34 C.F.R. § 657.31 – What is the payment procedure for fellowships?

(a) An institution must award a stipend to fellowship recipients.
(b) An institution must pay the stipend and any other allowances to the fellow in installments during the term of the academic year fellowship.
(c) An institution may make a payment only to a fellow who is in good academic standing and is making satisfactory progress.
(d) The institution must make appropriate adjustments of any overpayment or underpayment to a fellow.
(e) Any payments made for less than the full duration of a fellowship must be prorated to reflect the actual duration of the fellowship.