Maintained for Historical Purposes

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

Until Verification Is Complete

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.

Last Modified: 07/29/1998