Disbursement

Institutions are responsible for conveying financial aid funds to their Title-IV eligible students in accordance with very detailed regulations and for establishing accounting and recordkeeping systems that ensure proper handling of federal funds. Disbursement is, in a sense, the culmination of the various aspects of determining student eligibility.

Related topics in this Index: Cash Management; Recordkeeping; Verification

Synonyms: Payment of funds

Statutory Authority
- U.S. Code, Title 20—Education Chapter 28—Higher Education Resources and Student Assistance Subchapter IV—Student Assistance > Part A—Grants to Students in Attendance at Institutions of Higher Education, Subpart 9—TEACH Grants § 1070g Definitions [HEA § 420L]
- U.S. Code, Title 20—Education Chapter 28—Higher Education Resources and Student Assistance Subchapter IV—Student Assistance > Part G—General Provisions Relating to Student Assistance Programs § 1094(a)(19) Program participation agreements [HEA § 487(a)(19)]
Regulations
- 34 CFR 668.164
- 34 CFR 668.165
ED References
See also Subtopics for more specific references.
- 2018-19 FSA Handbook, Vol. 4
- 2017-18 FSA Handbook, Vol. 4
NASFAA Publications and Articles
- NASFAA AskRegs Knowledgebase
  Search or browse the Knowledgebase for answers to regulatory and compliance questions submitted by financial aid administrators.
- NASFAA Award Letter Evaluation Tool
- NASFAA Compliance Engine
  The Compliance Engine is comprised of two modules: the Self-Evaluation Checklists which allows administrators to evaluate their programs in a centralized, shared online space, and the P&P Builder, a tool designed to assist institutions in the creation and maintenance of a policies and procedures manual. Along with an online space to update and maintain policies and procedures, the P&P Builder includes legislation and regulation associated with compliance with Title IV requirements.
Subtopics
- Authorizations to perform certain optional functions on student’s behalf
  - General rules regarding authorizations
    
    668.165(b)(2) - (4)
    
    675.16(d)(2) - (4)
    
    Federal Register, 9/29/17, pp. 45465 to 45471
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Hold funds for student or parent rather than paying them directly
    
    General rules
    
    668.165(b)(1)(ii)
    
    668.165(b)(5)
    
    675.16(d)(1)(ii)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
    
    Deadline for payment of remaining balance
    
    668.165(b)(5)(iii)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
    
    School-issued stored-value cards
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Payment of prior year charges
    
    668.164(c)(3)
    
    668.165(b)(1)(i)
    
    675.16(b)(1)(ii)
    
    675.16(b)(2)
    
    675.16(d)(1)(i)
  - Use of FWS to pay current year institutional charges
    
    675.16(b)(1)(i)
    
    675.16(d)(1)(i)
- Books and supplies provision
- By payment period
- Checking student’s eligibility at time of disbursement
- Confirmation process for loans and TEACH Grant
- Contracted services
- Correspondence student
- Credit balances
  See Authorizations regarding disbursement institutions must obtain to offer optional services and Third-Party Servicers
  - General rules
    
    668.164(h)
    
    675.16(c)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Holding credit balances
    
    668.165(b)(1)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Loan disbursements subject to 30-day delay
    
    668.164(a)(2)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - School-issued stored-value cards with no third party involvement
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Unclaimed credit balances
    
    668.164(l)(2), (3)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
- Crediting student’s institutional account
  - Bookstore charges
    
    GEN-12-21
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Consent
    
    668.164(e)(2)
    
    668.164(f)(4)(i)(B)
    
    Federal Register, 10/30/15, pp. 67151 to 67155
  - Current year charges
    
    668.164(c)
    
    675.16(b)(1)(i)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Institutional charges vs. non-institutional charges (definitions)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Pass-through charges
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Prorating charges
    
    668.164(c)(5)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Prior year charges
    
    668.164(c)(3), (4)
    
    675.16(b)(1)(ii)
    
    675.16(b)(2)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Student choice
    
    668.164(d)(4)
    
    Federal Register, 10/30/15, pp. 67151 to 67155
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
- Day
  - 668.161(a)(3)(iv)
- Death of borrower
  See also top list entry for Verification
  - 2018-19 FSA Handbook, Vol. 4, Ch. 2
  - 2017-18 FSA Handbook, Vol. 4, Ch. 2
- Direct payment
  - Date of issuance of check to student
    
    668.164(d)(1)(i)(B)
    
    668.164(d)(1)(ii)(B)
    
    668.164(d)(2)
  - Methods of making
    
    668.164(d)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
- Disaster guidance
  - GEN-17-08
- Disbursement (date of disbursement) defined
- Disbursement records (submission to ED)
  See top list entry for Cash Management
- During reapplication when program participation agreement expires
  - 600.20(f)
- Early disbursement before first day of class
- Garnishment of Title IV funds
- Late disbursement
  - Completion of enrollment prior to receipt of funds
    
