Federal Student Aid - IFAP
   
REPORTING OF TITLE IV OVERPAYMENTS TO THE NSLDS
QUESTIONS AND ANSWERS
July 1998


BACKGROUND:

Q1 What is a Title IV overpayment?


A1 A Title IV overpayment is the amount of any Title IV student assistance funds received by a student that exceeds the amount the student is eligible to receive.

Q2 Must overpayments from all Title IV student assistance programs be reported to the NSLDS?

A2 No, only overpayments in the Federal Pell Grant (Pell), Federal Supplemental Educational Opportunity Grant (FSEOG), and Federal Perkins Loan (Perkins) programs need to be reported to the NSLDS. Because of the structure of the Federal Work-Study program, overpayments in it do not occur.

Also, in general once all disbursements of an FFEL or Direct Loan have been made, there is no possibility of an overpayment that schools would need to enter into the NSLDS. In some limited situations (i.e., the student never having begun attendance), a student may be required to repay the lender all or a portion of the loan proceeds received. When this circumstance exists the lender will report to the NSLDS; the school is not required to do so.

Q3 Must all overpayments in the three programs noted above (Pell, FSEOG, and Perkins) be reported to the NSLDS?

A3 No, only overpayments for which the student is responsible for repaying need to be reported to the NSLDS.

Q4 Are there circumstances when an overpayment exists and the student is not responsible for repayment?

A4 Sometimes an overpayment is created because the school made an error that results in a student receiving Title IV aid that exceeds the student’s eligibility. For example, a school might miscalculate the amount of a student's Federal Pell Grant award because it used the wrong EFC or a school inadvertently disbursed FSEOG funds to a graduate student.

In instances where the overpayment is the result of institutional error, the institution is responsible for eliminating the overpayment through either an adjustment to a subsequent disbursement for the student in the same award year or by returning to the Title IV account, using institutional funds, the amount of the overpayment. In any case, an overpayment that is the result of institutional error does not affect the student's eligibility for additional Title IV aid (except if such an error resulted in the student exceeding an annual or aggregate loan limit) and thus need not be reported to the NSLDS.


Q5 Does the response to the previous question mean that if the school repays the overpayment to the Title IV account the student is not liable for those funds?

A5 No, it means that any amount that may be owed by the student would be an institutional debt and not a Title IV debt. It would be up to the school to determine if it wished to attempt to collect such a debt from the student. As stated above, in such cases the debt is not a Title IV debt and should not be reported to NSLDS.

Q6 Does an overpayment that was not the result of school error and thus is the student's responsibility, mean that the student fraudulently obtained Title IV aid?

A6 No, in most instances there simply was a set of conditions that are defined by the regulations as producing an overpayment. An example could be when a student withdraws from school without completing the payment period and owes a repayment of a portion of the Title IV aid that was disbursed. Another common example is when additional resources (i.e., an outside scholarship) are made available to the student after the FSEOG or Perkins Loan has been fully disbursed.

Q7 May a school repay an overpayment for a student even though the school is not liable for that overpayment? If yes, what is the effect of the school’s repayment on the eligibility of the student to receive additional Title IV aid?

A7 Yes, a school may repay an overpayment that otherwise would be the responsibility of the student. If a school repays an overpayment for a student, that student does not owe a Title IV overpayment. Thus, the debt, although it may be owed by the student as an institutional obligation, does not affect Title IV eligibility and should not be reported to the NSLDS.

Q8 Are there program specific rules for determining if an overpayment exists?

A8 Yes, in addition to a common set of rules for all Title IV programs contained in the Student Assistance General Provisions regulations (§§668.21 and 668.22), each of the Title IV student assistance programs has rules for determining whether a student owes an overpayment on aid previously received from that program. Federal Pell Grant overpayments are described in the Pell Grant regulations at §690.79. And, §673.5 of the campus-based programs regulations provides information on when an overpayment exists under the Federal Perkins Loan Program and the Federal Supplemental Educational Opportunity Grant (FSEOG) Program.

As noted earlier there is no concept of an overaward in the Federal Work-Study Program and overpayments, if any, in the FFEL and Direct Loan programs are handled by the lender.

Q9 Who is responsible for repaying an overpayment?

A9 As stated above, if the overpayment was the result of the school’s error the school must attempt to eliminate the overpayment in the same award year, or if unable to do so, it is liable for the overpayment and must use its own funds to repay the Title IV program account. Other overpayments, whether intentional or not, are the responsibility of the student.

