Avoiding VA Overpayments

You can help avoid or minimize overpayments by promptly notifying the VPS office of all status changes.

Overpayment of educational benefits occurs when you receive an incorrect benefit payment that is more than what you are entitled to receive. The educational benefits you receive are affected by any changes you make in your current registration including full-time/part-time status, cancellation, withdrawal, college/major, and academic standing (suspension/dismissal).

If the withdrawal reduces your VA pay rate, it may result in an overpayment of VA Benefits.  You will have to establish that you withdrew for a reason that was beyond your control, unanticipated, and unavoidable in order to receive payment through your last date of attendance in the dropped class (unless you received a "W" for the withdrawal and you have not yet used the VA's one-time exclusion rule).  Generally VA documentation to approve these mitigating circumstances.  Any payment received for the period following the official drop date must be paid back to VA, regardless.

Grades that do not count toward graduation at UC are: "NG", "W", "T", "NP", "UW", "X", "SP", "UP", "F" grades assigned for a withdrawn class, and Graduate credit level "I" grades.  You will need to establish that you received the grade due to circumstances beyond your control.

There are just a few exceptions to these rules at UC:

• First-time "W" grades that reduce your VA pay-rate (See "VA Exclusion Rule" in your "Glossary of VA Terms").

• "SP" grades assigned for classes entitled "Master's Thesis Research" and "PhD Dissertation Research".

• College of Law students matriculated in the JD degree program.

• College of Medicine students matriculated in the MD degree program.

The law requires that VA must collect all benefits paid to a beneficiary for a course for which the grade assigned is not used in computing the requirements for graduation including a course from which the beneficiary withdraws, unless there are mitigating circumstances.

This means that if you withdraw from a course, unless you can demonstrate to VA that there are mitigating circumstances, you must return all of the money paid to you for pursuit of that course from the start of the term, not merely from the date you dropped the course.

Examples of acceptable mitigating circumstances are prolonged illness, severe illness or death in your immediate family, and unscheduled changes in your employment or work schedule.  Examples of unacceptable mitigating circumstances include withdrawal to avoid a failing grade, dislike of an instructor, or too many courses attempted.  You will be required to submit evidence to support your reasons before they can be accepted by the VA.  The required form to use for submitting mitigating circumstances (#21-4138) is available upon request.

• Add interest charges and collection fees to your debt.

• Withhold future benefits and apply them to your debt.

• Turn your debt over to a private collection agency.

• File suit in federal court to collect the debt.

• Withhold approval of your VA home loan guarantee.

• Collect the debt from your federal income tax return.