AwardYear: 1995-1996 EnterChapterNo: 4 EnterChapterTitle: Federal Pell Grant Program SectionNumber: 6 SectionTitle: Overpayments and Overawards PageNumbers: 85-89 [[Types of overpayments]] An overpayment of a Pell occurs any time the student receives a payment that is greater than the amount for which the student is eligible. Examples of the four most common types of overpayments are given below. 1. Student error, such as failing to report the spouse's income on the application. 2. School error, for instance, when a student's award is taken incorrectly from the Payment Schedule, or when the school pays a student who is not making satisfactory progress. 3. Required recalculations, when a student never begins attending class or does not begin attending all of his or her classes, or withdraws from school after receiving a cash disbursement for living expenses. (See "Refunds and Repayments" in Chapter Three of this handbook for repayment calculation.) 4. Optional payments, for instance, when the school makes an interim disbursement to a student selected for verification, but the student never completes verification. No matter what the reason for the overpayment, it must be repaid by the student, or the school must otherwise resolve the overpayment. In addition, if the overpayment is the result of a school error or an optional payment, the school must repay the Pell account whether or not it succeeds in collecting the overpayment from the student. [["Hold file"]] A student who owes an overpayment on a Pell that has been reported to the Department and who subsequently submits a FAFSA will be informed that the application cannot be processed because of the overpayment, and that the student is not eligible for additional federal aid until he or she repays in full the amount owed. An EFC will not be calculated for such a student. The student's application is considered to be in a "hold file." OVERPAYMENTS If a school has made an overpayment to a student, it may continue to make payments to that student under certain circumstances: The overpayment is due to the schoolÂ’s error--The school may continue to make Pell payments to the student if the student acknowledges the overpayment in writing and agrees to repay it within six months, or if the overpayment can be eliminated within that award year by reducing the student's subsequent Pell payments during the award year. Of course, the student must still meet all other eligibility criteria in order to receive payment. The overpayment is not the schoolÂ’s fault-For instance, the student may have made a mistake on the application.*11* Or, the school may have had no information in its records indicating a student had ever attended another school and made an award that resulted in an overpayment. In cases such as these, the school may continue to make Pell payments to the student if the school can reduce the student's subsequent Pell payments to eliminate the overpayment in that award year. IF THE OVERPAYMENT CANNOT BE ELIMINATED IN THIS WAY, THE SCHOOL MAY NOT MAKE FURTHER PELL PAYMENTS TO THE STUDENT UNTIL HE OR SHE COMPLETELY REPAYS THE SCHOOL. If the student will not agree to repay, the school is not liable to the U.S. Department of Education, but must make a reasonable effort to contact the student and collect the overpayment. NOTE: A school may not reduce a student's Pell award from the current award year to eliminate a Pell overaward from a previous award year. For example, if a student received an overaward in 1994-95, a school may not reduce any portion of the student's 1995-96 Pell award to eliminate the overaward. Financial Aid Transcripts If a student transfers from School A to School B and receives an overpayment at School B because School A completed the student's financial aid transcript improperly, School A may be subject to a fine or other adverse action. School B will not be liable for the overpayment but is responsible for attempting to collect it. If School A requests a financial aid transcript from School B but has not received it, School A may make a Pell disbursement to the student for only one payment period. School A would not be liable for an overpayment unless it made payments for more than one payment period. [[School has closed]] If School B cannot obtain a financial aid transcript from School A because that school has closed, School B may request assistance from the U.S. Department of Education by writing to- Federal Student Aid Information Center Financial Aid Transcript Request P.O. Box 4129 Iowa City, Iowa 52244 See Chapter Three, Section Four of this handbook for more information. Overpayments Collected [[Overpayments from a prior award year]] If a student repays a Pell overpayment for a prior award year, you must deposit the funds in your institutional federal funds or Pell account and report the decrease in the student's award to the Federal Pell Grant Program (see Section Seven of this chapter). The funds can then be used for current year disbursements. At the same time you report the decrease to the Federal Pell Grant Program, you must also report the decrease to your total Pell expenditures for the prior award year on the Federal Cash Transaction Report (ED/PMS 272A)-see the instructions in Chapter 6 of the Recipient's Guide to the Payment Management System. [[Reporting an award decrease after September 