Q10 Why must overpayments be reported to the NSLDS?

A10 Section 484(a)(3) of the HEA, provides that an applicant who owes an overpayment of a Title IV aid is not eligible to receive additional Title IV assistance. By reporting overpayment information to the NSLDS, an institution informs the Department and other institutions and agencies that the student is not eligible for additional Title IV student assistance unless the overpayment is cleared. An overpayment may be satisfied by a full repayment of the amount owed or by the student having made arrangements, satisfactory to the holder of the overpayment debt, to repay. Once overpayment information is entered into the NSLDS it will appear on any subsequent Student Aid Reports (SARs) and Institutional Student Information Records (ISIRs) produced for the student. It will also be available through the Financial Aid Transcript (FAT) functions of the NSLDS.

Q11 How is overpayment information reported on SARs and ISIRs?

A11 Overpayment information is reported on SARs and ISIRs by the setting of one or more Overpayment Flags to a value of Y (or S when satisfactory arrangements to repay have been made). The presence of an Overpayment Flag set to Y will also produce a C code on the SAR and in the ISIR. In addition, when any Overpayment Flag is set to Y, a comment is printed on the applicant’s SAR and the corresponding comment code is included on the ISIR. All of these indicators inform a school that it must resolve the overpayment status before payment of Title IV aid may be made to the applicant. Overpayment information is also available to schools through the batch and on-line FAT processes of the NSLDS.

STUDENT ELIGIBILITY AND INSTITUTIONAL RESPONSIBILITY:

Q12 What are the school's obligations if, based upon information provided by NSLDS (ISIRs, SARs, FAT Processes), it becomes aware that an applicant for Title IV aid owes an overpayment on previously received aid?


A12 As noted above, the HEA provides that an applicant for Title IV aid is ineligible for additional aid if he or she owes an overpayment of a Title IV grant or loan. Thus, when a school becomes aware that a Title IV applicant owes an overpayment debt, it must not make any additional disbursements of Title IV aid until the overpayment is repaid or otherwise cleared. Any Title IV aid that is disbursed by a school after it was informed of the overpayment must be repaid by the school to the Title IV program account for Pell, Direct Loan, FSEOG, and Perkins Loan, or to the FFELP lender.

Additionally, a school must follow the guidance provided in Q&A # 13 and Q&A # 14 below regarding its responsibilities when it determines that a student who owed an overpayment continued to receive Title IV aid, in spite of the fact that the student became ineligible for that aid once he or she received the overpayment.

Q13 What is the obligation of a student with regard to disbursements of Title IV aid made while the student owed an overpayment?

A13 Generally, a student who owed an overpayment of Title IV aid was not eligible to receive additional Title IV aid until the overpayment was repaid or otherwise cleared. However, because of the special nature of many overpayment situations that arose in the past (e.g., lack of proper notification to the student, no sustained collection activity, no central reporting mechanism, and the relatively small amounts owed), we are providing partial relief to students who previously received Title IV aid while they owed an overpayment.

Q14 What is the nature and scope of the partial relief for students noted in the previous answer?

A14 A student will be considered to have been eligible for Title IV aid that was received while the student owed an overpayment debt if the student has made full repayment of the original overpayment. Once the student has fully repaid the overpayment amount, he or she will be considered to have been eligible for the Title IV aid received prior to the repayment. The making of satisfactory arrangements to repay does not satisfy the conditions set forth above for reestablishing eligibility for previously received aid; full repayment is required.

Q15 What is the responsibility of the student and the school if a student who received Title IV aid while owing an overpayment refuses to repay the overpayment?

A15 A student who owes but refuses to repay an overpayment is ineligible for all Title IV aid received while the overpayment was outstanding. The school must immediately follow the procedures discussed at Q&A # 15 in the July 1996 Dear Colleague Letter (GEN-96-13) when it discovers that an ineligible student received Title IV aid. These procedures include placing the student into an overpayment status for any grants and Perkins Loans received and reporting the ineligibility for any loans received by the student to the FFEL lender or Direct Loan servicer.

Q16 What is the responsibility of a school when it determines that one of its students owes an overpayment of a Title IV grant or loan?

A16 In general when a school determines that one of its students owes an overpayment of a Title IV grant or loan, it must:

1. Not disburse any additional Title IV aid until the overpayment is resolved. Any Title IV aid that is disbursed by a school after it is informed of an overpayment must be repaid by the school to the Title IV program account (for Pell, Direct Loans, Perkins Loans and FSEOG) or to the FFEL lender, as appropriate.

