Overawards and Overpayments | 2020-2021 Federal Student Aid Handbook (2024)

In this chapter we will discuss a student’s and a school’s responsibility for resolving overawards and overpayments. This chapter does not cover returning funds when a student withdraws; see Volume 5 for that discussion. See Volume 3 for avoiding overawards during packaging.

OverAwards

An overaward exists when a student’s aid package exceeds his or herneed or overall cost of attendance (COA). Remember when packagingsubsidized or need-based aid, the basic formula is COA minus ExpectedFamily Contribution (EFC) minus Estimated Financial Aid (EFA) equalsneed. When packaging unsubsidized or non-need based aid the formulais simply COA minus EFA (unsubsidized aid can replace all or part of theEFC).

While your school must always take care not to overaward a studentwhen packaging his or her aid, circ*mstances may change after you havepackaged the student’s aid that result in an overaward. For instance, thestudent may receive a scholarship or grant from an outside organization.When an overaward situation arises, you may be required to adjust theTitle IV aid in the student’s package in order to eliminate the overaward.

Overawards only become overpayments if a school cannot correct theoveraward before funds are disbursed to a student. That is, an overpaymentexists when some or all of the funds that make up an overawardhave been disbursed to the student. An overaward exists whenever a:

• school awards aid either to a student who is ineligible for aspecific program or to a student who is ineligible for any FSAprogram assistance;

• student’s award in an individual program exceeds the regulatorymaximum, e.g., lifetime limit for Pell, annual or aggregateloan limits, annual limit on Federal Supplementary EducationalOpportunity Grant (FSEOG) awards, or a Pell award based onthe wrong payment schedule/enrollment status;

• student’s aid package exceeds his or her need, including whenthe student’s expected family contribution (EFC) is revised upwardafter initial packaging;

• student’s award exceeds cost of attendance (COA); and

• student is receiving a Pell or Iraq and Afghanistan ServiceGrant at multiple schools for the same period.

In general, unless the school is liable, the student is liable for anyoverpayment made to the student that is greater than $25. Also, when astudent’s aid package includes assistance from multiple programs thathave different overpayment regulations/requirements, a school must applythe most restrictive requirements.

Also, remember before reducing a student’s need-based aid or establishingan overpayment, the school should reevaluate the student’s COAto determine whether the student has increased costs that the school didnot anticipate when he or she was originally awarded aid. If the student’scosts have increased and his or her total aid package does not exceed therevised COA, the school is not required to take further action. If the student’said package still exceeds the revised COA, the school must resolvethe overaward or overpayment.

The school should first reduce the student’s level of borrowing, beginningwith any unsubsidized loans. Once the student’s loans have beenreduced or if the student has no loans, it may be necessary for the schoolto reduce other Title IV aid or other aid it has control over.

Pell Grants

A Pell Grant is determined by using the Pell Payment Scheduleappropriate for the student’s enrollment status, as well as the correct EFCand COA. A correctly determined Pell Grant is never adjusted to take into account other forms of aid. Therefore, if a student’s aid package exceedshis or her need, you must attempt to eliminate the overaward byreducing other Title IV aid or other aid your school controls.

However, a Pell Grant awarded to an ineligible student or based onan incorrect enrollment status greater than that for which the student isenrolled is an overaward.

Iraq and Afghanistan Service Grants

The following are considered Iraq and Afghanistan Service Grantoverawards and must be corrected:

• an award made to an ineligible student,

• an award based on a Pell Grant payment schedule for anenrollment status that is greater than the status for which the studentis enrolled, and

• an award that by itself exceeds the student’s COA.

Iraq and Afghanistan Service Grants, like Pell Grants, are not adjusted to take into account other forms of aid. But unlike Pell Grants,they are not considered estimated financial assistance (HEA 420R(e) specifically excludes them from EFA). If a student’s aid package includesan Iraq and Afghanistan Service Grant that was awarded correctly and byitself does not exceed the COA, an overaward will occur only if the otheraid in the package exceeds the student’s financial need or COA. In suchcases you must reduce the other aid to eliminate the overaward.

If an Iraq and Afghanistan Service Grant recipient becomes eligibleduring the award year for a Pell Grant instead of the IASG (adjusted EFCbecomes Pell eligible), then the school must treat the Pell Grant as estimatedfinancial assistance and adjust the student’s aid package, includingthe other aid, as necessary. Schools must have a process to identify thoseIraq and Afghanistan Service Grant recipients who become Pell Granteligibleduring the year.

Teacher Education Assistance for College and Higher Education Grants

TEACH Grants are not considered to be need-based aid. If a student is not receiving any need-based financial assistance, the EFC is not usedto determine whether a student is in an overaward status. However, astudent’s TEACH Grant in combination with his or her other non-needbasedestimated financial assistance (EFA) may not exceed the COA. Ifthe combined aid does exceed the COA, the student is in an overawardsituation that must be resolved.

For a student who is receiving need-based federal student aid, a student’sEFC, plus his or her TEACH Grant and other EFA may not exceedthe COA.

As with Direct Unsubsidized Loans, PLUS loans, and nonfederaleducation loans, TEACH Grants can be used to replace the EFC. Forinstance, if a student’s EFC, plus his or her TEACH Grant and other EFAexceed the COA, the school may choose to replace some or all of theEFC with TEACH Grant funds. If the TEACH Grant amount exceedsthe EFC, the amount in excess of the EFC is considered EFA when determiningthe student’s eligibility for aid under the other FSA Programs. Ifthe school replaces the EFC with TEACH Grant funds, but the EFC plusany TEACH Grant amount in excess of the EFC, plus any other EFA stillexceed the student’s COA, the student is in an overaward status that theschool must resolve.

If a school chooses not to use the TEACH Grant to replace the EFC,then all of the TEACH Grant is considered EFA that must be consideredwhen determining the student’s eligibility for aid under need-based federalstudent aid programs. The Department strongly encourages schoolsto replace student EFCs with TEACH Grants where appropriate.

Campus-Based Programs

If a school learns that a student received financial assistance that was not included when calculating his or her eligibility for Campus-Based aid and that resulted in the student’s total aid exceeding his or her financial need by more than $300, the school must resolve the overpayment.

