Maintained for Historical Purposes

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

Referral of Overpayment Cases

AwardYear: 1998 - 1999
ChapterNumber: 4
ChapterTitle: Overpayments, Overawards, Referrals, and Suspected Fraud
Section: Referral of Overpayment Cases
PageNumber: 1

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 you are unable to collect a Federal Pell overpayment (not the result of institutional error), you may refer the overpayment to ED if the amount owed is at least $25. You may also refer an FSEOG overpayment to ED as long as the federal share of that overpayment is at least $25. If you choose not to refer such Federal Pell or FSEOG overpayment cases to ED, you are liable for the overpayments and must repay the appropriate program funds from school funds. If the federal share of an FSEOG overpayment is less than $25, and you have been unsuccessful in collecting from the student, no further action on your part is required.

Note that if a student claims that a school’s FSEOG overpayment determination is erroneous, the school must consider any information the student provides and determine whether the objection is warranted before referring the case to ED.

To refer a 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 shown on the Overpayment Referral Format Form.16

Remember that even if the amount owed is less than $25, it is still an overpayment, and the student will continue to be ineligible for federal student aid funds at any school until the amount is repaid or until satisfactory repayment arrangements are made. 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 procedures.

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 or financial aid history information at the request of the student or another institution. You should notify such institutions that the student owes an overpayment.

Once you’ve received confirmation from ED that the referred account has been accepted, 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 accepted by 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. Please put the student’s name and Social Security Number (SSN) on the check. If you send a check to cover more than one student, please list each student’s name, each SSN, and each payment amount.

If the student whose overpayment case has been accepted by ED wishes to establish a repayment schedule, the student should contact ED’s Debt Collection Service at 1-800-621-3115.

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 (letters and telephone contacts) to try and establish a repayment schedule or to secure payment in full. Also, the student’s record will become part of the databases matched against incoming student aid applications. Any future CPS transactions for the student will be flagged during processing; a comment will appear on the output document, explaining the overpayment and instructing the school and the student how to resolve the matter.

Last Modified: 02/03/1999