2. Determine if the student owed the overpayment while receiving additional Title IV aid at that school and, if so, require the student to fully repay the original overpayment before disbursing any additional Title IV aid.

3. If the student does not repay the original overpayment in full, include as an addtional overpayment any grant or Perkins Loan funds received while the student owed the original overpayment.


4. If the student does not repay the original overpayment in full, inform the FFEL lender or the Direct Loan servicer of any loan funds received while the student was ineligible due to the original overpayment.

Q17 What options do schools have for reporting overpayment information to the NSLDS?

A17 The only method by which schools can submit overpayment information to the NSLDS is through the on-line screens developed for this function. There are no paper or batch electronic options.

Q18 Must my school have on-line access to the NSLDS and to the overpayment screens?

A18 Yes, all schools must have on-line access to the NSLDS, including these new overpayment screens. On September 19, 1997, the Department published a notice in the Federal Register that included deadline dates for schools to use designated electronic processes to meet administrative capability requirements for the Title IV programs, as required by the regulations at 668.16(o). That notice required schools to have on-line access to the NSLDS by January 1, 1998. This requirement can be met by the school itself having access or by the use of a third-party servicer that performs the required reporting functions for the school.

Q19 What should we do if no one at our school has signed up through the Title IV Wide Area Network (TIV WAN) for update access to the NSLDS overpayment screens?

A19 The TIV WAN Customer Service staff can assist a school when it needs to ensure that one of its staff has update access to the NSLDS overpayment screens. TIV WAN Customer Support staff can be reached at (800) 615-1189.

Q20 What is the deadline by which schools must have entered into the NSLDS all previous overpayment information?

A20 Although it is expected that most schools will only need a few days to enter their existing overpayments into the NSLDS, October 31, 1998, has been established as the date by which all overpayment information that a school is aware of must be entered into the NSLDS.

Q21 Must schools continue to update the NSLDS with new or changed overpayment information? If so, what is the timeframe by which they must report new overpayments and changes.

A21 After initially populating the NSLDS with historical overpayment information, schools are required to enter new overpayments and changes to previously submitted overpayment information no later than 30 days after they become aware of an overpayment or of a change to a previously reported overpayment.

Q22 Which overpayments must a school enter into the NSLDS?

A22 Schools must enter all information they possess that indicates that a student has received, and has not resolved, an overpayment of Title IV student aid, regardless of the amount of that overpayment, including those overpayments where the student has made satisfactory arrangements to repay as allowed by §668.35(c)(2). However, schools should not report to the NSLDS overpayments that have previously been reported to the Department’s Debt Collection Service (DCS).

Q23 Does a school need to enter all past unresolved overpayments into NSLDS or just those from this time forward?

A23 Schools must enter any overpayments that have not been paid or otherwise resolved, except those already reported to DCS. Just as schools had been required to maintain records on all past overpayments for possible notation on paper financial aid transcripts, they must now enter those overpayments into the NSLDS.

Q24 How are overpayments that a school had previously reported to DCS entered into the NSLDS?

A24 Overpayments previously reported by schools to DCS have been entered into the NSLDS by an interface between DCS and NSLDS. Therefore, schools do not need to enter them into the NSLDS.

Q25 What about overpayments that may be submitted to DCS in the future?

A25 An overpayment should be entered into the NSLDS as soon as the school determines that the overpayment exists, regardless of whether it is expected that it will later be reported to DCS.

Q26 Does reporting an overpayment to the NSLDS relieve the school of the requirement to report it to DCS?

A26 No, the requirement that institutions report certain overpayments to DCS so that it can collect the debt is separate and distinct from the requirement to report overpayment information to the NSLDS. Schools are referred to Chapter 2, page 25 of the Federal Student Aid Handbook, to §§673.5(f)(5) and 690.79(b), and to Chapter 5 of the 1998-99 Verification Guide for additional information on the DCS overpayment reporting requirements. The Department plans to develop a process that will combine both the NSLDS and DCS reporting requirements.

Q27 How does a school use the NSLDS Overpayment Function Screens for entering Title IV overpayment information?

