Why You May Have to Repay Part of a Grant

Unlike loans, 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

Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Academic Competitiveness Grants and National Science and Mathematics Access to Retain Talent Grant (National SMART Grants). Once a school notifies you that you must repay part of a grant, you will have 45 days to either pay that portion of the grant back in full or enter into a satisfactory repayment arrangement with the school. If you do not carry out one of these options, you will lose your eligibility for further Title IV Federal financial aid, and the school will assign the overpayment debt to the U.S. Department of Education (Department) for collection.

If you choose to enter into a satisfactory repayment arrangement, the school may assign the debt to the Department for collection or may keep the debt and allow you to make payments directly to them.

Teacher Education Assistance for College and Higher Education (TEACH) Grants. Through the College Cost Reduction and Access Act of 2007, Congress created the TEACH Grant Program that provides grants of up to $4,000 per year to students who intend to teach in a public or private elementary or secondary school that serves students from low-income families. If you have been awarded a TEACH Grant, and then it is determined that all or a portion of your grant(s) has been over-awarded, the amount declared an overpayment will be assigned to the Department for collection.

You may restore your eligibility for Title IV Federal financial aid by entering into an acceptable repayment plan with the Department. As long as you make the payments as agreed the grant-originated debt 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.