slightly from school to school, they do have certain requirements they have to meet. Download the flowchart here to help illustrate the disbursement process.

When your student receives Federal Student Aid, the university is able to disburse the money directly to the student*. However, most universities first apply the aid to any “allowable charges.” “Allowable charges” are tuition and related fees, along with room and board if your student uses on-campus housing or dining. The university can also use up to $200 of the aid to pay off these same charges from the previous year.

Many universities give students the option of using the remaining balance toward other educationally related charges. Universities can apply Federal aid directly to charges such as library fines, parking passes, and campus bookstore bills — but only if the student has agreed (given his or her signed authorization). This is often referred to as Title IV Authorization.

Schools usually ask students to opt in or out of a Title IV Authorization at the beginning of their first year. In most cases your student can give or change his authorization online. Encourage your student to go to his school’s Financial Aid site or talk to one of the Financial Aid advisors if he wants to check whether he has authorized the charges or change his decision.

If your student does not authorize the school to use the money for other charges, he will be refunded any amount over the tuition, fees, and room and board. However, he may still have a balance to pay the university for other university charges.

If your student allows the school to apply aid to other charges, all available aid will be used toward his university account. He will still receive any remaining funds after all charges have been paid.

*In the case of Parent PLUS Loans, parents will receive the aid if the school opts to give it out directly, or the remainder of the aid if it is first applied toward the student’s account. The university needs the parent’s authorization in order to use money from Parent PLUS Loans for other educational charges.

Definitions:
Title IV Aid (Federal Student Aid) consists of the programs created by Title IV of the Higher Education act, including the Pell grant, Perkins Loan, Stafford Loan and Parent PLUS Loan, among others.

“Allowable Charges” are tuition, fees, and room and board. The university can automatically apply your student’s Federal Student Aid to these charges.

Title IV Authorization is a signed (print or electronic) statement by a student that gives the university permission to use his or her Federal Student Aid toward university charges other than tuition, fees, and room and board. When authorized, the university can use financial aid toward charges such as library fines, parking passes, and campus bookstore bills. In the case of Parent PLUS Loans, the authorization must come from the parent.

Information is from Title IV of the Higher Education Act and the Information for Financial Aid Professionals website.

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