Repayment Process for Referred Pell Grant Payments

What is an Overpayment?

Federal regulations for Title IV funds require that students must attend their classes in order to maintain eligibility for Financial Aid. Colleges must perform “return of funds” calculations for each student who receives federal financial aid who withdraws or stops attending all of their courses during the first sixty (60) percent of the Semester. In most cases this means that the college must refund a portion of charges for the Semester and the student must repay a portion of the funds they received for the Semester. Students are encouraged to discuss the consequences of dropping out of school with the Financial Aid Office before they stop attending.

As the name indicates, grants do not usually have to be repaid. However, there are two reasons why you may have to repay part of a Federal grant:

  • The amount given to you was more than you were eligible to receive (this is called an over-award). This can happen if the school makes an error when calculating your eligibility for financial aid, or if an audit of your financial records reveals that some of the information you provided was incorrect (for example, your income was higher than what you reported on your application for financial aid).
  • You withdrew early from the program for which the grant was given to you.

Once the College has referred a Pell Grant Overpayment to the Department of Education for collection, the student must repay the overpayment directly to the Department. It is not possible for the College to accept payment after the matter has been referred. The process below explains the steps to resolve the indebtedness and regain eligibility for Title IV financial assistance.

Please note that this process may take 3-6 weeks to resolve. 

  1. The Financial Aid Office (FAO) will provide you with a copy of the Overpayment Referral so that proper crediting to your account will occur. You may make arrangements to repay the referred amount to the US Dept. of Education; however the entire overpayment amount must be repaid in full before VGCC will restore your Title IV eligibility. Arrangements must be made directly with the department. You may contact the Department by phone at 1-800-621-3115.
  2. When making payment, mail a check or money order along with a copy of the referral and a letter with your current address to:U.S. Department of Education National Payment Center
    PO Box 4169
    Greenville, Texas 75403-4169
    Phone # 1-800-621-3115
  3. Allow approximately 14 days for processing of the payment and then call the Debt Collection Service (DCS) and request a “Paid in Full” letter and a “Reinstatement of Title IV Eligibility” letter. (If they have not yet processed payment, keep calling until they acknowledge receipt.) The letters should be mailed to you in approximately 14 days. Bring the letters to the Financial Aid Office for verification purposes. The DCS will not mail the letters to the college directly.
  4. If you opt for a payment arrangement, you must make consistent payments in accordance with the agreement. When you have made the final payment, please request the documentation listed in item III above and present it to your financial aid office.

Lastly, repaying the overpayment does not automatically entitle you to receive financial assistance. One must reapply for federal financial aid every year. You must complete a Free Application for Federal Student Aid (FAFSA) for the academic award year you plan to attend before your eligibility can be determined. You may complete the application while you are waiting for resolution of the overpayment.

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