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Does your institution offer any remedial classes in ethics and integrity?
FMK didn't steal money from her employer or hatch a plan to raid and abscond with the tuition plan's assets. The employer made a mistake. FMK acted in good faith, followed her company's policies and procedures, and was unaware that she'd been overpaid.
When I read FMK's original message, I got a picture of someone who's distraught because of some very recent bad news. FMK had been told that she owes money to her employer (possibly thousands of dollars?). Because she's a student and works part-time, she may not have the financial means to pay the debt. I also wonder whether FMK relied on bad information when she made her decision to enroll in classes -- would she have chosen a less expensive school, or taken fewer courses, if she'd known that her tuition wouldn't be 100% reimbursed?
To FMK - You ask us, several times, "is this legal?" This message board (or any website) isn't the place to find legal opinions, interpretations, or advice. You really do need to rely on an attorney for resolution of a legal problem. I sincerely hope things work out for you.