| AwardYear: 1995-1996 ChapterNumber: 5 ChapterTitle: Overpayments, Referrals, and Suspected Fraud Section: Overpayments PageNumber: The Federal Pell Grant, FSEOG, and Federal Perkins Loan Programs If you discover that an applicant received more than the amount for which he or she was eligible under the Federal Pell Grant, FSEOG,*15* or Federal Perkins Loan*15* programs, you should determine whether the overpayment was the result of a student error or a school error. Then, you should try to eliminate the overpayment by adjusting subsequent disbursements in the award year. If this is not possible and if the overpayment is a result of student error, you should seek to have the student repay the overpayment amount. FEDERAL PELL GRANT, FSEOG, AND FEDERAL PERKINS OVERPAYMENT BY SCHOOL ERROR. The school is liable for overpayments that result from school error, as in the following examples: - the school made an INTERIM DISBURSEMENT before verification was complete - the school had CONFLICTING DOCUMENTATION when the award was made - the school made an INCORRECT HAND CALCULATION of a student's eligibility for aid If the overpayment is the responsibility of the school, you may continue to make Federal Pell Grant, FSEOG, and Federal Perkins Loan payments to the student if he or she acknowledges the overpayment in writing and agrees to repay it within six months, or if the overpayment can be eliminated through subsequent disbursements as described above. If you cannot recover the overpayment through either of these methods, you must reimburse the appropriate program account from your own funds within 60 days following the applicant's last day of enrollment OR by the last day of the award year, whichever comes first. FEDERAL PELL, FSEOG, AND FEDERAL PERKINS OVERPAYMENT BY STUDENT ERROR. If the overpayment occurred as a result of student error, you may continue to make Federal Pell Grant, FSEOG, or Federal Perkins Loan payments to the student if you can eliminate the overpayment by adjusting subsequent disbursements as described on the previous page. If you are unable to eliminate the overpayment, you CANNOT make any further Federal Pell Grant, FSEOG, or Federal Perkins Loan payments to the student until he or she completely repays the overpayment to you. (If the student will not agree to repay, you are not liable, but you must make a reasonable effort to contact the student and collect the repayment.) The Federal Work Study (FWS) Program The law has been amended to allow a student employed under the FWS program to earn (from need-based employment) up to $300 in excess of his or her financial need before employment under the FWS program must be discontinued. Schools are no longer required to monitor income from non-need-based employment in determining an FWS overaward. However, because a $200 overaward limit is still in effect for the FSEOG and Federal Perkins Loan programs, a $300 FWS overaward limit is permitted ONLY when FWS is the only campus-based aid awarded. If FWS is awarded in conjunction with other campus-based aid, the $200 overaward limit is still in effect for all the campus-based aid awarded to the student. If the student's FWS earnings have already exceeded his or her eligibility by more than the applicable limit as explained above, and you cannot eliminate the overpayment by adjusting or canceling other federal aid (other than Pell) received by the student, you are required to reimburse the FWS program from the school's funds. (If the student also received FSEOG funds or other funds under institutional control, you may attempt to have the student repay the overpaid amount to those program funds.) YOU CANNOT REQUIRE A STUDENT TO REPAY WAGES EARNED, EXCEPT IN THE CASE OF PROVEN STUDENT FRAUD. The Federal Direct Loan and Federal Stafford Loan Programs If you discover that a student's Federal Direct Loan or Federal Stafford Loan application was certified for an amount in excess of the student's need, the steps you are required to take vary according to whether the entire loan amount has already been disbursed to the student. NO FUNDS DISBURSED. IF NO DISBURSEMENT HAS BEEN MADE, YOU CAN EITHER RETURN THE CHECK to the lender or escrow agent (within 45 days) and request that a new check be issued in the appropriate amount, or you can disburse the proper amount to the student and refund the excess to the lender or agent. FIRST DISBURSEMENT MADE, BUT ENTIRE LOAN PROCEEDS HAVE NOT BEEN RELEASED. If the first disbursement has already been made, you must instruct the lender or agent to reduce the second disbursement and thereby eliminate the overpayment. (You must withhold and promptly return any proceeds not yet delivered.) In rare cases, the amount of the first disbursement alone exceeds the student's reassessed need; in such a situation, you must seek repayment from the student. LOAN PROCEEDS DISBURSED IN FULL. If the entire loan has already been disbursed to the student, you must notify both the lender (or agent) and the student within 30 days of discovery. |