The $300 tolerance includes situations where a student with need ends up with an overaward of up to $300 above COA as well. For example, a student with a 0 EFC and a $10,000 COA originally receives $9,800 in EFA which includes Pell Grant, FSEOG and private scholarship funds (the student did not receive any loan funds). Later in the payment period, the student reports to the school that he or she just received a $500 merit scholarship from his or her parent’s employer. Though the $500 exceeds the student’s COA, it only exceeds the student’s need by $300. $200 of the merit scholarship is used to fully meet the student’s need and package the student up to the full COA of $10,000 ($9,800 + $200 = $10,000). The remaining $300 of the merit scholarship, though over the COA, is within the $300 tolerance over the student’s need ($10,000 + $300 = $10,300).

Before reducing the student’s Campus-Based aid, the school should determine if the student has increased need that was not anticipated when he or she was initially awarded aid. If the student’s need has increased and the total financial assistance does not exceed the revised need by more than $300, the school is not required to take further action. If the student’s need has not increased or it has increased but the total financial assistance still exceeds his or her need by more than $300, the amount over the $300 threshold is an overpayment that the school must eliminate.

The $300 overaward tolerance/threshold for the Campus-Based Programs is allowed only if an overaward occurs AFTER Campus-Based aid has been packaged. The threshold does not allow a school to deliberately award Campus-Based aid that, in combination with other aid, exceeds the student’s financial need.

Federal Work-Study Program

Because students can’t be required to repay wages earned, you canonly adjust FWS by reducing the hours students can work in the futurethus reducing future earnings. You can continue to employ the students,but they can’t be paid from FWS funds. If you’ve already adjusted allother federal aid and institutional aid, and there’s still an overaward, you must reimburse the FWS program from your school’s funds.

FSEOG Overpayments

For purposes of FSEOG overpayments, when a school awards FSEOG using the individual recipient or aggregate matching share methods, the FSEOG overpayment amount includes only the federal share. When a school uses the fund-specific method of matching, there is no distinction between federal and other funds. As a result, 100% of the funds disbursed are considered part of the overpayment.

Direct Loans

If you discover that a student has been overawarded and your schoolhas already received and disbursed some or all of the Direct Loan funds,you have a number of options:

• If the package includes an Unsubsidized Direct Loan, a DirectPLUS Loan, or a nonfederal education loan, and the aidpackage doesn’t already apply these loans toward the EFC, andthe school so chooses, the aid package can be adjusted so thatall or some part of these loans replaces the EFC, thusreducing or eliminating the overaward.

• If you have not yet made the second or subsequent disbursem*ntof a Direct Loan, the second or subsequent disbursem*ntcan be reduced or cancelled.

• If you determine that the loan was made to an ineligiblestudent, the school must return any amount it retained, and forany loan funds disbursed directly to a student, the school mustnotify the appropriate loan servicer of any outstanding loanfunds so that the Department can issue a 30-daydemand letter to the student.

Example: Hector’s cost of attendance is $12,000 and EFC is 4,000. Heis supposed to receive a subsidized Direct Loan of $5,000 and an unsubsidizedDirect Loan of $3,000, which completely meet his need. Before hereceives his first loan disbursem*nt, Guerrero University also gives hima $2,000 scholarship. Because part of the loan amount is unsubsidized,Guerrero simply considers that $2,000 of the unsubsidized loan that appliedto Hector’s financial need is now being used to replace part of hisEFC.

If the overaward situation occurs after Direct Loan funds have been fully disbursed, you do not need to adjust it. However, you might have toadjust the aid package to prevent an overaward of Campus-Based fundsor the aid package exceeding the student’s need.

Although a school isn’t required to return Direct Loan or nonfederaleducation loan funds that were disbursed to the borrower (eitherdirectly or by applying them to the student account) before the overawardsituation occurred, the law doesn’t prevent your school from returningfunds that were applied to the student account if you choose to do so. Aborrower who receives a direct payment of loan funds is not required torepay an overawarded amount, unless the overaward was caused by his orher misreporting or withholding information.

Replacing Subsidized and Unsubsidized loans

If a school discovers that a student received Direct Subsidized Loan funds in excess of need, the school must correct the error by replacing theexcess subsidized amount with an equal amount of Direct UnsubsidizedLoan funds if:

• the student is still enrolled for the loan period, and

• the school obtains the student’s agreement to accept the replacementunsubsidized loan amount.

If the student declines to accept the unsubsidized loan, the schoolmust return the excess subsidized loan funds. If the error isn’t discovereduntil after the loan period is over, no action is required to eliminate thesubsidized overaward.

If a school discovers that a student received Direct Unsubsidized Loan funds in error (unsubsidized loan funds that should have been subsidizedloan funds), the school must fix the error, even if the loan period has ended. Switching from unsubsidized to subsidized loan funds doesn’trequire the student’s approval. In this situation, the school can originatea replacement subsidized loan even if the loan period has ended. Thereplacement subsidized loan should have the same loan period and disbursem*ntdates as the unsubsidized loan that it replaces. Disbursem*ntsof a replacement Direct Subsidized Loan in this circ*mstance are notconsidered to be late disbursem*nts.

For information about resolving inadvertent overborrowing in excessof annual or aggregate loan limits, please see Dear Colleague Letter GEN-13-02. This letter provides clarification to institutions on how studentswho have inadvertently received loan funds under the Direct Loan orFFEL programs in excess of annual or aggregate loan limits may regainTitle IV eligibility. It also explains the procedures that institutions mustfollow when a student who has received a Direct Loan disbursem*nt failsto begin attendance.

A resolved overaward may become an overpayment

If a school has resolved an overaward by reducing scheduled futuredisbursem*nts for a second or subsequent payment period and the studentceases attendance before the end of the current payment period, thatportion of the student’s award that was an overaward must now be repaidas an overpayment outside of any amount that may have to be returnedunder an R2T4 calculation as required under 34 CFR 668.22. Regardlessof whether the student or school owes back the overpayment, the overpaymentamount is NEVER included as aid disbursed or could have beendisbursed in the R2T4 calculation (because the student never establishedeligibility for those funds).

If the school is responsible for repaying the overpayment, the schoolmust repay the overpayment AND any amount it is required to returnunder the R2T4 requirements.

If the student is responsible for repaying the overpayment, and thestudent withdrew before the 60% point in the payment period or periodof attendance, as applicable, the school should not take any action until ithas completed the required return calculation.

As mentioned earlier, when performing the R2T4 calculation, theschool will not include the amount of the overpayment for which thestudent is responsible as aid that was or could have been disbursed (seeVolume 5). Then, when the school has completed the return calculation,it should document the amount of the overpayment and, as applicable,reduce any post-withdrawal disbursem*nt or increase any amount thestudent must return by the amount of the overpayment owed by the student.

