According to Educationdata.org, the dropout rate for undergraduate college students is 40%, with 30% qualifying as college freshmen who drop out before their sophomore year. Both are pretty significant figures. Students have a variety of reasons for dropping out of college. Some leave college to work, while others believe that they cannot continue because of a lack of financial support. Whatever the case, dropping out of college is not simple – and it’s not cheap. Why? Because students that drop out of college are required to pay back any financial aid they have used to pay for their college education.So before dropping out, think twice about how much it will cost.Once the student has applied to colleges, each institution will use the information gathered on the FAFSA to deliver a financial aid package. These packages can contain grants, scholarships, work study, and student loans. Though colleges and the government will use terms like “awarded” financial aid dollars, the money is actually earned. Therefore, when a student drops out of college, they have to pay back a certain amount of their financial aid, which is determined by a refund-calculation formula. Depending on when the student drops out of college, he or she must pay back 50% of a percentage of aid not used for classes. Sound confusing? Let us break it down with a little story problem.John receives a $2,000 Pell Grant for the semester and uses $1,000 for tuition. He drops out a fourth of the way through the semester. Under the rule, John has only "earned" 25% of his grant. The college is required to return all of John's "unearned" aid that went toward tuition (75 percent, or $750). John is personally required to pay back 50% of his unearned aid that didn't go toward tuition. Because he dropped out a fourth of the way through the semester, John earned $250 of his $1,000. Fifty percent of the remaining amount ($750) is $375, which is what John owes.
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