Resolving Pell Overpayments

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. ED has indicated that this will be one of the items they are looking at in upcoming program reviews at colleges and third party servicers that process disbursement information.

ED put schools on blast last year, telling them to review their procedures to ensure compliance. In addition, ED is telling schools they 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.

Knowing how to resolve an overpayment of Pell can be confusing. Basically, a school is liable for repaying Pell to the Department if the overpayment occurred because it failed to follow the necessary procedures. If the school is liable it shouldn’t report the overpayment to NSLDS. Instead, it must make the appropriate adjustments to the Pell Grant information on COD within 15 days of becoming aware of the need to adjust the Pell Grant, and then return the funds through G5.

Conversely, a student will be liable if a school was in compliance with all disbursement and reporting requirements when it made the award. In this case, the school should report the overpayment to NSLDS so they can pursue collection. They instruct schools to make the appropriate adjustments to the Pell Grant information reported to COD, 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. Confused yet?

ED provided a table summarizing Pell Grant overpayment reporting requirements to NSLDS, the COD System, and G5 to help school administrators understand the processes for handling and reporting Pell Grant overpayments.

Program Reviews are coming!