If a student is responsible for repaying the overpayment and thestudent withdrew after the 60% point in the payment period or period ofattendance, as applicable, the school should try to collect the overpaymentfrom the student, and if it is unable to do so, should refer the student tothe Department’s Default Resolution Group.

When A Student Fails To Begin Attendance

A school may not ignore information available to any office at the school indicating that a student failed to begin attendance. A student is considered not to have begun attendance if a school is unable to document his or her attendance in any class.

If your school disburses Pell Grant, Iraq and Afghanistan Service Grant, TEACH Grant, or FSEOG funds to a student who never begins attending classes, you must return the disbursed Title IV funds to the appropriateFSA programs even if the funds were disbursed directly to the student.¹ For credit-hour term based programs, if the student began attending some but not all of his or her classes, you will have to recalculatethe student’s Pell or Iraq and Afghanistan Service Grant award based on the student’s actual enrollment status (see Volume 3).

If a school disburses Direct Loan funds but the student does notbegin attendance in any courses during the payment period, the schoolmust return all Direct Loan funds that were credited to the student’s accountat the school for the payment period or period of enrollment. Inaddition, a school must return the amount of any payments made directlyby or on behalf of the student to the school for the payment period or period of enrollment, up to the total amount of the loan funds disbursed.

¹ A school may satisfy this requirement either by redepositing the funds in its federal fundsaccount and disbursing them within three days to another eligible student in the sameprogram and award year or by returning them to the appropriate FSA program using therefund function in G5.

In addition, a school must return any Direct Loan funds that itdisbursed directly to a student if the school knew prior to disbursing the funds directly to the student that he or she would not begin attendance (forexample, if the student notified the school that he or she would not be attendingor if the school expelled the student prior to directly disbursingthe funds).

For any remaining loan funds disbursed directly to a student—andif the school does not choose to repay those funds on the student’s behalf—the school must notify the appropriate loan servicer (as identified inNSLDS) of the loan funds that are outstanding so the Department can issuea 30-day demand letter to the student. To identify the current servicerof an FSA loan, use the National Student Loan Data System (NSLDS) andselect “Aid.” Identify the student and select “Loan History”; the currentloan will be listed at the top. Use the “Servicer” field to identify the organizationto which you will be returning funds. Click on the servicer nameto access the NSLDS Organizational Contact List page. Additional contactinformation for the loan servicers is available on the Information for FinancialAid Professionals (IFAP) website under the Help menu (ContactInformation > Service Centers for Schools > Loan Servicing Centers forSchools).

Schools must return funds disbursed to a student who failed to beginattendance as soon as possible but no later than 30 days after the datethey become aware that the student has not begun and will not begin attendance.

Among schools that have a census date to establish that a studentcommenced attendance in a course(s), some take attendance and somedo not. At a school that is not required to take attendance but that 1) hasa census date that requires ensuring that students have begun attendance,and 2) uses that census date to report its enrollment levels to a state, localjurisdiction, or outside agency, it is reasonable to expect the school toreturn funds for students who fail to begin attendance as soon as possible,but no later than 30 days after the census date. (Note that a student beginsearning FSA funds on his or her first day of attendance. Therefore, ifhe or she withdraws after starting classes but before the census date, theschool must perform a return calculation; see Volume 5).

If a student who received a Direct Loan disbursem*nt either fails tobegin attendance or drops to a less than half-time status, the school mustreport the change in the student’s enrollment status to the Departmentaccording to the NSLDS enrollment reporting process and time frames.Upon receiving the revised enrollment status from NSLDS, the student’sfederal loan servicer will change the student’s loan status as follows:

• In-school status will change to grace period status.

• In-school deferment status will change to repayment status.

Disbursing Direct Loan funds when a student begins attendance on a less than half-time basis

Neither the school nor the student is required to return any loan proceedsdisbursed to a student or parent for a payment period as long as:

• the student commenced attendance in at least one course duringthe payment period; and

• at the time of the loan disbursem*nt the student was enrolled(registered) for classes on at least a half-time basis.

However, the school must not make any subsequent disbursem*ntsof the loan unless the student resumes enrollment on at least a half-timebasis.

When a SAR/ISIR contains a disqualifying comment code

If a student’s SAR/ISIR contains a comment code that requiresresolution (e.g., 132–Default), the underlying issue must be resolved beforeany funds may be disbursed to the student. In addition, if a schooldisburses Title IV funds to a student with a SAR comment code thatrequires resolution and the student withdraws before the school has resolvedthe underlying issue, any funds disbursed must be returned to EDsince the funds were provided to an otherwise ineligible student.

When funds are considered to have been returned for a student who fails to begin attendance

The Department considers a school to have returned FSA funds timelyif the school does the following:

1. deposits or transfers the funds into its federal funds account nolater than 30 days after the date that the school becomes awarethat a student will not or has not begun attendance; or

2. initiates an electronic funds transfer (EFT) no later than 30days after the date that the school becomes aware that a studentwill not or has not begun attendance.

Treatment of Overpayments

Overpayments for which the school is responsible

Your school is liable for any amount of a Pell Grant, Iraq andAfghanistan Service Grant, TEACH Grant or FSEOG overpayment (includingamounts under $25) that occurred because your school failed tofollow the requirements in 34 CFR parts 668, 673, 676, 686, or 690, as applicable.If your school makes an FSEOG overpayment in any amount forwhich it is liable, you must immediately restore (to your FSEOG account)an amount equal to the overpayment plus any administrative cost allowanceclaimed on the overpayment. When returning Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant overpayments, you mustmake a downward adjustment to the student’s award in COD, and eitherreturn the funds through G5 or disburse them to another eligible student.For a description of overpayments for which students are responsible, seethe discussion later in this chapter.

A school may attempt to collect from a student funds the school wasrequired to return. However, an overpayment for which a school is responsible can never result in a student losing Title IV eligibility and mustnever be reported to NSLDS or referred to the Department for collection.As a result, an overpayment for which a school is responsible can neverbecome a student’s FSA debt.

Examples of overpayments due to school error:

• Allen received a Pell grant at Sarven Technical Institute, whichhad the correct EFC on Allen’s ISIR but looked at the wrong chartand used a different EFC in the Pell calculation, causing Allen toreceive too much money. Because Sarven erred, it is liable for theoverpayment.

