Posted Date: September 6, 2016

Author:  Sue O'Flaherty, Service Director, Program Management, Federal Student Aid

Subject: Reminder - Operational Guidance on COD Processing of Pell Grant Overpayments when Referring to Department of Education

Based on a review of Federal Pell Grant (Pell Grant) data in the Common Origination and Disbursement (COD) System, we have determined that some schools are incorrectly adjusting Pell Grant information due to a Pell Grant overpayment. Incorrect adjustments to Pell Grant information for overpayments may result in a student receiving more Pell Grant funds than he or she is eligible to receive and can result in an audit finding for a school.

In this announcement, we remind schools when to report Pell Grant overpayments to the National Student Loan Data System (NSLDS) and when to make adjustments to Pell Grant information in the COD System.

Generally, if a Pell Grant overpayment is the responsibility of the—

  • School A school is liable if the overpayment occurred because it failed to follow the procedures set forth by the Department of Education (Department). This includes overpayment amounts under $25.00. The school should not report the overpayment to NSLDS, but it should make the appropriate adjustments to the Pell Grant information previously reported to the COD System no later than 15 days after becoming aware of the need to adjust the Pell Grant, and return the funds through G5.

  • Student If a school was in compliance with all disbursement and reporting requirements, and an overpayment exists, a student would be liable for a Pell Grant overpayment made to him or her. The school should report the overpayment to NSLDS, and make the appropriate adjustments to the Pell Grant information previously reported to the COD System, and return the funds through G5. However, the amount of the adjustment to the Pell Grant information depends on what portion of the overpayment is collected by the school and what portion of the overpayment is being referred to the Department for collection. Note: In accordance with 34 CFR 690.79(a)(3), a student is not liable for, and the school is not required to attempt to recover or report to the Department, a Pell Grant overpayment if the amount of the overpayment that the student owes is less than $25.00 and is not a remaining balance.

In the attachment to this announcement, we provide a table summarizing Pell Grant overpayment reporting requirements to NSLDS, the COD System, and G5. Schools should review their processes for handling and reporting Pell Grant overpayments and update their procedures as necessary. In addition, schools should review the Pell Grant overpayment cases referred to the Department and verify that the adjustments were correctly reported to the COD System. If corrections are needed, schools must make them as soon as possible.

Note: Depending on the award year of the Pell Grant adjustment, a school may first need to request extended processing through the COD Web site. In addition, Pell Grant funding availability is canceled five years after the data submission deadline for the award year, so a school should make corrections prior to the final data submission deadline for the impacted award year (For example, the funding cancellation date for the 2010-2011 Award Year is September 30, 2016 [2011 + 5 = 2016]).


Additional guidance can be found in the following documentation:

  • 2016-2017 FSA Handbook Volume 4, Chapter 3 – Chapter 3 specifically covers overawards and overpayments, including many tips and reminders about handling different Pell Grant overpayment scenarios and when to make updates to the COD System based on those scenarios.

  • Federal Regulations – 34 CFR 690.79

  • Federal Register Deadline Date notice for the 2016-2017 award year – April 4, 2016, 81 FR 19157

Contact Information

If you have questions about this announcement or its attachment, contact the COD School Relations Center at 800/474-7268 for Grants. You may also e-mail


Pell Grant Overpayment – System Reporting Guidance in PDF Format, 116KB, 2 Pages


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