30]] If you need to report a decrease in a student's Pell award to the Federal Pell Grant Program after the September 30 student award data submission deadline, you may use the "Decrease Award Report," provided in "Dear Colleague" Letter P-94-6, dated November 1994. You may also use your own stationery, if you choose. You report downward adjustments to a student's Federal Pell award under the following conditions: - An award on the Student Payment Summary is greater than the award disbursed, and the student's true award amount must be reported. - The student received an overpayment because of an institutional error or optional payment, and you must report the student's true award amount. (You must report the true award amount regardless of whether the student has repaid any part of the overpayment.) - The student received an overpayment because of a student error or change in attendance or costs, the student has repaid all or part of the overpayment, and you must reduce the award amount on file by the amount of the overpayment that has been repaid. You should use a separate report for each award year that you need to report an award reduction; always include your school's total Pell expenditure figure. The business office must also report its corrected total Pell expenditure figure on its ED/PMS 272A. Problems in Collecting Overpayments [[Referrals to the Department]] The school must notify the Department's Debt Collection Service if it has serious difficulty in collecting an overpayment from a student: for example, if the school cannot contact the student or the student is uncooperative, or if the school establishes a repayment plan and the student refuses to pay or discontinues payments. If the school is unable to recover or eliminate an overpayment that is not the school's fault, the school must refer the student's case to the Debt Collection Service for collection. (The referral procedures for overpayments are discussed in the Verification Guide.) [[Effect on eligibility for other SFA programs]] After the Department has received the school's information, collected the overpayment from the student (if possible), and resolved the case, it will notify the school by letter of the results. Please note that until the Department has reached a final resolution of the referred case, THE SCHOOL MAY NOT MAKE ANY FURTHER PAYMENTS TO THAT STUDENT UNDER ANY SFA PROGRAM. (Note that you must report the overpayment on the student's financial aid transcript.) Similarly, if the student owes a repayment on other SFA grants or is in default on SFA loans, that student would also be ineligible for a Pell. The general eligibility rules for students in default or overpayment status are discussed in Chapter Two, Section One. PREVENTING OVERAWARDS [[NSSP/Douglas scholarships cannot be reduced]] The Pell is generally regarded as the first source of assistance to the student and thus is usually never adjusted to take into account other aid, even if the student's combined aid package exceeds the student's need. However, any funds awarded the student under the National Science Scholarship Program (NSSP) and the Paul Douglas Teacher Scholarship Program (Douglas scholarship) may not be reduced because the student receives other forms of federal student aid-including a Pell. This statutory provision is discussed in Chapter Nine of this handbook. [[Adjusting campus-based aid]] Note that a Pell may not be adjusted when combined with any aid other than an NSSP scholarship or Douglas scholarship. The aid administrator is responsible for preventing an overaward by adjusting the aid the school controls. For example, if the student is receiving campus-based aid in addition to a Pell, the campus-based aid must be adjusted to prevent an overaward. The sum of the student's EFC, Pell, campus-based aid, and any other aid and resources may not exceed the student's COA. [[ The example on page 4-89 is currently unavailable for viewing. Please reference your paper document for additional information.]] As mentioned in Section Four, if the student's aid package includes a loan and the package must be adjusted to prevent an overaward, the Pell may not be used to pay back the loan-a loan repayment does not constitute an educational expense. [[Estimated financial assistance]] In addition to adjusting any campus-based aid, schools are required to include an estimate of the student's Pell eligibility as part of the student's "estimated financial assistance" when certifying a subsidized Federal Stafford Loan application. (See Chapter Ten of this handbook for further information.) [[NCAA rules for student athletes]] The National Collegiate Athletic Association (NCAA) has rules limiting the amount of aid student athletes may receive. However, the law does not permit schools to adjust students' Pells except in the two circumstances described previously. STUDENT ATHLETES MUST RECEIVE THE FULL AMOUNT OF ANY PELL FOR WHICH THEY ARE ELIGIBLE. If the student's potential aid plus the student's Pell exceeds the NCAA limits, the school must reduce any aid over which it has control, not the Pell. *11* Note that in cases where the overpayment is the result of an error on the SAR or ISIR, the overpayment is the difference between the amount the student was eligible for, based on correct information, and the amount the student was actually paid. |