• Owen received an outside scholarship to attend GuerreroUniversity. The bursar’s office was notified of the scholarshipso that it could apply the payments properly but didn’t notifythe financial aid office, which awarded Owen a TEACH Grantwithout taking the scholarship into account. When the aid officefinds out about the scholarship, it discovers that Owen has a $600TEACH overpayment. Because the school had information aboutthe scholarship—even though the financial aid office didn’t—theoverpayment is due to school error.

Interim disbursem*nts - school responsibility

If an overpayment is the result of an interim disbursem*nt of Pell orFSEOG funds (see the Application and Verification Guide) to the extentthat the overpayment is not recovered by reducing subsequent disbursem*ntsto the student for the award year, the school must eliminate theoverpayment by reimbursing the appropriate account by:

• asking the student to return the overpayment (though it can askthe student for payment, the school is ultimately responsible forreturning the interim disbursem*nts), or

• making restitution from its own funds.

Reimbursem*nt must be made by the earlier of:

• 60 days after the applicant’s last day of attendance, or

• the last day of the award year.

If an overpayment is the result of an interim disbursem*nt of FWSProgram funds, the school must eliminate the FWS overpayment byadjusting the applicant’s other financial aid or reimbursing the FWSProgram account from its own funds. If the school cannot correct theoverpayment by adjusting the student’s other financial assistance, thestudent must still be paid for all work performed.

Because interim disbursem*nts were made at the school’s discretion, the school is ultimately responsible for repaying it. Therefore,in this situation, a student does not owe a Title IV overpayment, andmust not be reported to NSLDS or referred to the Department forcollection.

Pell Grant overpayments - COD, NSLDS, and G5

The Department found some schools misreporting Pell overpayments,so we issued an electronic announcement to clarify the actionsschools should take when there is a Pell overpayment. How Pell Grantoverpayments should be reported depends on whether the school orstudent is responsible for the overpayment and on how much (if any) ofthe overpayment the school has collected or is collecting. Please see theSeptember 6, 2016 electronic announcement and linked table that summarizesthe reporting requirements for NSLDS, COD, and G5 for moreinformation.

Prohibition on receiving funds for enrollment at more than one school and Potential Overawards (POP)

Students may not receive more than 100% (or 150% if qualifying under“Year-round” Pell) of their scheduled award for a Pell Grant duringan award year. Moreover, they may not receive a Pell Grant for concurrentattendance at two or more schools.

If a student has identified himself or herself as a mid-year transferstudent, or if a school has any information that indicates the studentmight have previously attended another postsecondary school during theaward year, the school must request transfer monitoring of the studentin NSLDS (transfer student monitoring process). A school’s coordinatingofficial (see Volume 2) is responsible for ensuring that a school does notignore information the school has about a student’s prior or concurrentenrollment.

If a student has not self-identified as a transfer student, data on thestudent’s SAR/ISIR can sometimes alert a school to the fact that a studenthas already received a Pell Grant during the current award year. Schoolsshould examine the Pell payment data on the SAR/ISIR generated fromthe student’s most recent transaction to see if the percentage of the scheduledaward used for the award year (% Sch Used) is greater than 0, andexamine the “As Of” date (MM/DD/CCYY) to see if the information iscurrent. If the SAR/ISIR is the most recent and the percentage of thescheduled award used for the award year is greater than zero, the school should request transfer monitoring of that student and wait until it hasreceived the results of that process through NSLDS before creating a Pellaward for that student in the COD System.

In their award of Pell Grant funds to a student, schools are requiredto ensure that they do not originate awards that would result in a studentreceiving more than 100% or 150% (if qualifying under “Year-round”Pell) of the student’s scheduled award for the year.

Concurrent Enrollment

When multiple schools report disbursem*nts for a student and theenrollment dates reported are within 30 calendar days of each other, theCOD System identifies a potential concurrent enrollment and sends awarning message to all schools involved.

The COD System sends the school that submitted the second or subsequentdisbursem*nt information a response document that containswarning edit 69. Warning edit 69 informs schools that submit second orsubsequent disbursem*nt information that Pell disbursem*nts for a studenthave been received from two or more schools, and the enrollmentdates for the student are within 30 days of one another. The COD Systemalso sends a multiple reporting record (MRR) to all the schools with accepteddisbursem*nt information in the COD system for the student andthe award year. The MRR alerts the schools to a possible overlap in enrollment.

The Department expects all schools involved to cooperate in resolvingthe concurrent enrollment issue. To help facilitate resolution, the MRRcontains the Pell contact information, as reported by the schools to theCOD System, for the schools involved.

Pell Potential Overaward Process

A student may receive disbursem*nts from more than one schoolduring an award year. When more than one school reports disbursem*ntsfor a student, the COD System checks to make sure the student hasnot received more than 100% (or 150% if qualifying under “Year-round”Pell) of his or her eligibility for a Pell Grant.

If the COD System receives disbursem*nt information that will causea student to receive more than 100% (or 150% if qualifying under “Yearround”Pell) of his or her “total eligibility used” or TEU, the student hasentered a potential overaward (POP) situation. Remember, to certifyeligibility for the “Year-round” Pell provision, the Additional EligibilityIndicator (AEI) must be submitted in order for disbursem*nts exceeding100% of the Scheduled Award to be accepted in the COD System.

COD will accept the disbursem*nt and notify the schools involved inthe POP in the following three ways:

1. COD sends the school that submitted the disbursem*nt thatcaused the student to exceed the 100% (or 150% for “Year-round”Pell) TEU for the year warning edit 68 in the response document.

2. Weekly, COD sends all schools that have accepted andposted disbursem*nts for students in a POP status a Pell POPreport that will identify the student and schools involved.

3. COD sends all schools that have accepted and posteddisbursem*nts for the student in the award year an MRRcontaining the Pell contact information for the schools involved.

Warning edit 68 informs the school that submitted the disbursem*ntthat caused the student to exceed the 100% (or 150% if qualifying under“Year-round Pell) TEU for the year that:

1. Pell disbursem*nts for a student have been received from two ormore schools.

2. The student’s TEU is greater than 100.000% or 150.000% asapplicable.

3. The POP situation must be resolved within 30 calendar days.

During the 30-day period, the Department expects each schoolinvolved in the potential overaward to review the student’s award anddisbursem*nts and perform the proper eligibility calculations. If theschools (working with COD School Relations) do not resolve the POPsituation during the 30-day period, the COD System will reduce allschools’ authorization for the student to zero, and the issue will have to beaddressed with the involvement of the Department.

Schools, along with the student, must work together to resolve the POP before contacting COD School Relations for help.

Schools should document any phone calls, emails, and letters thatwere part of their attempts to resolve the POP with the student and theother schools involved, and be prepared to provide that documentationto COD School Relations if requested.

