UNCLAIMED CREDIT BALANCES RESULTING FROM DISBURSEMENTS WITH THE CORONAVIRUS INDICATOR
When Title IV funds disbursed to a student’s account result in a Title IV credit balance, there may be occasions when the school is unable to deliver the appropriate amount of the credit balance refund (e.g., when the student fails to cash or deposit a check or if an electronic funds transfer is unsuccessful). In these cases, if the school is unable to deliver the proceeds of the credit balance to the student, the school must have a process that ensures that the unclaimed funds never escheat to a State or revert to the school or any other third party. If the school is unable to deliver the funds by the applicable deadlines (see Volume 4, Chapter 2 of the FSA Handbook), the funds must be returned to the Department.
Normally, any such returns would be offset by a downward adjustment in the student’s Pell Grant, Direct Loan, and/or TEACH Grant record in the COD System. However, once a school has assigned the Coronavirus Indicator to a Pell Grant, Direct Loan, or TEACH Grant disbursement, the school is unable to modify the disbursement amount. In these situations, a downward adjustment to the student’s COD records is not required, and the school is instead directed to return the funds using the G5 Miscellaneous Refund process.