| AwardYear: 1997-1998 EnterChapterNo: 4 EnterChapterTitle: Federal Pell Grant Program SectionNumber: 4 SectionTitle: Disbursing Federal Pell Grant Awards PageNumbers: 57-64 [[All eligible students must be paid for all eligible enrollment]] This section explains how payments can be made and when the payments can be made. A school must pay ANY student who is eligible (including payment for less-than-half-time students), and must make payments for ALL eligible periods of enrollment (including remaining eligibility for students in summer school terms). On November 29, 1996, the Department published revisions to the regulations regarding cash management, which provide uniform rules for disbursing and managing funds for all programs (see Chapter 3, Section 3 for more information). SCHOOL CERTIFICATION AND STUDENT ELIGIBILITY [[School certification]] The school is required to certify, when submitting Payment Data through the Recipient Data Exchange (RDE), the Electronic Data Exchange (EDE), or the Floppy Disk Data Exchange, that the information about the student is accurate and complete. The procedures used are slightly different for the three systems. Under RDE, the aid administrator 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, the school will be asked to acknowledge the certification as part of the batch generation process. 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]] The school must review the student's eligibility at the time it is 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. The school must make sure the student still meets the eligibility requirements for the Pell (as discussed in Section 1 of this chapter), and that the appropriate documentation is retained. METHODS OF DISBURSEMENT [[Credit to account or direct payment]] There are several ways a school may pay a Pell to a student: crediting the student's account for any outstanding education expenses, paying the student directly by check or EFT, or dispensing cash to the student for which it gets a signed receipt. The school must have authorization from the student to pay him or her by EFT (see Chapter 3 for more 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 pay the remaining 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 gives written authorization. The school cannot require the student to authorize payment of such charges. As with any SFA funds, payments may be made only for education expenses.*1* If a credit 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 for the school to hold the funds. (See Chapter 3, Section 3 for more on authorizations and credit balances.) [[Early payment option]] [[NEW]] 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 disburse a Pell is 10 days before the first day of classes in the payment period. 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. Effective July 1, 1997, this rule also applies to credit-hour programs offered in nonstandard terms: the school cannot disburse before the student completes the previous payment period. If the school disburses the Pell 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, the school may have to recalculate the award--see Section 5.) [[The graphic on page 4-58 is currently unavailable for viewing. Please reference your paper document for additional information.]] FIRST PAYMENT OPTIONS [[Verification]] [[34 CFR 668.58]] In general, schools are not allowed to make a disbursement of a Pell award without a valid output document. However, the school may make an interim disbursement to a student who is selected for verification (including a student selected for verification by the school rather than the CPS). See The Verification Guide for more information. [[Must have valid output document]] If a student is not selected for verification, the school may not make a disbursement to the student until it has a valid output document. If the student needs to make corrections to his or her data, or the financial aid administrator wishes to use professional judgment to adjust the student's data, the student must submit the SAR for reprocessing (using Part 2) or the school must make the changes through EDExpress and receive the new output document before making a disbursement. TIMING OF PAYMENTS [[34 CFR 690.76(a)]] 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 the school rations payments to students by crediting the entire payment for the payment period to the student's account and making periodic payments to the student from these funds, it must have the student's written authorization.) 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. [[The graphic on page 4-59 is currently unavailable for viewing. Please reference your paper document for additional information.]] [[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 receives a valid output document 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 must be paid retroactively for the fall term. However, the fall payment would be based on the hours COMPLETED by the student for that term. If the student had enrolled full time 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 the student's account or directly to the student). 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.) [[Releasing a check--34 CFR 690.78(c)]] If the student does not pick up the check on time, the school must still make the check available to the student for 20 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.) A student attends the fall term at a community college. The college credits the student's account for tuition and fees early in the term and sends a letter to the student to notify her of the payment. However, at the end of the term, the student still has not picked up the check. The school MUST release the check to the student if she claims it within 20 days after the end of the fall term. If the student has withdrawn from school but resumes enrollment later in the award year, the school must again make the payment for fall living expenses available to her. If the student has not picked up the check at the end of the 20-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 20 days after the student's last day of enrollment, the school may pay the