[Code of Federal Regulations]

[Title 34, Volume 3]

[Revised as of July 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 34CFR668.58]



[Page 468-469]

 

                           TITLE 34--EDUCATION

 

 CHAPTER VI--OFFICE OF POSTSECONDARY 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 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



[[Page 469]]



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]