    668.164(b)(2)
    
    668.164(j)(3)(ii)
  - Conditions to qualify for late disbursement
    
    668.164(b)(3)
    
    668.164(j)(2)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - FWS payments after last day of attendance
    
    675.16(a)(6)
  - Limitations and prohibitions
    
    668.164(j)(4)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Notification requirement for late disbursement of loans
    
    668.165(a)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Post-withdrawal disbursement
    
    668.22(a)(6)(iii)
    
    668.164(j)(3)(i)
    
    GEN-17-08
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Student ceases qualifying enrollment
    
    668.164(j)(1)
    
    668.164(j)(3)(iii)
  - Summary chart
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
- Multiple disbursements within payment period
- Notices from institutions regarding disbursement to students
  - General information
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Acceptable means of notification
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Amounts of Title IV funds and how and when disbursed
    
    668.165(a)(1)
    
    675.16(a)(3)
    
    686.31(e)(1)(i)
  - Crediting of Title IV loan or TEACH Grant funds to student’s charges
    
    668.165(a)(2), (3)
  - Right to cancel Title IV loans or TEACH Grant
    
    668.165(a)(2) - (6)
    
    686.31(e)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
- Power of attorney
  - FWS
    
    675.16(a)(8)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Perkins loans
    
    674.16(g)
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
- Program-specific disbursement rules
  - Direct Loan
    
    General disbursement rules
    
    685.301(b)
    
    685.303(b)
    
    2019-20 FSA Handbook, Vol. 3, Ch. 1
    
    2018-19 FSA Handbook, Vol. 3, Ch. 1
    
    30-day delay for first-year, first-time Direct Loan borrowers
    
    668.164(a)(2)(i)
    
    685.303(b)(5)
    
    Continuous eligibility
    
    685.303(b)(3)
    
    Disbursement dates and amounts
    
    685.303(d)
    
    Substantially equal disbursements
    
    685.303(d)(5)
  - FSEOG
    
    676.16
  - FWS
    
    668.161(a)(4)
    
    675.16
    
    2018-19 FSA Handbook, Vol. 4, Ch. 2
    
    2017-18 FSA Handbook, Vol. 4, Ch. 2
  - Pell Grant
    
    Completion of previously paid hours (clock hour and nonterm credit hour programs)
    
    690.75(a)(3)
    
    Retroactive payments based on completed work
    
    668.164(b)(3)
    
    668.164(k)
    
    690.76(b)
    
    2019-20 FSA Handbook, Vol. 3, Ch. 1
    
    2018-19 FSA Handbook, Vol. 3, Ch. 1
- Retroactive disbursements for completed periods within award year
- Social security number of student not verified
  - 668.36(b)

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Disbursement

Statutory Authority

Regulations

ED References

NASFAA Publications and Articles

Subtopics

Authorizations to perform certain optional functions on student’s behalf

General rules regarding authorizations

Hold funds for student or parent rather than paying them directly

General rules

Deadline for payment of remaining balance

School-issued stored-value cards

Payment of prior year charges

Use of FWS to pay current year institutional charges

Books and supplies provision

Prorating

By payment period

Checking student’s eligibility at time of disbursement

Confirmation process for loans and TEACH Grant

Contracted services

Correspondence student

Credit balances

General rules

Holding credit balances

Loan disbursements subject to 30-day delay

School-issued stored-value cards with no third party involvement

Unclaimed credit balances

Crediting student’s institutional account

Bookstore charges

Consent

Current year charges

Institutional charges vs. non-institutional charges (definitions)

Pass-through charges

Prorating charges

Prior year charges

Student choice

Day

Death of borrower

Direct payment

Date of issuance of check to student

Methods of making

Disaster guidance

Disbursement (date of disbursement) defined

Disbursement records (submission to ED)

During reapplication when program participation agreement expires

Early disbursement before first day of class

Garnishment of Title IV funds

Late disbursement

Completion of enrollment prior to receipt of funds

Conditions to qualify for late disbursement

FWS payments after last day of attendance

Limitations and prohibitions

Notification requirement for late disbursement of loans

Post-withdrawal disbursement

Student ceases qualifying enrollment

Summary chart

Multiple disbursements within payment period

Notices from institutions regarding disbursement to students

General information

Acceptable means of notification

Amounts of Title IV funds and how and when disbursed

Crediting of Title IV loan or TEACH Grant funds to student’s charges

Right to cancel Title IV loans or TEACH Grant

Power of attorney

FWS

Perkins loans

Program-specific disbursement rules

Direct Loan

General disbursement rules

30-day delay for first-year, first-time Direct Loan borrowers

Continuous eligibility

Disbursement dates and amounts

Substantially equal disbursements

FSEOG

FWS

Pell Grant

Completion of previously paid hours (clock hour and nonterm credit hour programs)

Retroactive payments based on completed work

Retroactive disbursements for completed periods within award year