What is an underuse waiver?
In accordance with HEA sections 413D(d)(2), 442(d)(2) and 462(i)(4), if a school returns more than 10 percent of its Federal Perkins Loan, FWS, or FSEOG allocation for an award year, the allocation for the next fiscal year for that program will be reduced by the dollar amount returned. The law also provides that the Secretary may waive this requirement if its enforcement would be contrary to the interest of the affected campus-based program. Your school must apply for such a waiver. Your expended amount from the FISAP is used to calculate the unexpended percentage of funds. The unexpended percent = (Highest award amount expended amount)/(Highest award amount) x 100 percent. If this unexpended percent is greater than 10 percent, you will receive a penalty next year unless a waiver has been approved. Funds returned during reallocation do not affect the underuse penalty calculation.