During the 30-day period, the COD System will accept and post disbursem*ntsthat decrease or increase the student’s year-to-date disbursem*ntamount. Students will be removed from POP status within 30 daysof the date the student was initially placed in the POP if the student’sTEU becomes 100% (or 150% for “Year-round” Pell) or below based ondownward disbursem*nt adjustments submitted by the schools.

If after 30 calendar days the situation has not been resolved, the CODSystem generates a negative disbursem*nt that reduces all accepted andposted disbursem*nts to $0 for the student in the award year in questionat all schools involved.

A school that has attempted to resolve an overaward situation withthe other schools that have submitted disbursem*nt records for thestudent and has been unable to arrive at a satisfactory solution shouldcall the COD School Relations Center to request escalated mediation.

A school that calls the COD School Relations Center to requestescalated mediation should be prepared to provide the name and socialsecurity number of the student involved.

The COD School Relations Center will review the POP situation and,if necessary, refer the case to the Department for additional action.

Schools should remember that failure to:

• take action when they receive warning notices from the CODSystem;

• correct overaward situations;

• ensure that students do not receive Pell awards for concurrentenrollment at two or more schools; and

• prevent repeated POP situations from occurring;

may call into question a school’s administrative capability and fiscal responsibility, and might eventually result in the Department taking action to limit, suspend, or terminate a school’s participation in the Federal Student Aid programs.

Regarding COD processing and POPs:

• The COD System accepts Disbursem*nt Information from amaximum of three schools for a student in a POP situation.

• The COD System does not prevent the same schools from creatinganother POP situation for the same student.

• Schools do not need to request post-deadline processing (extendedprocessing) to submit upward adjustment records after the end ofthe processing year in order to correct a POP situation.

• The COD System accepts downward adjustments to disbursem*ntor award information at any time.

• Disbursem*nt information can be submitted via the COD websitefor those schools that do not wish, or are not able, to reopen anysoftware they may have used to process the affected award year.

Overpayments for which the student is responsible

In some instances a student, rather than the school, is responsible forrepaying the overpayment. A student who has an overpayment of an FSAloan or grant loses eligibility for FSA program aid but may re-establish eligibilityby repaying the excess amount or making arrangements satisfactorywith the school (optional) or Department to pay the excess amount.Remember that if the school chooses to set up satisfactory payment arrangementswith the student, the overpayment must be resolved withintwo years.

If a student received more Pell or Iraq and Afghanistan Service Grantfunds than he or she was eligible for because his or her eligibility for thegrant decreased, you can try to eliminate the overpayment by adjustinglater disbursem*nts for the award year. You may not reduce a student’s correctly awarded and disbursed Pell or Iraq and Afghanistan Service Grant to address overpayments in other programs.

For TEACH Grant and FSEOG overpayments, you can also adjustsubsequent disbursem*nts.

If that is not possible, you must promptly attempt to recover theoverpayment by notifying the student (by paper or electronically) and requestingfull payment. The notice must state that if he or she fails to repaythe overpayment or to make satisfactory repayment arrangements, thestudent will be ineligible for FSA funds until the overpayment is resolved.

If the student claims that your school made a mistake in determiningthe overpayment, you must consider any information the student providesand judge whether the objection is warranted.

If, after notification to the student and consideration of possibleobjections, an overpayment remains and the student has not repaid ormade satisfactory arrangements to repay the overpayment, you must takefurther action.

For TEACH Grant, FSEOG, Iraq and Afghanistan Service Grant, andPell Grant funds, you must refer the overpayment to the Departmentwith the required information (see Referring overpayments to Default Resolution Group later in this chapter), and you must report to NSLDSthe unresolved overpayment. After that, you are not required to make anyfurther attempt to collect Title IV grant overpayments.

A student is not liable for overpayments of less than $25 (the thresholdfor overpayments resulting from withdrawal and R2T4 requirements is $50).

Such overpayments do not affect the student’s FSA eligibility. Therefore,your school need not:

• attempt recovery of such overpayments,

• report such overpayments to NSLDS, or

• refer such overpayments to the Department for collection.

However, this does not include remaining balances of overpayments,i.e., when the overpayment amount was originally $25 or more but isnow less than $25 because the student has made payments. In addition, astudent is also liable for overpayments of less than $25 when that amountis the result of applying the $300 Campus-Based overaward threshold/tolerance.For example, if a school discovers that after a student’s Campus-Based aid was disbursed, the student received additional aid that resultedin the aid the student received exceeding his or her need by $314, the$314 is an overaward. When the school applies the $300 overaward tolerance,the student only has a Campus-Based overpayment of $14. The studentis responsible for repaying the $14 because the initial amount of theoverpayment before the $300 tolerance was applied was $314, which is inexcess of the less than $25 de minimis amount.

Your school may decide to pay a student’s obligation by returning tothe appropriate FSA program account the amount overpaid to the student.Once your school makes the appropriate return, the student will nolonger owe an FSA debt but rather a debt to your school that you can collectaccording to your procedures. The student’s eligibility for FSA fundsis restored as long as the student meets all other FSA eligibility criteria.

If a student (through the school) or a school (with its own funds)satisfies the student’s overpayment, the school must update the student’soverpayment information in NSLDS as discussed later in this chapter underReporting Overpayments to NSLDS.

Examples of overpayments due to student error

1. When Chavo filled out his FAFSA, he had not filed a tax returnbecause he didn’t think he had to. After he received his aidfrom Sarven Technical Institute in June, he told the aid officethat he had to file a return after all. When Chavo submitted thecorrections, his EFC increased, and Sarven determined that he’dreceived a Pell overpayment. Sarven canceled his second Pelldisbursem*nt, but he still owed $100. Sarven allowed Chavo toagree to repay $25 a month for four months so that he’d still beeligible for other aid for the rest of the year.

2. On his 2020–2021 FAFSA, Meurig didn’t report any assets for hisfather. However, Meurig’s application is selected for verificationand Brust determines that Meurig should have reported hisfather’s business assets for 2020-2021 and on the 2019–2020application. In both cases Meurig’s EFC increases and it isdetermined that Meurig received an overpayment for the 2019–2020 award year. Because he’s received all his aid for that year,he has to either pay the overpayment or negotiate a satisfactoryrepayment agreement.

