Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

Federal Pell Grant Program - Disbursing Federal Pell Grant Awards

AwardYear: 1995-1996
EnterChapterNo: 4
EnterChapterTitle: Federal Pell Grant Program
SectionNumber: 4
SectionTitle: Disbursing Federal Pell Grant Awards
PageNumbers: 73-80


[[All eligible students must be paid for all eligible enrollment]]
It may seem that most of the work is done once the student’s
award has been calculated. However, there is still the matter of
actually getting the payment to the student. KEEP IN MIND
THAT YOU MUST PAY ANY STUDENT WHO IS
ELIGIBLE (including payment for less-than-half-time
students), and that you must make payments for ALL eligible
periods of enrollment (including remaining eligibility for
students in summer school terms).

In this section, we discuss how payments can be made (by
check or credit to the student’s account) and when the
payments can be made. Below we discuss the Certification
statement that each aid administrator must sign before any
payment can be made. (See Chapter Two, Section One for
information on the statements STUDENTS must sign.)

[[Final Rule 12-1-94]]
On December 1, 1994, the Department published new
regulations regarding cash management. These regulations
provide uniform rules for disbursing and managing funds for
all programs. We will note the effect of these rules on the
Federal Pell Grant Program in this section, but you should
refer to Section Three of Chapter Three for more information.

SCHOOL CERTIFICATION AND STUDENT ELIGIBILITY

[[School certification]]
You must sign either the Certification statement on Part 3 of
the SAR or the Certification statement your school uses if it
participates in the RDE, the EDE, or the Floppy Disk Data
Exchange systems. The procedures used are slightly different
for the four systems.

The Certification statement on the SAR says that the student’s
Pell was calculated in accordance with program regulations,
the instructions in the Federal Student Financial Aid
Handbook, and the 1995-96 Payment Schedule. The statement
further certifies that the student is making satisfactory
academic progress, has signed the required statements, and
has completed verification (if required). The Certification
statement for RDE, EDE, and Floppy Disk systems states that
the information about the student is accurate and complete.
Under RDE, you must sign the Certification statement that is
part of the transmittal included with the tape. Under EDE, there
is a signature flag in the record. Under the Floppy Disk Data
Exchange, you will be asked to acknowledge the certification
as part of the batch generation process.

As noted in the Certification statement, the school is liable for
incorrect payments made to the student because of a mistake
by the school. The financial aid administrator is subject to a
$10,000 fine, a prison sentence, or both if he or she knowingly
makes false or misleading statements.

[[Reviewing student's eligibility]]
You must review the student’s eligibility at the time you are
going to make a payment. For instance, a student may have
been making satisfactory academic progress when award
letters were mailed in the spring term, but may no longer be
making progress when he or she comes to the business office
for payment at the beginning of the fall term. Make sure the
student still meets the eligibility requirements for the Pell (as
discussed in Section One of this chapter), and that the
appropriate documentation is in the student’s file.

METHODS OF DISBURSEMENT

[[Credit to account or direct payment]]
[[Final Rule 12-1-94]]
There are two ways a school may pay a Pell to a student: either
by crediting the student’s account for any outstanding
education expenses, or directly (by check or electronic funds
transfer [EFT]). (Direct payments to the student are often
referred to as "cash disbursements".) The school must have
authorization from the student to pay the student by EFT. See
Chapter Three for more information about this requirement.
Usually, a school will use the Pell to credit the student’s
account for any unpaid charges for tuition and fees (and
room and board, if provided by the school), and then will
disburse the remaining amount of the Pell (if any) to the
student for remaining living expenses.

[[Limitation on credit to account]]
The school may use the Pell to pay other charges at the school
only if the student authorizes such a payment in writing. The
school may not require the student to authorize such
payments. As with any SFA funds, payments may be made
only for education expenses.*10* If an account balance
remains after the Pell is credited to the student’s account, the
balance must be returned to the student unless the student
provides written authorization. See Section Three of Chapter
Three for information on handling student account balances.

