Over-award Resulting From a Reduction in Financial Aid
6189 Funds Applied over-award process
The funds applied over-award situation is created when financial aid is awarded and disbursed to a student's account, and then a subsequent reduction of financial aid is processed.
When this occurs, cash is returned to the financial aid account from the account the college established (in LSO for most colleges) for this process. Object code 6189 is debited and cash is credited. A receivable is also created in that account and the charge is put on the student's account. If the student pays this back, everything washes. This would then be like a clearing account and should be at or near $0.00 if the student pays in a timely fashion.
If the student does not pay, the receivable and expense would stay in that account until the receivable is written off, waived, or paid off by the college in another way.
Write-Offs
A write off would credit 6189 and debit 7903 (bad debt write off). If this is in LSO, a reimbursement would have to be made from another fund source to reimburse the account since funds in LSO should not be the college's money and can not be used for this purpose. The reimbursement would be a payment from object code 7903 from the reimbursing account and a receipt to object code 7903 in the LSO account. If a college does not account for this in LSO, then it is the college's decision whether or not to reimburse the account. (This account should not be in SFA or FFA.)
Waivers
A waiver would Credit 6189 and debit 6190 (Financial Aid Over Award Expense). If this is in LSO, a reimbursement would have to be made from another fund source to reimburse the account since funds in LSO should not be the college's money and can not be used for this purpose. The reimbursement would be a payment from object code 6190 from the reimbursing account and a receipt to object code 6190 in the LSO account. If a college does not account for this in LSO, then it is the college's decision whether or not to reimburse the account. (This account should not be in SFA or FFA.)
Possible Financial Aid Over Award resolutions:
- Student pays off the receivable - No action necessary.
- College decision to cover the charge and pay off the student's account. Pay from object code 6190 and receipt to the student's account.
- Waive the charge - The account may have to be reimbursed as described above. (If the college decides to waive this charge, be sure to document the reason for doing so.)
- Write Off the charge - The account may have to be reimbursed as described above.
- Financial Aid error by college - If the financial aid was incorrectly reduced, the college should correct the financial aid.
If you have questions or comments please email us (accounting@so.mnscu.edu) or refer to the staff directory link at the top of this page for additional contact information.
