[Code of Federal Regulations]
[Title 34, Volume 3]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR668.61]

[Page 485-486]
 
                           TITLE 34--EDUCATION
 
                         DEPARTMENT OF EDUCATION
 
PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS--Table of Contents
 
     Subpart E--Verification of Student Aid Application Information
 
Sec. 668.61  Recovery of funds.

    (a) If an institution discovers, as a result of the verification 
process, that an applicant received under Sec. 668.58(a)(2)(ii)(A) more 
financial aid than the applicant was eligible to receive, the 
institution shall eliminate the overpayment by--
    (1) Adjusting subsequent financial aid payments in the award year in 
which the overpayment occurred; or
    (2) Reimbursing the appropriate program account by--
    (i) Requiring the applicant to return the overpayment to the 
institution if the institution cannot correct the overpayment under 
paragraph (a)(1) of this section; or
    (ii) Making restitution from its own funds, by the earlier of the 
following dates, if the applicant does not return the overpayment:
    (A) Sixty days after the applicant's last day of attendance.
    (B) The last day of the award year in which the institution 
disbursed Federal Pell Grant, Federal Perkins Loan, or FSEOG funds to 
the applicant.
    (b)(1) If the institution determines as a result of the verification 
process that an applicant received Stafford Loan or proceeds for an 
award year in excess of the student's financial need for the loan, the 
institution shall withhold and promptly return to the lender or escrow 
agent any disbursement not yet

[[Page 486]]

delivered to the student that exceeds the amount of assistance for which 
the student is eligible, taking into account other financial aid 
received by the student. However, instead of returning the entire 
undelivered disbursement, the school may choose to return promptly to 
the lender only the portion of the disbursement for which the student is 
ineligible. In either case, the institution shall provide the lender 
with a written statement describing the reason for the returned loan 
funds.
    (2) If the institution determines as a result of the verification 
process that a student received Direct Subsidized Loan proceeds for an 
award year in excess of the student's need for the loan, the institution 
shall reduce or cancel one or more subsequent disbursements to eliminate 
the amount in excess of the student's need.

(Approved by the Office of Management and Budget under control number 
1840-0570)

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

[56 FR 61337, Dec. 2, 1991, as amended at 57 FR 39089, Aug. 27, 1992; 59 
FR 22068, Apr. 28, 1994; 59 FR 23095, May 4, 1994; 59 FR 61207, Nov. 29, 
1994; 63 FR 40626, July 29, 1998]