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CFR > Title 34 - Education > SUBTITLE B—Regulations of the Offices of the Department of Education > CHAPTER VI—OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION (parts 600 to 694) > PART 668—STUDENT ASSISTANCE GENERAL PROVISIONS > SUBPART E—Verification of Student Aid Application Information (§668.51 to §668.61) > 668.58—Interim disbursements.

CFR

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.

Code of Federal Regulations

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

Code of Federal Regulations

[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]

Code of Federal Regulations

Effective Date Note: At 75 FR 66954, Oct. 29, 2010, subpart E to part 668 was revised, effective July 1, 2012. For the convenience of the user, the revised text is set forth as follows: Subpart E—Verification and Updating of Student Aid Application Information § 668.58 Interim disbursements. (a) (1) If an institution has reason to believe that an applicant's FAFSA information is inaccurate, until the information is verified and any corrections are made in accordance with § 668.59(a) , the institution may not— (i) Disburse any Federal Pell Grant, FSEOG, or Federal Perkins Loan Program funds to the applicant; (ii) Employ or allow an employer to employ the applicant in its FWS Program; or (iii) Originate a Direct Subsidized Loan, or disburse any such loan proceeds for any previously certified originated Direct Subsidized Loan to the applicant. (2) If an institution does not have reason to believe that an applicant's FAFSA information is inaccurate prior to verification, the institution may— (i) (A) Withhold payment of Federal Pell Grant, Federal Perkins Loan, or FSEOG Program funds for the applicant; or (B) Make one disbursement from each of the Federal Pell Grant, Federal Perkins Loan, or FSEOG Program funds for the applicant's first payment period of the award year; (ii) Employ or allow an employer to employ that applicant, once he or she is an eligible student, under the FWS Program for the first 60 consecutive days after the student's enrollment in that award year; or (iii) (A) Withhold origination of the applicant's Direct Subsidized Loan; or (B) Originate the Direct Subsidized Loan provided that the institution does not disburse Subsidized Stafford Loan or Direct Subsidized Loan proceeds. (3) If, after verification, an institution determines that changes to an applicant's information will not change the amount the applicant would receive under a title IV, HEA program, the institution— (i) Must ensure corrections are made in accordance with § 668.59(a) ; and (ii) May prior to receiving the corrected valid SAR or valid ISIR— (A) Make one disbursement from each of the Federal Pell Grant, Federal Perkins Loan, or FSEOG Program funds for the applicant's first payment period of the award year; (B) Employ or allow an employer to employ the applicant, once he or she is an eligible student, under the FWS Program for the first 60 consecutive days after the student's enrollment in that award year; or (C) Originate the Direct Subsidized Loan and disburse the Subsidized Stafford Loan or Direct Subsidized Loan proceeds for the applicant. (b) If an institution chooses to make a disbursement under— (1) Paragraph (a)(2)(i)(B) of this section, it— (i) Is liable for any overpayment discovered as a result of verification to the extent that the overpayment is not recovered through reducing subsequent disbursements in the award year or from the student; and (ii) Must recover the overpayment in accordance with § 668.61(a) ; (2) Paragraph (a)(2)(ii) of this section, it— (i) Is liable for any overpayment discovered as a result of verification to the extent that the overpayment is not eliminated by adjusting other financial assistance; and (ii) Must recover the overpayment in accordance with § 668.61(b) ; or (3) Paragraph (a)(3) of this section, it—
Code of Federal Regulations 587
(i) Is liable for any subsidized student financial assistance disbursed if it does not receive the valid SAR or valid ISIR reflecting corrections within the deadlines established under § 668.60 ; and (ii) Must recover the funds in accordance with § 668.61(c) . (Authority: 20 U.S.C. 1094 ) Effective Date Note: At 76 FR 20536, April 13, 2011, § 668.58 (a)(1)(iii) is amended by removing the word “certified”, (a)(2)(iii)(B) is amended by removing the words “Subsidized Stafford Loan or”, (a)(3)(ii)(C) is amended by removing the words “Subsidized Stafford Loan or”, effective July 1, 2012.
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