The grant awarding agency, SUSI, is seeking a write off of €4m paid in error to third- level students in its first year of operation.
SUSI (Student Universal Support Ireland), which is gradually taking over the student grant processing work traditionally done by 66 local bodies countrywide, was mired in administrative chaos for its first year.
The overpayments, made to about 1,300 students in 2012/13, came to light in a report published last week by the Comptroller and Auditor General (C&AG).
The Dáil's Public Accounts Committee (PAC) announced last week that it was going to examine the operational deficiencies in SUSI in 2012/13.
In a recent letter to PAC, Department of Education secretary general Seán Ó Foghlú, stated that City of Dublin Education and Training Board (CDETB), which operates SUSI, has sought approval to write the overpayments off.
Mr Ó Foghlú said that CDETB had confirmed that SUSI normally requires students to repay grant overpayments, where they arise, but, for the moment, they had not pursued recovery of the money paid in error in 2012/13.
According to the letter, a decision on whether SUSI seeks repayment by the students is pending the outcome of ongoing discussions between it and the Department of Education.
While the department was carefully considering the proposals, any decision to write-off the overpayments would also require agreement of the Department of Public Expenditure and reform, Mr Ó Foghlú stated.
Among those who received payments in error were 790 students who were not entitled to a maintenance grant because they were in receipt of the Back to Education Allowance (BTEA), following a change in the rules in 2010.
A further 432 students who received grants did not meet nationality requirements.
Mr Ó Foghlú said a number of factors gave rise to the overpayments, including lack of understanding of grant criteria by applicants, availability and visibility of information to validate applications and the complexity of establishing the immigrant status of some non -EEA nationals.
Measures introduced in its second year have contributed to the smooth running of SUSI since 2013.
A key change was the roll-out of electronic data-sharing arrangements with Government departments such as the Revenue Commissioners, which has given SUSI direct access to information to validate applications.
Mr Ó Foghlú said other measures taken by SUSI to mitigate risk included additional internal controls and revised quality assurance procedures and enhanced training.
He said the department was satisfied that the level of overpayment identified in 2012/13 was a once-off occurrence.