[[Early payment option]]
The cash management regulations permit a school to pay a
student before the beginning of a payment period if the student
has already registered for that payment period. The earliest a
school may credit a registered student’s account or directly
pay a student is 10 days before the first day of classes in the
payment period. Previously, schools could credit the student’s
account as early as 3 weeks before the first day of classes, but
now both methods of disbursement are subject to the same
limit. Remember that in a clock-hour program or a nonterm
credit-hour program, the school may not pay a student until
he or she has completed the coursework for the previous
payment period.

If the school uses the Pell to credit the account or pay the
student before the payment period begins, but the student
never actually begins attending any classes, the school must
reimburse the Pell account for that payment. (If the student
begins attending some but not all of his or her classes, you
may have to recalculate the award - see Section Five.)

[[The graphic on page 4-75 is currently unavailable for viewing.
Please reference your paper document for additional information.]]

FIRST PAYMENT OPTIONS

[[Must have SAR or ISIR]]
[[Final Rule 11-1-94]]
Under the new Federal Pell Grant Program regulations,
schools are NOT allowed to make a first disbursement of a
Pell award without a valid SAR or ISIR. If the student needs
to make corrections to his or her data, or you wish to use
professional judgment to adjust the student’s data, you must
submit the student’s SAR for reprocessing (using Part 2), or
make the changes through the Electronic Data Exchange and
receive the new SAR or ISIR before making a first
disbursement.

[[Verification]]
Note that, in some cases, you may make a first payment while
the student is being verified, as long as you have no conflicting
information. See The Verification Guide for more information.

TIMING OF PAYMENTS

The school may use its discretion in disbursing funds within a
payment period to best meet a student’s needs. For instance,
some schools pay students on the first day of class in a
payment period, while others wait until the end of the add/drop
period. Other schools pay the student in monthly installments
to help meet living expenses throughout the payment period.
(Note that if you ration cash disbursements to students
throughout the payment period, you must have the student’s
authorization in writing.) In all cases, however, the full amount
due the student for a payment period must be disbursed to the
student before the end of the payment period.

[[Retroactive payment]]
The school may pay a student retroactively for any completed
payment periods within the award year if the student was
eligible for payment in those periods. Thus, if the school has a
valid SAR or ISIR for the student while he or she is enrolled
as an eligible student in the summer term, but the student was
also enrolled and eligible for payment in the fall term, that
student can be paid retroactively for the fall term.

[[The graphic on page 4-76 is currently unavailable for viewing.
Please reference your paper document for additional information.]]

However, the fall payment would be based on the hours
COMPLETED by the student for that term. If the student had
enrolled as a full-time student at the beginning of the fall term
but dropped to half-time status by the end of the term, the
retroactive payment must be based on half-time status.

A school may make any retroactive payments in one lump sum
to decrease the administrative workload.

[[Notification of payment]]
The school must notify the student of the amount he or she
will be paid and the method of payment (by credit to account
or directly by check or EFT). If the school will be paying the
student by check, it must tell the student when the check will
be available and where to go to pick it up. (It is helpful to
include the cashier’s office hours in any notification.)

If the student does not pick up the check on time, the school
must still make that payment available to the student for 15
days after the student’s last day of enrollment for that award
year. (Instead of holding the check for that period, the school
may cancel the first check and issue a new check when the
student requests payment.)

[[The example on the bottom of page 4-76 is currently
unavailable for viewing. Please reference your paper document
for additional information.]]

If the student has not picked up the check at the end of the
15-day period, the school may credit the student’s account
ONLY for outstanding charges for TUITION AND FEES and
ROOM AND BOARD for the award year. If the student
contacts the school to request the check more than 15 days
after the student’s last day of enrollment, the school may pay
the student (if it chooses) through the next payment period,
even though the student is no longer enrolled. The school may
mail the check to the student, rather than waiting for him or her
to return and pick it up.

[[Payments to students who have completed a program]]
If there is a delay in a school receiving its Pell funds, some
students could complete their program or academic year
before receiving their final Pell awards. If this happens, as
soon as the school receives its funds, it must pay any student
who has a valid SAR or ISIR. Even though these students
would receive their payments late, no regulations would be
violated because the students had previously met all the
requirements for payment.

