[Code of Federal Regulations]
[Title 34, Volume 3]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR668.58]

[Page 481-482]
 
                           TITLE 34--EDUCATION
 
                         DEPARTMENT OF EDUCATION
 
PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS--Table of Contents
 
     Subpart E--Verification of Student Aid Application Information
 
Sec. 668.58  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 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, campus-based funds; 
or
    (ii)(A) May make one disbursement of any combination of Federal Pell 
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

[[Page 482]]

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]