AwardYear: 1998-1999 EnterChapterNo: 4 EnterChapterTitle: Federal Pell Grant Program SectionNumber: 6 SectionTitle: Overpayments and Overawards PageNumbers: 69-74 hb4-73.pdf OVERPAYMENTS --------------- A Pell overpayment occurs any time the student receives a payment that is greater than the amount for which the student is eligible. Examples of the four most common types of overpayments are given below. [[Types of overpayment]] 1. Student error, such as failing to report the spouse's income on the application. 2. School error, for instance, when a student's award is taken incorrectly from the Payment Schedule, or when the school pays a student who is not making satisfactory progress. 3. Required recalculations, such as when a student never begins attending class or does not begin attending all of his or her classes, or withdraws from school after receiving a disbursement for living expenses. (See "Refunds and Repayments" in Chapter 3 for repayment calculation.) 4. Optional payments, for instance, when the school makes an interim disbursement to a student selected for verification, but the student never completes verification. [[34 CFR 690.79(a)(2)]] No matter what the reason for the overpayment, it must be repaid. If the overpayment is the result of a school error or an optional payment, the school must repay the Pell account whether or not it succeeds in collecting the overpayment from the student. [[Continuing payments after overpayment]] If a school has made an overpayment to a student, it may continue to make payments to that student under certain circumstances: - The overpayment can be eliminated within that award year by reducing the student's subsequent Pell payments during the award year; - The school repays the overpayment itself. The student would then owe an institutional debt, not a Pell overpayment, and would be eligible for further Pell payments; - The student makes arrangements to repay that are satisfactory to the school; - The student completely repays the overpayment. Note that if the overpayment is due to the school's error, the school is required to repay the overpayment promptly if it cannot collect the overpayment from the student. As noted above, once the school repays the overpayment, the student is eligible for further aid. If the overpayment is not the school's fault (for instance, the student made a mistake on the application, or the school had no information indicating that the student attended another school), the school may, but is not required to, repay the Pell account for the student. If the school does not repay the overpayment, and the student will not agree to repay, the school is not liable to the Department, but must make a reasonable effort to contact the student and collect the overpayment. Note that a school may not reduce a student's Pell award from the current award year to eliminate a Pell overpayment from a previous award year. For example, if a student received an overpayment in 1997-98, a school may not reduce any portion of the student's 1998- 99 Pell award to eliminate the overpayment. FINANCIAL AID TRANSCRIPTS ----------------------------- If a student transfers from School A to School B and receives an overpayment at School B because School A completed the student's financial aid transcript improperly, School A may be subject to a fine or other adverse action. School B will not be liable for the overpayment but is responsible for attempting to collect it from the student. [[34 CFR 668.19(a)(3)(ii)]] If School A requests a financial aid transcript from School B but has not received it, School A may make a Pell disbursement to the student for only one payment period. School A would not be liable for an overpayment unless it made payments for more than one payment period. [[School has closed]] If School A cannot obtain a financial aid transcript from School B because that school has closed, School A may get the financial aid history from NSLDS or request assistance from the Department by writing to-- Federal Student Aid Information Center Financial Aid Transcript Request P.O. Box 4129 Iowa City, Iowa 52244 (See Chapter 2, Section 2 of this handbook for more information on financial aid transcripts.) REPORTING OVERPAYMENTS COLLECTED ------------------------------------- If a school collects or repays an overpayment for the current award year, it reports the decrease in the student's award using its normal reporting method (EDE, RDE, or Floppy Disk Data Exchange). The school may also use these methods to report a decreased award after the general September 30 payment data submission deadline; for the 1998-99 award year, decreased award reports will be processed at least through January 31, 2000. [[Reporting an award decrease after September 30]] For reporting decreases after September 30, the school may also use the "Decrease Award Report," provided in "Dear Colleague" Letter P-97-3, dated October 1997. The school should use a separate report for each award year for which it needs to report an award reduction; the school's total Pell expenditure figure must always be included. The business office must also report its corrected total Pell expenditure figure through EDCAPS/GAPS. [[Overpayments from a prior award year]] If a student repays a Pell overpayment for a prior award year, the school must deposit the funds in its institutional federal funds or Pell account and report the decrease in the student's award to the Federal Pell Grant Program. The funds can then be used for current year disbursements. See Section 7 of this chapter for more information on reporting decreased awards. PROBLEMS IN COLLECTING OVERPAYMENTS ---------------------------------------- [[Referrals to the Department]] The school must notify the Department's Debt Collection Service (DCS) if it has serious difficulty in collecting an overpayment from a student: for example, if the school cannot contact the student or the student is uncooperative, or if the school establishes a repayment plan and the student refuses to pay or discontinues payments. If the school is unable to recover or eliminate an overpayment that is not the school's fault, the school must refer the student's case to DCS for collection. (Referral procedures for overpayments are discussed in the Verification Guide.) [[Effect on eligibility for other SFA programs]] After the Department has received the school's information, collected the overpayment from the student (if possible), and resolved the case, it will notify the school by letter of the results. Please note that until the Department has reached a final resolution of the referred case, the school may not make any further payments to that student under any SFA Program. A student who owes a Pell overpayment that has been reported to the Department and who subsequently submits a FAFSA will be informed that he or she is not eligible for additional federal aid until the overpayment is repaid in full. NSLDS will show for all such students that a Pell overpayment is owed to the Department. A "C" will be printed on the output document next to the EFC to indicate that the school must resolve the issue before paying the student. Beginning in January 1998, the Department expects that schools will be able to report Pell overpayments electronically through NSLDS. The Department will issue further guidance on this topic at a later date in the form of a "Dear Colleague" letter. When issued, this up- to-date information will also be available on the SFA BBS. PREVENTING OVERAWARDS ------------------------ The Pell is regarded as the first source of assistance to the student and thus is not adjusted to take into account other aid, even if the student's combined aid package exceeds the student's need. [[Adjusting campus-based aid]] The aid administrator is responsible for preventing an overaward by adjusting the aid the school controls. For example, if the student is receiving campus-based aid in addition to a Pell, the campus-based aid must be adjusted to prevent an overaward. The sum of the student's EFC, Pell, campus-based aid, and any other aid and resources may not exceed the student's COA. (See Chapter 2.) [[This file contains the graphic on page 4-73 in Portable Document Format (PDF). It can be viewed with version 3.0 or greater of the free Adobe Acrobat Reader software.]] As mentioned in Section 4, if the student's aid package includes a loan and the package must be adjusted to prevent an overaward, the Pell may not be used to pay back the loan--a loan repayment does not constitute an educational expense. [[Estimated financial assistance]] In addition to adjusting any campus-based aid, schools are required to include an estimate of the student's Pell eligibility as part of the student's estimated financial assistance (EFA) when certifying a Federal Stafford or Direct Loan application. (See Chapters 10 and 11 for further information.) [[NCAA rules for student athletes]] The National Collegiate Athletic Association (NCAA) has rules limiting the amount of aid student athletes may receive. However, the law does not permit schools to adjust students' Pells. Student athletes must receive the full amount of any Pell for which they are eligible. If the student's potential aid plus the student's Pell exceeds the NCAA limits, the school must reduce any aid over which it has control, not the Pell. |
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