Exceptions to student liability

There are some exceptions to holding a student liable for a Pell Grant,Iraq and Afghanistan Service Grant, TEACH Grant, or FSEOG overpayment.Generally, a student is liable for any such overpayment he or shereceives unless the school is liable for it. However, as noted previously, thestudent is not liable for the overpayment if it is less than $25 and is not aremaining balance or, in the case of an FSEOG, is the result of the applicationof the $300 overaward threshold.

Such overpayments do not affect the student’s FSA eligibility. Therefore,your school need not

• attempt recovery of such overpayments,

• report such overpayments to NSLDS, or

• refer such overpayments to the Department for collection.

Overpayments created by inadvertent overborrowing

Another kind of overpayment occurs when a student inadvertentlyhas received FSA loan funds in excess of annual or aggregate loan limitsand is no longer eligible for FSA funds. See DCL GEN-13-02.

A school must determine that a borrower’s receipt of loan funds inexcess of an annual or aggregate loan limit was inadvertent before theborrower may regain Title IV eligibility.

Examples of circ*mstances that may have resulted in a student inadvertentlyexceeding an annual or aggregate loan limit include, but are notlimited to: school processing errors, missing or incorrect National StudentLoan Data System (NSLDS) information, or unintentional studenterror or omission.

Borrowing in excess of annual or aggregate loan limits is not consideredto have been inadvertent if there is any evidence that the over-borrowingwas the result of deliberate action on the part of the school thatdetermined the borrower’s eligibility for the loan or on the part of theborrower who received the loan. If the school determines that the over-borrowingwas the result of deliberate action on the part of the school,another school or the borrower, it must notify its school participationdivision and provide the necessary evidence. If the school suspects fraudinvolving federal student aid, it must also call the inspector general hotlineat 1-800-MIS-USED (1-800-647-8733).

If a student has consolidated the loan(s) that exceeded the annual or aggregate loan limit, the student is considered to have made satisfactory arrangements to repay the debt since by signing the consolidation loan promissory note the student has agreed to repay any excess loan amount. This is true regardless of the type of loan consolidated—Federal Family Education Loan (FFEL) or Direct Loan— or the type of consolidation loan. No additional action on the student’s part is required.

A student who is not in default on an FSA loan but who has inadvertentlyreceived FSA loan funds that exceed the annual or aggregate loanlimits is ineligible for any further FSA funds until he or she (1) repays infull the excess loan amount or (2) makes arrangements, satisfactory to theholder of the loan, to repay that excess loan amount.

However, please keep in mind that when a borrower with an inadvertentoverpayment advances to a higher undergraduate grade level orbecomes a graduate student (thus gaining higher annual or aggregate loanlimits), the inadvertent overpayment is NOT simply resolved due to thenew higher loan limits. The inadvertent undergraduate overborrowingmust first be resolved before he or she can receive any Title IV aid at theundergraduate or graduate level.

Also, a student who received subsidized loan funds in excess of theapplicable subsidized annual or aggregate loan limit cannot regain TitleIV eligibility by having the excess subsidized loan amount changed to anunsubsidized loan. See the subsection on Direct Loans under Overawardsearlier in this chapter for the treatment on correcting an overaward of DirectSubsidized Loan funds in the current award year.

If a student who has inadvertently received loan funds in excess of anannual or aggregate loan limit wishes to receive additional Title IV aid,the school where the student wishes to receive the aid must identify theloan(s) that resulted in the overborrowing, discuss the overborrowingwith the student, and resolve any discrepancies in the information that isobtained.

If the loan that caused the inadvertent overborrowing is a Direct Loanor a FFEL Program loan held by the Department, the student must contactthe federal servicer of the loan to resolve the overborrowing. If theloan that caused the overborrowing is a FFEL Program loan held by anentity other than the Department (a “commercially held” FFEL Programloan), the student must contact that loan holder or the servicer of the loanto resolve the overborrowing.

Repayment of the excess loan amount

If a student who has inadvertently overborrowed wishes to regainTitle IV eligibility by repaying the excess loan amount, the student mustcontact the applicable servicer and comply with the servicer’s repaymentinstructions. The school may assist the student in identifying andcontacting the servicer, but the student, not the school, must make thepayment of the excess loan funds in accordance with the servicer’s instructions.Once the student has repaid the excess loan amount in full, theservicer will send the student confirmation that the excess loan amounthas been repaid. The student or servicer must provide a copy of the repaymentconfirmation to the school. The inadvertent overborrowing isconsidered to have been resolved as of the date the servicer received theborrower’s full payment of the excess loan amount.

Satisfactory repayment arrangements

A student who has inadvertently overborrowed may also regain TitleIV eligibility by making satisfactory repayment arrangements acceptableto the servicer of the loan. This requirement can be met if the studentagrees in writing to repay the excess amount according to the terms andconditions of the promissory note that supported the loan. This is called“reaffirmation.” The July 18, 2019 electronic announcement includes themust current reaffirmation form. The reaffirmation process includes thefollowing five steps:

1. Either the school or the student contacts the servicer andexplains that the student has inadvertently overborrowed andwishes to reaffirm the debt.

2. The servicer sends the student a reaffirmation agreement.

3. The student reads, signs, and returns to the servicer thereaffirmation agreement.

4. The servicer sends the student confirmation that thereaffirmation agreement has been accepted. The student or servicermust provide a copy of the reaffirmation confirmation tothe school.

5. The inadvertent overborrowing is considered to have beenresolved as of the date the servicer receives the student’s signedreaffirmation agreement.

We require a borrower who does not repay the excess loan amount infull to make satisfactory repayment arrangements in order to ensure thatthe borrower acknowledges a debt in excess of the regulatory maximum.For defaulted loans, the law and regulations specify what constitutes asatisfactory repayment agreement. For students who have exceeded loanlimits or owe an overpayment of an FSA grant, the law and regulationsdo not specify what makes a repayment agreement satisfactory. The loanholder determines whether the repayment arrangement is satisfactory.

Once you have documented that the inadvertent overborrowing hasbeen resolved (through repayment in full, making satisfactory arrangementsto repay the debt, or consolidation of the excess loan amount), youmay award additional FSA funds to the student.

A student who regains Title IV eligibility after having exceeded anannual loan limit for an academic year is not eligible to receiveadditional Direct Loan funds for that same academic year, but couldreceive other types of Title IV aid for the year. If the studentexceeded only the annual subsidized limit and has regained eligibility, thestudent might be eligible to receive Direct Unsubsidized Loans up to theappropriate annual maximum.

