Maintained for Historical Purposes

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

Referral of Overpayment Cases

AwardYear: 1995-1996
ChapterNumber: 5
ChapterTitle: Overpayments, Referrals, and Suspected Fraud
Section: Referral of Overpayment Cases

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, however, you are unable to collect Federal Pell or
FSEOG overpayments (not the result of institutional error), you may
refer the overpayment case to ED. (If you choose not to refer a
Federal Pell or FSEOG overpayment case to ED, you are liable for
the overpayment and must repay the appropriate program funds
from school funds.)

Before referring a case to ED, you should be certain that the case
warrants collection action. For instance, if a student claims that a
school's FSEOG overpayment determination is erroneous, the school
must consider any information provided by the student and
determine whether the objection is warranted BEFORE referring the
case to ED.

DO NOT refer cases involving overpayment of less than $25. Such
cases will be returned to the institution. The student will still owe
an overpayment and will continue to be ineligible for federal student
aid funds at any school. 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

To refer a Federal 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 p. 64.

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.

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 right. If the student wishes to establish a
repayment schedule, he or she should contact ED's Student
Receivables Division at (202) 708-4766.

U.S. Department of Education/OPE
Student Financial Assistance Programs
Student Receivables Division
600 Independence Avenue, S.W.
Room 5118, ROB-3
Washington, DC 20202-5320

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, consisting of letters and
telephone contacts in an attempt to establish a repayment schedule
or to secure payment in full. Also, the student's record will become
part of the databases that are matched against incoming FAFSAs.
Any future FAFSA filed by the student 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 as to resolving the matter.

Last Modified: 06/11/1998