A Pell overpayment occurs when you are awarded a grant, your classes are paid for, and you either drop out of school or withdraw from classes.

When this happens, you will need to pay the money back. The amount may vary: each school will dictate its policy on withdrawal.

Example: You are going to attend a community college and your EFC is zero. You are awarded the maximum amount of Pell Grant -- $2,025 -- for the fall semester. The Pell pays for $1,000 in tuition and books, and you get a refund check from the school for the remainder of the Pell Grant, $1,025. You get your books and supplies and even have some money left over. A month into the semester, you decide that school is not for you and you drop out. The school will send you an overpayment notice that tells you that you were paid Pell Grant money and did not attend class, and you owe them $2,025.

This money has to be paid back to the school. You will not be able to get financial aid at any school in the future if this is not paid back.

Your school is required by law to provide you with their withdrawal policy at some point during the registration process.