1. (a) All institutions participating in the financial aid programs outlined in chapter 22 and chapter 24 of this title (relating to Student Loan Programs), unless otherwise specified, shall follow the guidelines for the timely distribution of funds, as outlined in this section:

   1. (1) Timely Disbursement. Institutions shall disburse state student financial aid funding to a student recipient's account or, in the case of work-study, through a paycheck, no later than three business days after receiving the funds. Institutions must return undisbursed funds to the Coordinating Board no later than ten calendar days after the receipt of funds. Institutions may disburse gift aid and work-study funds for which a student is no longer eligible to a different eligible student for whom funds have not yet been requested in order to meet the timely disbursement requirement.
   2. (2) Timely Determination of Ineligibility. For state student financial aid funding already disbursed to a student, except work study, institutions shall return funds to the Coordinating Board within forty-five calendar days of a student becoming ineligible for the funding. Gift aid funds for which a student has been determined ineligible may be disbursed to a different eligible student for whom funds have not yet been requested in order to meet the timely determination of ineligibility requirement. In all cases, an institution must provide notification to the Coordinating Board regarding the change in student eligibility, as appropriate for the particular student financial aid program.
   3. (3) Timely Cancellation. For state student financial aid funds already disbursed to a student, except work-study, institutions may return funds to the Coordinating Board within 120 calendar days of disbursement in situations where a student has notified the institution of his or her decision to cancel the financial aid. Gift aid funds for which a student has made the decision to cancel may be disbursed to a different eligible student for whom funds have not yet been requested in order to meet the timely cancellation requirement. In all cases, an institution must provide notification to the Coordinating Board regarding the student's decision to cancel financial aid, as appropriate for the particular student financial aid program.
2. (b) Re-offering of funds. Funds made available from financial aid adjustments, as detailed in §22.8 of this subchapter (relating to Financial Aid Adjustments) are subject to the requirements of timely determination of ineligibility in subsection (a)(2) of this section.

3. (c) Late Disbursements of Gift Aid.

   1. (1) A student may receive a gift aid disbursement after the end of his/her period of enrollment if the student:

      1. (A) Owes funds to the institution for the period of enrollment for which the grant is being made; or
      2. (B) Received a student loan that is still outstanding for the period of enrollment.
   2. (2) Funds that are disbursed after the end of the student's period of enrollment must be used to either pay the student's outstanding balance from his/her period of enrollment at the institution or to make a payment against an outstanding student loan received during that period of enrollment. Under no circumstances are funds to be released to the student.
   3. (3) The institution shall retain documentation proving the late-disbursed funds were used to make a payment against an outstanding balance at the institution from the relevant period of enrollment and/or to make a payment against an outstanding loan taken out for the period of enrollment.
   4. (4) Unless granted an extension by the Coordinating Board, late disbursements must be processed prior to the end of the state fiscal year for which the funds were allocated to the institution.

Source Note:The provisions of this §22.2 adopted to be effective May 22, 2017, 42 TexReg 2719; amended to be effective November 16, 2022, 47 TexReg 7555; amended to be effective May 15, 2025, 50 TexReg 2786; amended to be effective February 12, 2026, 51 TexReg 728.