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1.4.2.2.2 Pell Grant overpayments

Grants do not usually have to be repaid unless there is an overpayment. The school is liable for an overpayment if it occurred because the school failed to follow proper procedures.119 If the school is not liable, they must notify students of the overpayment and request repayment. Once a grantee is notified of a grant repayment, he or she must either pay the grant back in full or enter into a satisfactory repayment arrangement.120 Failure to respond will lead to lost eligibility for further federal financial aid, and the school will assign the debt to the Department of Education for collection.121 Grant overpayment debts are not eligible for either consolidation or rehabilitation. A student who owes a grant overpayment of $50 or less that is not a remaining balance is eligible to receive additional federal student aid.122 Students are not liable for overpayments less than $25.123

In addition, the amount of a grant overpayment due from a student is limited to the amount by which the original overpayment exceeds 50% of the total grant funds received by the student for the payment period or period of enrollment.124

The requirement to repay is waived for students who withdraw from a school because of their status as an “affected individual,” defined to include those serving on active duty during a war or other military operation or during a national emergency, performing qualifying National Guard duty during a war or other military operation or during a national emergency, residing or employed in an area that is declared a disaster area by any federal, state, or local official in connection with a national emergency, or suffering direct economic hardship as a result of a war or other military operation or a national emergency, as determined by the Secretary of Education (the Secretary).125

The Secretary is also permitted to waive a student’s Title IV grant repayment if the student withdraws from an institution because of a major disaster.126 An otherwise eligible student qualifies for the waiver if he or she withdraws during the award year in which the major disaster designation occurred or during the next succeeding award year, if the student withdrew because of the major disaster.127

Footnotes

  • 119 {119} 34 C.F.R. § 690.79(a)(2).

  • 120 {120} 34 C.F.R. § 690.79(b), (c).

  • 121 {121} 34 C.F.R. §§ 668.32(g)(4), 690.79(c).

  • 122 {122} 34 C.F.R. § 668.22(h)(3)(ii)(B).

  • 123 {123} 34 C.F.R. § 690.79(a)(3).

  • 124 {124} 34 C.F.R. § 668.22(h)(3)(ii)(A).

  • 125 {125} 68 Fed. Reg. 69,312 (Dec. 12, 2003).

    The waiver was extended through September 30, 2017, 77 Fed. Reg. 59,311 (Sept. 27, 2012), and subsequently extended through September 30, 2022. 82 Fed. Reg. 45,465 (Sept. 29, 2017).

  • 126 {126} See Pub. L. No. 109-66, 119 Stat. 1999 (Sept. 21, 2005) (Pell Grant Hurricane and Disaster Relief Act); Pub. L. No. 109-67, 119 Stat. 2001 (Sept. 21, 2005) (Student Grant Hurricane and Disaster Relief Act); U.S. Dep’t of Educ., Dear Colleague Letter, GEN-10-16, Guidance for Helping Title IV participants Affected by a Major Disaster (Aug. 23, 2010). See also 34 C.F.R. § 668.22(h)(5); U.S. Dep’t of Educ., Dear Colleague Letter, GEN-08-10, Reminder of Guidance for Helping Title IV Participants Affected by a Disaster (June 24, 2008).

  • 127 {127} 34 C.F.R. § 668.22(h)(5).