34 CFR 668.58 - Interim disbursements.

Code of Federal Regulations - Title 34: Education (2010)

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Title 34: Education

Subtitle B: Regulations of the Offices of the Department of Education (Continued)

CHAPTER VI: OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION

PART 668: STUDENT ASSISTANCE GENERAL PROVISIONS

Subpart E: Verification of Student Aid Application Information

668.58 - Interim disbursements.

(a)(1) If an institution has reason to believe that the information included on the application is inaccurate, until the applicant verifies or corrects the information included on his or her application, the institution may not?

(i) Disburse any Federal Pell Grant, ACG, National SMART Grant, or campus-based program funds to the applicant;

(ii) Employ the applicant in its Federal Work-Study Program;

(iii) Certify the applicant's Federal Stafford Loan application or process Federal Stafford Loan proceeds for any previously certified Federal Stafford Loan application; or

(2) If an institution does not have reason to believe that the information included on an application is inaccurate prior to verification, the institution?

(i) May withhold payment of Federal Pell Grant, ACG, National SMART Grant, or campus-based funds; or

(ii)(A) May make one disbursement of any combination of Federal Pell Grant, ACG, National SMART Grant, Federal Perkins Loan, or FSEOG funds for the applicant's first payment period; and

(B) May employ or allow an employer to employ an eligible student under the Federal Work-Study Program for the first 60 consecutive days after the student's enrollment in that award year; and

(iii)(A) May withhold certification of the applicant's Federal Stafford Loan application or origination of the applicant's Direct Subsidized Loan; or

(B) May certify the Federal Stafford Loan application or originate the Direct Subsidized Loan provided that the institution does not deliver Federal Stafford Loan proceeds or disburse Direct Subsidized Loan proceeds.

(b) If an institution chooses to make disbursement under paragraph (a)(2)(ii) (A) or (B) of this section, it is liable for any overpayment discovered as a result of the verification process to the extent that the overpayment is not recovered from the student.

(c) An institution may not withhold any Federal Stafford Loan or Direct Loan proceeds from a student under paragraph (a)(2) of this section for more than 45 days. If the applicant does not complete the verification process within the 45 day period, the institution shall return the proceeds to the lender.

(d)(1) If the institution receives Federal Stafford Loan or Direct Loan proceeds in an amount which exceeds the student's need for the loan based upon the verified information and the excess funds can be eliminated by reducing subsequent disbursements for the applicable loan period, the institution shall process the proceeds and advise the lender to reduce the subsequent disbursements.

(2) If the institution receives Federal Stafford Loan or Direct Loan proceeds in an amount which exceed the student's need for the loan based upon the verified information and the excess funds cannot be eliminated in subsequent disbursements for the applicable loan period, the institution shall return the excess proceeds to the lender.

(Authority: 20 U.S.C. 1094)

[56 FR 61337, Dec. 2, 1991, as amended at 57 FR 39089, Aug. 27, 1992; 59 FR 22067, 22068, Apr. 28, 1994; 59 FR 61207, Nov. 29, 1994; 63 FR 40625, July 29, 1998; 71 FR 64418, Nov. 1, 2006]


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