student through the next payment period (if it chooses) 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 payments. If this happens, as soon as the school receives its funds, it must pay any student who has a valid output document. Even though these students would receive their payments late, no regulations would be violated given that the students had previously met all the requirements for payment. [[Payments to students who have lost eligibility--34 CFR 668.164(g)]] [[NEW]] Ordinarily, a student who has lost his or her Pell eligibility before receiving a disbursement cannot be paid. However, in some cases a school can pay a student if it received the student's valid output document 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 payment. The regulations published on 11/29/96 provide a unified treatment of such disbursements; these disbursements are called late disbursements. As previously for Pell, the school must have received the student's valid output document before the student became ineligible, and may only pay the student if the funds are used to pay educational costs incurred while the student was enrolled and eligible. The regulations now specify that in order for the school to make a late disbursement the student must be ineligible solely because he or she is no longer enrolled. In addition, the school must make the disbursement within 90 days after the student becomes ineligible. A late Pell disbursement can be made by crediting it to the student's account to cover institutional charges or by paying it directly to the student (in cash or by check or EFT) for noninstitutional costs, such as living expenses. 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 and she has been notified to pick up the check, she has withdrawn from school. [[The graphic on page 4-61 is currently unavailable for viewing. Please reference your paper document for additional information.]] The school can pay this student if it makes the disbursement within 90 days of the student's withdrawal. The aid administrator must determine what unpaid educational costs for the enrollment period still exist (that is, what costs have not been paid by the student or other sources of aid). (See Chapter 3, Section 3 for more information on late disbursements.) STUDENTS WHO WITHDRAW AND LATER RETURN [[Returning student may receive refunded amount]] 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 but 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 must 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. [[Incompletes at term schools]] Suppose a student enrolled for the fall semester withdraws before the semester is over, receiving all "Ws" before the school receives his or her output document. When the student re-enrolls for the spring semester, the "Ws" are changed to "incompletes." When the student submits a valid output document, 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 or nonterm credit-hour schools. If a student withdraws from a clock-hour program or nonterm credit-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 or credit 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. The following example will clarify the eligibility of students for Pell disbursements when they are retaking hours for which they have already been paid. Dean enrolled in a 1,284-clock-hour program at Sarven Technical Institute in September. The school defined the academic year as 900 clock hours. Dean was paid for the first payment period (1-450) and second payment period (451-900). He withdrew due to illness after completing 768 hours (first payment period plus 318 hours of second payment period). [[The graphic on page 4-63 is currently unavailable for viewing. Please reference your paper document for additional information.]] When Dean recovered, he had to wait until the next enrollment group in September of the following year. He completed the entire course, including the repetition of the first 768 clock hours. He was making satisfactory progress and was otherwise eligible. When Dean withdrew, Sarven made a Pell refund for those clock hours that he had not completed. However, because Dean returned in the following award year he could not receive the amount that had been refunded as a Pell payment. And, as he did not complete the entire clock hour program, he could be paid only for those clock hours for which he was not already paid (that is, clock hours 901-1284). Note that if Dean had re-enrolled in the same award year, he could have received the amount that the school returned to the Pell account. [[The graphic on page 4-63 is currently unavailable for viewing. Please reference your paper document for additional information.]] Suppose instead that the school did not make a Pell refund when Dean withdrew. Dean still may begin to receive Pell funds only after he has completed the 900th clock hour (clock hours 901-1284). Even if he picked up the program at the 769th clock hour, the situation would be the same. In this case, even if Dean had re-enrolled in the same award year, he would not receive Pell funds until completing the 900th clock hour (because there was no refund). Assume that instead of returning in the next award year, Dean returned two years later. He could then be paid for the entire program because, as noted previously, a student who returns two years after withdrawing is not held accountable for remaining clock hours. 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. The difference in the treatment of a student at a clock-hour or nonterm credit-hour school versus a term-based credit-hour school is that at a term-based credit-hour school, a student may be paid to repeat a course and does not necessarily have to complete the program before he or she can be paid for that course. Generally, at a clock-hour or nonterm credit-hour school, the student can be paid again for clock hours or credit hours that he or she has already completed at that school only if he or she has completed a program and re-enrolls to take that program again or to take another program. *1* Pell funds may not be used to repay a student's loan. Loan payments are not considered an education expense. |