Maintained for Historical Purposes

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

Until Verification is Complete

AwardYear: 1996-1997
ChapterNumber: 3
ChapterTitle: Completing the Verification Process
Section: Until Verification is Complete
PageNumber:


Withholding Payment

[[School may withhold aid until verification is complete]]
If a student's application is selected for verification, he or she must
complete the verification process or forfeit federal student aid
eligibility. You have the authority to withhold disbursement of any
federal student aid funds until the student completes the required
verification. Such a policy ensures that a student's application
information and eligibility determination are absolutely correct
before any funds are disbursed. Adopting this policy substantially
reduces the incidence of overpayments.


Making Interim Disbursements

Making an interim disbursement before verification is completed is
allowable, AS LONG AS YOU HAVE NO REASON TO BELIEVE
THE APPLICATION INFORMATION MAY BE INACCURATE.
The limitations as they apply to each program are listed below. Be
forewarned--you will be liable for an interim disburement if
verification reveals the student has received an overpayment, or if
the student fails to complete verification.

[[The chart "Making Interm Disbursements" on page 33 is currently
unavailable for viewing. Please reference your paper
document for additional information.]]

THE FEDERAL PELL GRANT, FEDERAL PERKINS LOAN,
AND FSEOG PROGRAMS. For the applicant's first payment
period, you may make one disbursement from each of these
programs for which the applicant is eligible. If the applicant were
eligible for aid from all three programs, for example, you could
make three disbursements (one from each program), as long as they
all fall within the applicant's first payment period. Note that if you
make an interim Pell disbursement, you must designate the "W"
verification code (Without Documentation) when reporting the
payment to ED. (See the "Verification Status Codes" section in this
chapter.)

[[FWS overpayments]]
[[34 CFR 675.14]]
THE FEDERAL WORK-STUDY (FWS) PROGRAM. Before
completing verification, you may employ an applicant under FWS
for up to 60 CONSECUTIVE days after the applicant enrolled (or in
summer employment for up to 60 days), provided you have no
conflicting documentation on the applicant. After 60 days, if
verification has not been completed, you must cease employing the
student under FWS. If you later discover that an overpayment exists,
you should attempt to adjust the student's other aid. Otherwise, you
must reimburse the FWS program from school funds. EXCEPT IN
THE CASE OF PROVEN STUDENT FRAUD, YOU MAY NOT
REQUIRE A STUDENT TO REPAY FWS WAGES EARNED.
(See Chapter Five, "Overpayments, Referrals, and Suspected
Fraud.")

THE FEDERAL STAFFORD LOAN AND FEDERAL DIRECT
STAFFORD/FORD LOAN (DIRECT SUBSIDIZED LOAN)
PROGRAMS. If you have no conflicting documentation on the
student in question, you may originate a Direct Subsidized Loan or
certify a Federal Stafford Loan application for a student who has not
yet completed the required verification process. YOU MAY NOT,
HOWEVER, DISBURSE A DIRECT SUBSIDIZED LOAN OR
DELIVER FEDERAL STAFFORD LOAN PROCEEDS TO THE
BORROWER.

[[May not hold Federal Stafford Loan proceeds for more than 45
days]]
You may not hold any Federal Stafford Loan proceeds received from
a lender for more than 45 days. If the applicant does not complete
the required verification process within 45 days, you MUST return
those loan proceeds to the lender. To handle excess Direct
Subsidized Loan funds, schools must follow the procedures in the
cash management regulations (668.166) and in Chapter 7 of the
Direct Loan School Guide.

[[Loan overawards]]
If you originate a Direct Subsidized Loan or certify a Federal
Stafford Loan application before verification is completed, you may
later discover that the loan amount exceeds the student's need. For
Stafford Loans, you may request the lender to reduce or cancel the
loan, and you also have the option of reducing or canceling aid over
which the school has control. Direct Loan schools must notify the
Direct Loan Servicing Center that the loan amount exceeds the
student's need.

Last Modified: 06/09/1998