Maintained for Historical Purposes

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

Referral of Overpayment Cases

AwardYear: 1996-1997
ChapterNumber: 5
ChapterTitle: Overpayments, Referrals, and Suspected Fraud
Section: Referral of Overpayment Cases

[[Referrals to ED must be at least $25]]
If, during the verification process, you discover overpayment
situations, you should make every reasonable effort to collect the
overpayment. (In the case of an FSEOG overpayment for which the
school is not liable, you must promptly attempt to recover the
overpayment by sending a written notice requesting payment in full
to the student.) If you are unable to collect a Federal Pell
overpayment (NOT the result of institutional error), you may refer
the overpayment to ED if the amount owed is at least $25. You may
also refer an FSEOG overpayment to ED as long as the FEDERAL
SHARE of that overpayment is at least $25. If you choose not to
refer such Federal Pell or FSEOG overpayment cases to ED, you are
liable for the overpayments and must repay the appropriate program
funds from school funds. If the federal share of an FSEOG
overpayment is less than $25, and you have been unsuccessful in
collecting from the student, no further action on your part is

Note that if a student claims that a school's FSEOG overpayment
determination is erroneous, the school must consider any information
the student provides and determine whether the objection is
warranted BEFORE referring the case to ED.

[[Overpayment referral format]]
To refer a Pell or FSEOG overpayment case to ED, you must provide
all information necessary for collection on the case. Each referral
must be TYPED and submitted on your INSTITUTIONAL
LETTERHEAD and should follow the format given on page 66.

Remember that even if the amount owed is less than $25, it is still an
overpayment, and the student will continue to be ineligible for
federal student aid funds at any school until the amount is repaid or
until satisfactory repayment arrangements are made. For as long as
you feel is reasonable, you should use all available means to recover
the overpayment from the student, in accordance with the school's
standard policies and procedures.

Institutional Responsibility

After referring an overpayment case, you cannot make further
federal student aid payments to the student until you've received
further notice from ED. In addition, you may be required to provide
any relevant documentation in your possession.

[[Cannot withhold financial aid transcripts]]
You may, at your option, withhold ACADEMIC transcripts from
students who owe an overpayment, but you must release
FINANCIAL AID transcripts at the request of the student or another
institution. You should notify such institutions that the student owes
an overpayment.

Once an account has been reported to ED, you have no responsibility
in the collection of the debt unless the student contacts you to make
repayment. If a student whose overpayment case has been referred
to ED notifies you that he or she wishes to make repayment, you
should accept payment on behalf of ED and forward the payment to
the address at the left. Please put the student's name and Social
Security Number (SSN) on the check. If you send a check to cover
more than one student, please list each student's name, each SSN,
and each payment amount.

U.S. Department of Education
National Payment Center
P.O. Box 4169
Greenville, Texas 75403-4169


If the student wishes to establish a repayment schedule, and you have
referred the case to ED, the student should contact ED's National
Payment Center at 1-800-621-3115.

Departmental Responsibility

Upon receipt of an overpayment referral, ED will determine if
sufficient information has been provided to initiate collection
activity; any referral lacking sufficient information will be returned
to the school. If the referral information is complete, you will
receive a letter confirming receipt and acceptance of the
overpayment referral.

ED will then initiate collection activity (letters and telephone
contacts) to try and establish a repayment schedule or to secure
payment in full. Also, the student's record will become part of the
databases matched against incoming FAFSAs. Any future FAFSA
the student files will be flagged during processing; a comment will
appear on the student's output document, explaining the overpayment
and instructing the school and the student how to resolve the matter.

Last Modified: 06/09/1998