A student who had inadvertently exceeded the combined subsidized/unsubsidized aggregate loan limit may not receive any additional DirectSubsidized Loans or Direct Unsubsidized Loans (though a dependent student’s parent or a graduate or professional student could receive DirectPLUS Loans).

When an otherwise eligible student resolves an inadvertent overborrowingissue by one of the methods discussed above, the student regainseligibility for the Pell Grant, Campus-Based, TEACH Grant, and Iraq andAfghanistan Service Grant programs beginning with the payment periodin which the issue was resolved and regains Direct Loan Program eligibilityretroactive to the beginning of the academic year in which the issuewas resolved.

Because you’re responsible for knowing about the student’s prior FSAloans before disbursing additional loan funds to the student, inadvertent overborrowing should not occur often.

Recording student payments and reductions in the Direct Loan Program

If, through its return calculation, a school determines that a studenthas received an overpayment of Direct Loan funds, the school shouldreduce the student’s award/disbursem*nts by making a downward adjustmentin COD.

Schools can report current year adjustments for awards/disbursem*ntseither through their loan processing software or by using the CODwebsite at https://cod.ed.gov.

Returning Direct Loan funds

If a school is required to return Direct Loan funds to comply with aregulatory or statutory requirement—even if more than 120 days haveelapsed since the disbursem*nt date—the school must return Direct Loanfunds through G5. The school returns Direct Loan funds to the Departmentfollowing the same procedures the school follows when makingother G5 refunds/returns.

Direct Loan processing for an award year generally remains openin the COD System for 13 months following the end of the award year(until July 31 of the next year). A school should be able to submit datavia batch or web processing through that time unless it has already confirmedcloseout for the impacted award year. If the year is closed in theCOD System before the 13-month period is over, the school should contactCOD School Relations for help in reopening the award year. Oncethe 13-month period is over and the COD System has closed the year,a school may request extended processing through the COD website athttps://cod.ed.gov.

Toward the end of each award year, the Department publishes anelectronic announcement containing information on the closeout deadlineand instructions on how schools can request extended processingfor Direct Loans after the closeout deadline. For more information onreturning FSA funds, see Chapter 4.

Updating Direct Loan disbursem*nt data in the COD System

If a school has confirmed closeout but then needs to submit additionalstudent level data to the COD System (and the data submissiondeadline has not yet passed), the school contacts COD Customer Supportand asks that the year be reopened.

If the data submission deadline has passed, the school uses the requestpost deadline/extended processing screen in the COD System to requestan extension. If the request is granted, the school may submit datato the COD System until the end of the extension period.

If a Direct Loan award year has been archived (all Direct Loan awardyears prior to 2011–2012 have been archived) and a school needs to reporta decrease to a student-level disbursem*nt record, the school sendsan email to schoolreconciliation@ed.gov.

In the email the school must provide its full name as it appears inthe COD System, its DL ID number, the award year, and the number ofrecords it needs to process. The school will receive an email telling themhow to submit the necessary data and how that data should be processed.

If a school needs to report a decrease to a FFEL Program loan held bya lender or guaranty agency (i.e. loan not owned or serviced by the Department),the school should work with the current holder/servicer of theloan identified in NSLDS to return funds.

Recording student payments and reductions in the Pell, TEACH, and Iraq and Afghanistan Service Grant programs

For reductions to awards and payments, schools should recordreductions and payments by entering a replacement value in the CODsystem. The replacement value will be the original value less only the amount the school has returned (the sum of: that amount the school isresponsible for returning plus any portion of the grant overpayment thatwould be the responsibility of the student but which the school has chosento return for him or her plus any portion of the grant overpaymentthe school has collected from the student). Do not reduce the award/disbursem*nt by the amount the student must return (unless the student has made a payment to the school).

If a school receives a payment for a current-year overpayment thathas not been referred to the Default Resolution Group, the school shouldNOT send the payment to the Default Resolution Group. Instead, afteryou have reduced the student’s disbursem*nt in the COD System, returnthe unearned funds as follows:

• If your school has made repayment arrangements with a studentand received a payment on a current‑year overpayment,the school would deposit the funds in their federal funds accountand then either return the funds through G5 to the appropriateFSA grant program account or award the funds to another eligible student within the required three business daytime frame.

• If a student makes a payment on any previous year’s Pell Grant,Iraq and Afghanistan Service Grant, or TEACH Grant overpayment,a school makes the aforementioned COD system entryusing the same software the school used to create the award.The school then returns the funds to the Department usingthe Electronic Refund function in G5 following the same proceduresthe school follows when making other G5 refunds orreturns.

If, through its return of Title IV funds calculation for a student whohas withdrawn (see Volume 5), a school determines that a student hasreceived an overpayment of FSEOG funds, the school must adjust its institutionalledgers, financial aid records, and the student’s account by subtractingthe amount the school must return (the FISAP filed for the yearwill reflect the net award to the student). If a student makes a paymenton an FSEOG overpayment made in the current award year, the schoolshould deposit the payment in its federal funds account and award thefunds to other needy students.

If the school collects an overpayment of an FSEOG for an awardmade in a prior award year, the funds recovered should be returned tothe Department using the electronic refund function in G5. Paymentsshould be applied to the award year in which the recovered funds wereawarded.

Since each disbursem*nt transaction (positive or negative) of a student’sPell Grant in COD affects his or her lifetime eligibility for Pellfunds, schools should ensure that adjustments are made in a timely manner.See Volume 3 for a discussion of Pell lifetime eligibility.

The deadline for updating Pell Grant student data in COD is the lastbusiness day of the fiscal year five years after the award year in question,for example, September 30, 2021, for the 2015–2016 award year. If thatdeadline has passed, but you have an adjustment to submit that affects astudent’s Pell Grant Lifetime Eligibility Used (LEU), contact COD supportfor instructions on updating the student’s LEU information. If yourschool has funds it needs to return to the Pell Grant program, contact theG5 Hotline for help at 888-336-8930.

Reporting Overpayments to NSLDS

You must report overpayments or changes to previously submittedinformation to NSLDS within 30 days of the date you learn of the overpaymentor change.

If a grant overpayment is the result of the student’s withdrawal and areturn of Title IV funds calculation, you must contact the student within30 days of determining that the student withdrew (see Volume 5).

You only report unresolved overpayments if they’re due to studenterror. Don’t report those that are a result of school error; instead, as explainedpreviously, you must repay the overpayment with school funds.

If you report a Pell Grant overpayment in NSLDS, do not reduce theaward/disbursem*nt in the COD system by the amount the student mustreturn (unless the student has made a payment to the school). For additionalinformation, please see the discussion earlier in this chapter underRecording student payments and reductions in the Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant programs and later in thischapter under School responsibility after referral and accepting payments on referred overpayments.

