Scenario: A student's Federal Pell Grant, Direct Loan, and TEACH Grant funds for fall and spring were disbursed as a single retroactive disbursement during the spring term, as allowed under 34 CFR 690.76(b), 685.303(d)(4), and 686.33(b) respectively. The student withdrew from the spring term as a result of COVID-19 and therefore qualifies for the withdrawal benefits under Sections 3506 and 3507 of the CARES Act.
Answer: According to guidance NASFAA received from the U.S. Department of Education (ED), the school needs to re-disburse the Pell Grant, Direct Loan, and TEACH Grant funds as two separate disbursements so that the school can then assign the Coronavirus Indicator to just the spring disbursements in this scenario. This is necessary in order for the school to properly set the Coronavirus Indicator only on eligible disbursements for the spring payment period, as well as for ED to properly apply the withdrawal benefits to the appropriate disbursements.
Per ED: The school has the option to reduce the single disbursement to $0, and re-disburse the original funds in multiple disbursements in order to isolate the payment period that is eligible for CARES Act relief for the student who completely withdrew in the spring. Note that the school should verify that all new disbursements have been accepted in COD before setting the Coronavirus Indicator on the spring disbursement.
Also, if the institution is re-disbursing funds after 180 days in order to comply with CARES Act relief requirements, ED does not consider those disbursements to be late disbursements. COD does not have edits that will block a disbursement that is occurring more than 180 days after a student ceased to be eligible, though an institution may need to seek extended processing in COD to create or perform an upward adjustment on a disbursement from the 2019-20 award year or earlier.
AskRegs Q&As represent NASFAA's understanding of regulatory and compliance issues. They are FOR INTERNAL USE ONLY. While NASFAA believes AskRegs Q&As are accurate and factual, they have not been reviewed or approved by the U.S. Department of Education (ED). If you should need written confirmation of AskRegs information for audit or program review purposes, please contact your ED School Participation Division. NASFAA shall not be liable for technical or editorial errors or omissions contained herein; nor for incidental or consequential damages resulting from the furnishing, performance, or use of this material.