- They can only return funds that have been disbursed in the current award year, so nothing from previous award years. If the disbursement hasn't been made, they can decline a disbursement to be made.
- They have to return it to the school, and then the school will refund the money.
- The students has to submit signed statements to the school, saying that they understand that the money they are refunding (or declining) is going back to the government, and also acknowledging that the Pell Grant funds may not be available after the award year is over. They may not be available if their Pell Grant awards change. Since the Lifetime Limit is according to percentage rather than amount, if your full pell is $5550 as opposed to a full pell of $3000, a quarter disbursement would be $1850 and $1000 respectively, but they are both 33%.
We'll see how many people actually do this. If you think/know that you're going to receive a higher Pell Grant in the following year, and you don't want to burn your eligibility on a small Pell Grant, then that could be a strategy if you have something else to supplement the Pell you are declining. On the other hand, I don't know many people who will turn down grant money from the government. Just remember that it's an option.