For-Profit Tuition Refund Policy

What is the Iowa Tuition Refund Policy?

Under Iowa Code Section 714.23, tuition refund policies apply to a refund (i.e., reduction) of tuition charges the school assesses, regardless of whether and to what extent those charges have been paid by the student or some source of financial aid.


What schools must adopt Iowa’s tuition refund policy for withdrawn students?

A for-profit school that offers at least one program of more than four months in length leading to a postsecondary educational credential, which may include but is not limited to a:

  • Degree, diploma or certificate issued by the school
  • Professional license or certification issued or otherwise required by the State
  • Certificate, badge, or other type of professional credential awarded by a corporation or employer (e.g., “microcredentials” such as those issued by software companies like Microsoft, Adobe, etc.)


What students must be covered under this tuition refund policy?

  • All students attending a for-profit school located in Iowa. If the school has at least one program of more than four months in length, the school must apply the Iowa tuition refund policy to all of the school’s students, even though some may attend shorter programs.
  • All Iowa resident students attending distance education programs offered by a for-profit school regardless of the school’s location in the United States.


What are the Iowa Tuition Refund formulas?

Iowa Code describes two general refund formulas for a student who withdraws from a for-profit school. More detailed information about these formulas is provided below:
 

  • School-friendly Formula - This general formula applies to a school that does not participate in the Federal Stafford Loan Program or whose most recent official default rate in that program is 110% or less than the national average. In addition, a school that may adopt the school-friendly general formula must implement an Exceptional Formula for students who withdraw under exceptional circumstances.
     
  • Student-friendly Formula - This general formula applies to a school that participates in the Federal Stafford Loan Program and whose most recent official default rate in that program is more than 110% of the national average.
     
School-friendly Formula

A school whose most recent official default rate in the Federal Stafford Loan Program is 110% or less than the national average, or a school that does not participate in the Federal Stafford Loan Program, must implement the following tuition refund formulas for students who withdraw from the school.  

  1. General Formula - The school may cease offering a refund of tuition charges on or after the 60% point in the period* for which the student was charged.

    The school’s first step is to determine the 60% point in the period for which the student was charged. 

The second step is to determine how many days the student failed to complete in 60% of the period for which the student was charged. To do this, the school must determine how many calendar days** the student completed as of the date of withdrawal. The school should subtract the # of calendar days** the student completed from the total # of calendar days** in 60% of the period* for which the student was charged. This produces the number of calendar days** incomplete in 60% of that period.

The school should proceed with the tuition refund calculation as follows: 


General Formula Example: A school’s program is measured in semester terms consisting of 110 days. The school assesses tuition charges at the beginning of each semester. This school is eligible to cease offering a reduction of tuition charges at the 60% point of the term. The 60% point of a term consisting of 110 calendar days is 66 days. 

The student withdraws on the 26th day of the term. The tuition charge for the term is $5,000.

  1. 110 (total # of calendar days in term)  X .60 (60%) = 66 days
     
  2. 66 days - 26 days (# of calendar days the student completed in 60% of the term) = 40 (# of calendar days the student failed to complete in 60% of the term)
     
  3. 40 (# of calendar days the student failed to complete in 60% of the term) divided by 66 (the 60% point of the term) =  .61✝
     
  4. .61 (the percentage of 60% of the term that the student failed to complete) X  $5,000 (tuition charge for the term) = $3,050✝
     
  5. $3,050 X .9 (Iowa law allows the school to retain 10% of its charges) = $2,745✝ (final minimum tuition charge refund/reduction to student)
Exceptional Formula

2. Exceptional Formula - The school must also adopt an exceptional tuition refund policy that applies when a student must withdraw because:

 

  • The student’s spouse’s employment is relocated to another city (for students attending programs offered via face-to-face instruction); or
  • The student is physically incapacitated (applicable regardless of instructional modality).

In these exceptional circumstances the student retains eligibility to receive a partial reduction of tuition charges all the way up to (but not including) the ending date of the period* for which the student was charged. There is no cut-off at 60%; nor may the school retain 10% of its tuition charges, as is allowed in the general formula above. The exceptional tuition refund formula is:
 


Exceptional Formula Example: A school’s program is measured in semester terms consisting of 110 days. The school assesses tuition charges at the beginning of each semester. The student withdraws on the 26th day of the term. The tuition charge for the term is $5,000.

  1. 110 (total # of calendar days in the term) - 26 (# of calendar days the student completed in the term) =  84 (# of calendar days the student failed to complete in the term)
     
  2. 84 (# of calendar days the student failed to complete in the term) divided by 110 (total # of calendar days in the term) = .76✝  (the percentage of the term that the student failed to complete)
     
  3. .76 (the percentage of the term that the student failed to complete)
    X $5,000 (tuition charge for the term) = $3,800 (minimum tuition charge refund/reduction to the student)

Student-friendly Formula

If a school participates in the Federal Stafford Loan Program and its most recent official default rate in that program is more than 110% of the national average rate of all schools, the school must adopt the following refund formula. 

Note: The student retains eligibility to receive a partial reduction of tuition charges all the way up to (but not including) the ending date of the period for which the student was charged. There is no cut-off at 60%.


Student-friendly Formula Example: A school’s program is measured in semester terms consisting of 110 days. The school assesses tuition charges at the beginning of each semester. The student withdraws on the 26th day of the term. The tuition charge for the term is $5,000.

  1. 110 (total # of calendar days in the term) - 26 (# of calendar days the student completed in the term) =  84 (# of calendar days the student failed to complete in the term)
     
  2. 84 (# of calendar days the student failed to complete in the term) divided by 110 (total # of calendar days in the term) = .76✝  (the percentage of the term that the student failed to complete)
     
  3. .76 (the percentage of the term that the student failed to complete) X $5,000 (tuition charge for the term) = $3,800 
     
  4. $3,800 X .9 (Iowa law allows the school to retain 10% of its charges) = $3,420 (the minimum tuition charge refund/reduction to the student)


How does a for-profit school demonstrate compliance?

A for-profit school demonstrates compliance as part of the school’s application for authorization to operate under Registration, Registration Exemptions, or Financial Responsibility.

Who do I contact?

For further information, contact the Postsecondary Authorization Team

 

* Period is the period of enrollment for which the school assesses tuition charges. The period may be the program for a school that assesses all tuition charges up front; or the academic year, term, payment period, or course for a school that assesses tuition charges incrementally throughout a program.

** For a school that measures academic progress in clock hours, calendar days in each tuition refund formula is substituted with scheduled clock hours.

✝  For the purpose of these examples, standard rounding procedures were used. However, Iowa law prescribes no rounding procedures. Schools should develop a set of rounding rules that the school applies consistently to all students. Iowa College Aid reserves the right to review the school’s application of its rounding rules.