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Q.: If a student dies during a payment period/period of enrollment, must the school perform the return of Title IV funds (R2T4) calculation?

A.: Yes, but there are some different actions the school must take as a result of the calculation. The 2008-09 Federal Student Aid Handbook, page 5-93, states the following:

"If an institution is informed that a student has died during a period, it must perform a Return calculation. If the Return calculation indicates that an institution is required to return Title IV funds, the institution must return the Title IV funds for which it is responsible.

"The student's estate is not required to return any Title IV funds. Therefore, an institution should neither report a grant overpayment for a deceased student to NSLDS, nor refer a grant overpayment for a deceased student to Borrower Services. If an institution had previously reported a grant overpayment for a student who is deceased to Borrower Services, it should inform Borrower Services that it has received notification that the student is deceased.

"The regulations governing the FFEL, Direct, and Federal Perkins loan programs provide for a discharge of a borrower's obligation to repay an FFEL, Federal Direct, or Federal Perkins loan if the borrower dies (including a PLUS loan borrower's obligation to repay an FFEL or Direct PLUS loan if the student on whose behalf the parent borrowed dies). If a school is aware that a student who has died has any outstanding Title IV loan debt, the school should contact the student's estate and inform it of the actions it can take to have the student's Title IV loan debt cancelled.

"If a Title IV credit balance created from funds disbursed before the death of the student exists after the completion of the Return calculation and the institutional refund calculations, the institution must resolve the Title IV credit balance as follows:

1. in accordance with the cash management regulations, paying authorized charges at the institution (including previously paid charges that are now unpaid due to the Return of Title IV funds by the institution);
   
   
2. returning any Title IV grant overpayments owed by the student for previous withdrawals from the present school (the institution may deposit the funds in its federal funds account and make the appropriate entry in GAPS);
   
   If the institution has previously referred the grant overpayment to Borrower Services, the institution should provide Borrower Services with documentation that the student has died so that Borrower Services can delete the overpayment from its records.
   
   
3. returning any remaining credit balance to the Title IV Programs."

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