You must use the NSLDS Professional Access website to reportoverpayments. To do so, your primary destination point administrator(PDPA) must have signed up at least one user for overpayment updatesfor NSLDS online services at https://fsawebenroll.ed.gov.

Once the overpayment is reported to NSLDS, the student’s futureSAR/ISIR output documents will show that he or she has an overpaymentThe financial aid history section of the SAR and ISIR will have informationon the overpayment, including whether the student has made satisfactoryrepayment arrangements.

Anytime a school receives funds (including the application of an FSAcredit balance) that the school will apply to satisfy an overpayment in full,the school must also update its original submission to NSLDS by changingthe entry for the indicator field on the “Overpayment Update Screen”to “Repaid.”

For more information on how to properly report overpayments inNSLDS, please contact NSLDS directly at 800-999-8219 or nslds@ed.govor review the various NSLDS reference materials available on IFAP underthe “Processing Resources” section.

Referring Overpayments

Referring overpayments to the Default Resolution Group

If you have tried but not succeeded in collecting a Pell Grant, Iraqand Afghanistan Service Grant, TEACH Grant, or FSEOG overpaymentfor which the student is liable, you must refer the overpayment to FSA’sDefault Resolution Group. You must make this referral in addition to reporting the overpayment to NSLDS.

To be referred, the initial amount of the overpayment must be atleast $25. You would still refer a student debt of less than $25 to the DefaultResolution Group when the amount due is a remaining balance orwhen the amount is the result of the application of the Campus-Basedoveraward threshold/tolerance.

Note: For an FSEOG overpayment, when a school uses theindividual recipient or aggregate matching methods, the overpaymentincludes only the federal share. When the schooluses the fund-specific method of matching, the overpaymentincludes both the federal and nonfederal shares. See Volume 6for more information.

If your school elects not to refer an overpayment to the Default ResolutionGroup, your school is liable for and must repay the overpaymentfrom its own funds.

To refer student overpayments for collection, schools should use aformat similar to the one found at the end of this chapter and send thedata to the address at the bottom of that page. Each referral must be typedor printed and must be submitted on school letterhead.

In order to avoid creating a double record for a single overpayment, the school must populate its Overpayment Referral Form: Dates of Disbursem*nt with the exact same dates the school used when it reported the overpayment in NSLDS. In addition, a school must ensure that it enters the year the disbursem*nt was made in the award year field.

In addition, when referring the overpayment, you should update theoverpayment information previously reported to NSLDS by changingthe “Source” field from SCH-SCHOOL to TRF-TRANSFER. Once theDefault Resolution Group has accepted a referred student overpayment,it will transmit the information to NSLDS and “ED Region” will replace“School” as the appropriate contact source for information about theoverpayment.

On its overpayment referral, a school must provide its Pell identification number. It should NOT enter its routing identifier.

If a student claims that a school’s overpayment determination iswrong, the school must consider any information the student providesand determine whether the objection is warranted before referring thecase for collection.

School responsibility after referral and accepting payments on referred overpayments

A school may continue to accept payments on FSA grant overpaymentsafter those overpayments have been referred to the Department. Aschool that accepts a check on an overpayment that has been referred tothe Default Resolution Group must:

• note the student’s name and SSN on the check;

• indicate that the payment is for an overpayment of an FSAgrant; and

• forward the payment to the Default Resolution Group at:

  Default Resolution Group Address

  Department of Education

  National Payment Center

  P.O. Box 790336

  St. Louis, MO 63179-0336

If a school accepts a cash payment from one or more students whoowe overpayments and who have been referred to the Default ResolutionGroup, the school should write its own check to the Department and attacha letter indicating that the check is for an FSA grant overpayment.The school must include in its letter a roster that includes, for each studentwho made a payment, the student’s name, Social Security number,and amount paid.

If you want a payment to be applied to a specific overpayment (by program and award year), you must include a memorandum on school letterhead. The memorandum must include the award year and program award number of the award you want credited, and your DUNS number.

If a school receives a payment for an overpayment previously referred to the Default Resolution Group for the current award year andthe payment will repay the student’s debt in full, the school must:

• deposit the payment in its appropriate institutionally maintainedfederal funds account;

• for Federal Pell Grant overpayments, make the appropriate entryin the student’s record on the COD system (either on CODor via Common Record); and

• send a letter or fax to the Default Resolution Group identifyingthe student and indicating that the student’s overpaymenthas been completely repaid. This will allow the Departmentto properly update its records in both the Default ResolutionGroup system and NSLDS.

  The fax number for this purpose and school use only is

  903-454-2243

  Note: This process cannot be performed via email.

In the fax or letter, a school must include the following:

• award year of the overpayment (current award year only);

• student’s Social Security number;

• student’s last name, first name, and middle initial;

• student’s date of birth;

• type of overpayment—Federal Pell Grant, Iraq and Afghanistan Service Grant, FSEOG, or TEACH Grant; and

• the disbursem*nt date the institution used to create the overpaymentrecord in NSLDS.

If a student whose overpayment case has been accepted by the Departmentwishes to establish a repayment schedule, he or she should callthe Default Resolution Group at 800-621-3115. The student can send anemail by going to https://myeddebt.ed.gov and selecting the borrower tab> “Contact Us” (at the bottom of the page) > “Click here” under “Sendemail.”

Responsibilities of the Default Resolution Group

Upon receipt of an overpayment referral, the Department will determineif enough information has been provided to start collection activity;any referral lacking information will be returned to your school to becompleted.

The Default Resolution Group will then try via letters and telephoneto establish a repayment schedule or to secure payment in full. It will alsoupdate the NSLDS information that you’ve already reported to show thatthe Department now holds the overpayment. Any future SARs or ISIRsfor the student will show that he or she owes an overpayment and willdirect the student to contact the Default Resolution Group instead of theschool. Finally, the Default Resolution Group also communicates PellGrant overpayment referrals to the COD system. COD will then alert aschool of a student’s Pell Grant overpayment status if the student submitsa FAFSA in the future. A student’s Iraq and Afghanistan Service Grantoverpayment status will be tracked and reported manually.

Payment in Full

Anytime a school receives funds (including the application of an FSAcredit balance) that will satisfy an overpayment in full, the school mustalso update its original submission to NSLDS by changing the entry forthe indicator field on the “Overpayment Update Screen” to “Repaid.”