[[Payments to students who have lost eligibility]]
Ordinarily, a student who has lost his or her Pell eligibility
cannot be paid. However, in some cases, the school may have
received the student’s valid SAR or ISIR while the student
was eligible for payment, but the student lost eligibility before
his or her account was credited or he or she received a cash
disbursement. In such a case, the school may pay the student
only the amount of Pell funds that could have been used for
educational purposes before the student became ineligible. A
late Pell disbursement can be made in two ways: credited
to the student’s account to cover institutional charges or paid
directly to the student (in cash or by check or EFT) for
non-institutional costs, such as living expenses.

[[The graphic on page 4-77 is currently unavailable for viewing.
Please reference your paper document for additional information.]]

For example, a student submits a valid SAR during the second
week of classes and is eligible for payment at that time. But by
the time the check is processed for the student’s cash
disbursement and the student has been notified to pick up the
check, the student has withdrawn from school.

The aid administrator must determine what institutional costs
for the enrollment period still exist (that is, what costs have not
been paid by the student or other sources of aid). A late Pell
disbursement not to exceed remaining costs can be credited
to school charges, provided the disbursement does not exceed
the amount of the Pell for which the student was originally
eligible.

To make a late Pell disbursement directly to the student, the
aid administrator must determine those non-institutional
expenses that could reasonably have been incurred up to the
date the student lost eligibility and that were not covered by
cash disbursements of other aid. A late Pell disbursement not
to exceed the amount of those expenses can be paid to the
student, provided it does not exceed the amount of Pell for
which the student was originally eligible.

DISBURSEMENTS FOR STUDENTS WHO WITHDRAW
AND LATER RETURN

A student who withdraws but returns to the program in the
same award year may be paid the amount of any refund that
was returned to the Pell account. For example, a student is
given a Pell disbursement of $875 for the first of two payment
periods, then withdraws in that payment period. The school
calculates a refund and returns $400 to the student’s Pell
account. If the student returns in the same award year, the
student may be paid the $400 when he or she re-enrolls in
the program. When the student completes the payment period,
he or she would be eligible for the Pell disbursement for the
next payment period.

If a student withdraws from a clock-hour program but returns
to it in the same award year, or in the subsequent award year,
the student will be held accountable for the remaining clock
hours in the payment period before the next disbursement of
the Pell can be made. However, in the case of a student who
returns two years after withdrawing, the school may pay the
student without waiting until the student has completed the
hours from the previous period of enrollment.

[["Incompletes" at term schools]]
A student enrolled for the fall semester withdraws before the
semester is over, receiving all "W’s" before the school
receives his or her SAR or ISIR. When the student re-enrolls
for the spring semester, the "W’s" are changed to
"incompletes". When the student submits a valid SAR or
ISIR, he or she can be paid retroactively for the fall semester.
The understanding is that the student would have the
opportunity to complete the fall courses.

[[Retaking hours and courses]]
In general, students at term-based credit-hour schools may
receive Pell funds for retaking coursework. The situation is
more complicated at clock-hour schools. The following
example will clarify the eligibility of students for Pell
disbursements when they are retaking clock hours for which
they have already been paid.

[[ The example on page 4-79 is currently unavailable for viewing.
Please reference your paper document for additional information.]]

If the student receives his or her Scheduled Award for a
clock-hour program, completes the entire program, and later
decides to retake the program, the student could again be paid
for the entire program.

[[Clock-hour vs. credit-hour school]]
The difference in the treatment of a student at a clock-hour
school versus a credit-hour school is that at a credit-hour
school, a student may be paid to repeat a course and does not
necessarily have to have completed the program before he or
she can be paid for that course. Generally, at a clock-hour
school, the student can be paid again for clock hours that he
or she has already completed at that school only if he or she
has completed a program and reenrolls to take that program
again or another program.

*10* Pell funds may not be used to repay a student’s loan.
Loan payments are not considered an education expense.