A27 Schools should refer to Chapter 7 of The NSLDS: The Paperless Link: Computer Assisted Training Guide for information on using the overpayment screens in the NSLDS. The Training Guide is available in a 'pdf' format on the Department’s "Information for Financial Aid Professionals" website (ifap.ed.gov) listed alphabetically under the "Bookshelf" icon. Schools may also obtain a paper copy of the guide by calling the NSLDS Customer Service Center at 1-800-999-8219, Monday through Friday between the hours of 7:00 AM and 7:00 PM (Central Time).

USING NSLDS OVERPAYMENT ON-LINE SCREENS:

NOTE: Readers are advised to review Chapter 7 of The NSLDS: The Paperless Link before continuing with the remainder of these Q&As, since they assume an understanding of the information provided in Chapter 7 on the use of the NSLDS Overpayment screens.

Q28 The Paperless Link directs schools to enter the student's identifiers on the "Student Identification" screen (RC0L). What exactly should be entered at this screen?


A28 While the screen allows the school to enter all three student identifier items (SSN, First name, and DOB) it is suggested that for older overpayment records, schools simply enter the SSN of the student. This will enable the system to query the NSLDS database to find any record that has the same SSN identifier.

Q29 What are the possible results of entering an SSN on the Student Identification screen (RC0L) and what are the school's responsibilities for each?

A29 If the SSN entered matches an SSN contained in the NSLDS database, the full name and date of birth of that matched record will be displayed. If the school, as a result of a review of that information, determines that the existing NSLDS record is for the student whose overpayment is being reported, the school can continue onto the Overpayment Update screen (RC0B) using Action Code OU as discussed in Chapter 7.

If, after entering an SSN, the Student Identification screen displays an existing NSLDS record that is not the desired student, the school should not enter any overpayment information. The school should, to the best of its ability, confirm the SSN of its student by referring to other documentation it may have. If the school determines that the SSN of its student is correct, it is encouraged, but not required, to contact the data provider of the existing NSLDS record and suggest to that data provider that it investigate and correct the SSN of its student/borrower. Schools are encouraged to periodically (every 30 days) attempt to enter the overpayment data for their student again.

If, after entering an SSN, the Student Identification screen displays a message saying Student Not Found, the school should confirm that it entered the SSN correctly, and if so, continue to the Add Student screen (RC0M) by using Action Code AS.

Q30 When required to add a student, the RC0M screen requires the student's date of birth. What should schools do when the date of birth is not available?

A30 In some instances a school may not have the date of birth (DOB) of a former student who owes an overpayment. In those instances, and if the school cannot locate a date of birth, the DOB field should be filled with a consistent plug date of '01-01-1900'. This will allow the record to be built into the NSLDS database. Special features of the NSLDS will update this plug date with the correct DOB if, at a later time, a data provider submits a record for the same SSN and name with a valid date of birth.

The use of a plug DOB is limited to cases of older overpayment records. Schools will always have a valid DOB for new overpayments, since they occur within, or shortly after, the end of an award year when the ISIR record for the student is still available.

Q31 When the Aid Overpayment Update (RC0B) screen is first displayed, some data items are already completed. How does that happen?

A31 The Aid Overpayment Update (RC0B) screen will be pre-filled with information about the school that is adding (or updating) a record. The screen gets this information from internal NSLDS files created with data about the user that logged onto the system. The screen will also be pre-filled with the student identifiers from either the Student Identification or Student Addition screen.

Q32 The Aid Overpayment Update (RC0B) screen asks for the Disbursement Date for the overpayment. What should be entered if the exact date of the disbursement that led to the overpayment is not known?

A32 The Disbursement Date is used as part of the unique key (along with the SSN, school code, and overpayment type) for each overpayment submitted to the NSLDS. Schools may use the approximate beginning date of the payment period for which the aid that is now in overpayment was disbursed. It is very important that the unique key used by the school, including the disbursement date, be the same one that is used on the letters and forms used by the school to report the obligation assign to DCS.

Q33 Why are there overpayment codes only for Pell, Perkins, and FSEOG? What about FWS and the other Federal loan programs?

A33 These three aid types are the only ones that have overpayments that must be reported to the NSLDS. Since FWS is an employment program and all persons must be paid for work performed, there are no overpayments in FWS. And, instances of overawards in the Direct Loan and FFEL programs are reported by the school to the lender, who then requests repayment from the borrower. If the borrower does not repay the lender, the loan is put into default and is reported to the NSLDS by the lender.

Q34 Can a school enter more than one overpayment for a single student?

