Scenario:

A school has a student who requests to have a refund check reissued after a credit balance check expired after 90 days. Does the 240 day rule to return unclaimed funds "reset" on the date of the check reissue?

Answer: 

No. The 240 days is the total amount of time and does not reset with each reissue.  The time frame is based on the first check. According to Volume 4, Chapter 2 of the FSA Handbook, a school may make additional attempts to disburse funds in cases where an EFT to a student's or parent's financial account is not accepted, or a check is returned to the school, as long as those attempts are made not more than 45 days after the EFT was rejected or the check returned.  If the school does not make another attempt to deliver the funds, the school must return those funds to the U.S. Department of Education (ED) before the end of the 45-day period.  The school must stop all attempts to disburse funds and return them no later than 240 days after the date it issued the first credit balance check. The FSA Handbook notes that all unclaimed credit balances must be returned; there is no de minimis amount.

If an institution becomes aware of unclaimed funds beyond the 240-days limit, instructions are provided in Volume 4, Chapter 4 of the FSA Handbook on how to return those funds.

You can find more information about credit balances in the Student Aid Reference Desk.

Publication Date: 1/27/2022

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