Why You Might Have to Repay Part of Grant

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: 

1) 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).

2) you withdrew early from the program for which the grant was given to you.

Repaying a Grant Overpayment Debt

Once a school notifies you that you must repay part of a grant, you will have 45 days to either pay that grant back in full or enter into a satisfactory repayment arrangement with the school. If you do not do either of these things, you will lose your eligibility for further Title IV Federal financial aid, and the school will assign the debt to the U.S. Department of Education for collection.

If you choose to enter a repayment plan, the school may assign the debt to the U.S. Department of Education (ED) for collection or may keep the debt and allow you to make payments to them directly.

You may restore your eligibility for Title IV Federal financial aid by entering into an acceptable repayment plan with ED; as long as you make the payments as agreed the grant will not affect your eligibility for further aid. However, if you fail to make the agreed-upon payments, your eligibility will be permanently lost until the debt is paid in full.

Grant overpayment debts are not eligible for either consolidation or rehabilitation.