A34 Yes. There are at least two ways this could happen. First, the student might owe an overpayment for more than one type of aid (Pell, Perkins, or FSEOG). Second, the student may owe an overpayment from more than one payment period.

Q35 How will the system keep track of multiple overpayments from a single school or from more than one school?

A35 The unique identifiers for each overpayment record include, in addition to the student's SSN, the school code, aid type, and disbursement date. Thus, it is important that schools enter this information correctly and use it exactly as entered when updating overpayment records and when completing forms that report an overpayment to DCS.

Q36 What are the possible values for the Overpayment Indicator on the RC0B screen?

A36 The values for the Overpayment Indicator field are:

Y for Yes. This is the value that a school should use when first entering an active overpayment into the system. It means that the student owes the overpayment, has not made satisfactory arrangements to repay, and should be considered ineligible for additional Title IV aid until the overpayment is repaid or otherwise resolved.

S for Satisfactory arrangements. This value means that, while the student still owes the overpayment, he or she has made arrangement satisfactory to the school to repay the overpayment. A status of S reported to other schools on a SAR or ISIR (or in the FAT process of NSLDS) will provide documentation that the student may continue to receive Title IV aid. In the event that the student fails to meet the commitment made with the school for the satisfactory arrangements to repay, that school should immediately reset the Overpayment Indicator field to Y.

R for Repayment. This value means that a previously reported overpayment that was in either Y or S status has been fully repaid by the student. Schools should update the NSLDS when the final payment has been made. The date that the final payment of the overpayment was made should be entered at that time. A value of R will not produce the overpayment flags and messages on SARs and ISIRs discussed earlier.

Q37 What is the purpose of the Inactive Flag field on the RC0B screen?

A37 Occasionally a school may determine that a previously reported overpayment is an error. This could occur if the school made an error when originally entering the information into NSLDS or if the original determination that an overpayment existed turned out to be an error or it was resolved without requiring repayment by the student. Instead of deleting such previously reported records, schools must make them inactive by setting the Inactive Flag to Y.

An overpayment record with an Inactive Flag set to Y will not generate flags and comments on SARs and ISIRs. If the school subsequently determines that the overpayment should be made active, it simply resets the flag to blank, which will make the overpayment active.

Q38 What is the Source field on the RC0B screen?

A38 This field will be pre-filled by the system with SCH (school) whenever a school is attempting to add a new, or update an existing, overpayment record. The only other value that a school may insert into this field is TRF, used when a previously reported overpayment has been transferred to DCS. See next Q&A.

Q39 What are the exact conditions under which a school would update the Source field from SCH to TRF?

A39 When a school has transferred an overpayment to DCS it should update the previously reported overpayment information in NSLDS by changing the Source field from SCH to TRF. This change will not invalidate the overpayment but it will inform any user of the system that the debt is in the process of being transferred from the school to DCS.

When DCS finalizes its acceptance of the overpayment it will update the NSLDS, using the same identifier keys (SSN, Overpayment Type, and Disbursement Date). The use of these same identifiers will cause the system to automatically change the school submitted Source value to EDR. A Source value of EDR means that the debt is now held by one of ED's DCS Regional Offices.

ADDITIONAL INFORMATION:

Q40 Where can I get additional information or special assistance regarding the use of the NSLDS Overpayment screens or on my school’s responsibilities for monitoring Title IV applicants who are reported to owe an overpayment?


A40 If, after reviewing these Q&As and the reference materials noted above, you have questions on accessing the NSLDS on-line, using the Overpayment screens, or need to obtain a copy of the NSLDS: The Paperless Link: Computer Assisted Training Guide, you can contact the NSLDS Customer Service Center at 1-800-999-8219, Monday through Friday between the hours of 7:00 AM and 7:00 PM (Central Time).

The Department’s SFA Customer Support Branch is available to answer questions related to the policy requirements and rules for the reporting of overpayment data to the NSLDS. Staff members are available Monday through Friday between the hours of 9:00 AM and 5:00 PM (Eastern Time) at 1-800-433-7327. You may also E-mail or FAX your question to our Customer Support Branch. The email address is csb@ed.gov and the FAX phone number is (202) 260-4199. Please be sure to include your name and phone number so that one of our staff can get back to you with the response to your question.

The Title IV Wide Area Network (TIV WAN) Customer Support staff can answer questions related to on-line access to the overpayment screens of the NSLDS. They can be reached at (800) 615-1189 Monday through Friday between the hours of 7:00 AM and 10:00 PM (Central Time).