| AwardYear: 1997-1998 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 DISBURSEMENT IF VERIFICATION REVEALS THE STUDENT HAS RECEIVED AN OVERPAYMENT, OR IF THE STUDENT FAILS TO COMPLETE VERIFICATION. [[The chart "Making Interim 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]] 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. [[Time Limits]] Generally, you may not hold any Federal Stafford Loan proceeds received from a lender (1) for more than 10 business days after receiving the funds via EFT and master check on or after July 1, 1997 but before July 1, 1999; (2) for more than 3 business days after receiving the funds via EFT and master check on or after July 1, 1999; and (3) for more than 30 days after receiving the funds if the lender provides those funds by a check payable to the borrower or copayable to the borrower and institution. To handle excess Direct Subsidized Loan funds, schools must follow the procedures in the cash management regulations and in Chapters 6 and 7 of the 1996-97 Direct Loan School Guide. However, for purposes of completing verification, Federal Stafford Loan proceeds received from a lender may be held up to 45 days. [[PLEASE NOTE: The preceding paragraph was modified on the SFA BBS on 2/6/97 to reflect a last minute change to the 1997-98 Verification Guide. The replacement pages 34 and 35 now indicate that for applications that have been selected for verification, the verification regulations allow that FFEL funds can be held a maximum of 45 days. This was only an omission from the original text and does not reflect a change in policy. Please note that for all other purposes other than verification, the cash management regulations specify that FFEL funds can be held for no longer than 30 days.The final, paper copy of the 1997-98 Verification Guide will reflect this change.]] [[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 adjust disbursements according to the procedures described in Chapter 6 of the 1996-97 Direct Loan School Guide. |