What can I use my financial aid refund for?

What can I use my financial aid refund for?
What can I use my financial aid refund for?

In order to receive financial aid for college, you’ll first need to file the Free Application for Federal Student Aid, (FAFSA®). Once your application has been filed, it’ll be sent to your school, and soon thereafter you’ll receive a financial aid award offer. 

If your financial aid award exceeds the amount you owe the school for tuition and other expenses at the time of disbursement, you will receive a financial aid refund. Each school has its own method and schedule for issuing students refunds (disbursement).

What is a Financial Aid Refund?

Most schools don’t give students direct access to their financial aid awards. Instead, they apply the award to tuition and other required costs at the start of the semester. When there’s a balance left over, the school issues the student a financial aid refund.

The leftover balance can come from loans, grants, or scholarships.

How Will I Receive My Refund?

Each school has its own method of financial aid refund disbursement, but there are three primary options:

  • Check – Some schools will write a check for the amount of the leftover balance and mail it to the student’s preferred mailing address.
  • Direct Deposit – Students may be given the option of having their financial aid refund sent to their bank via direct deposit. You will need to provide your school’s financial aid office with your bank account and routing information so they can make the deposit.
  • Student Accounts – The last option many schools provide is to have the leftover balance credited towards the student’s school debit account.

How Do I Know If I Am Eligible for a Refund?

Keep up to date with your account balances at school. Most schools have an online portal that allows students to easily monitor what they owe. If your balance indicates that you are owed a financial aid refund, contact your school’s financial aid office to coordinate disbursement.

When Will I Receive My Refund?

There is no one universal “set date” on which financial aid refunds are disbursed. The disbursement schedule is up to each school’s financial aid office and typically happens after essentials have been paid for each semester.

Some schools will apply the refund before the semester begins, and others will wait until after the add/drop period has passed. Additionally, some schools will disburse your refund all at once, and others will split it up into multiple payments.

Check your school’s website for their full financial aid schedule, and if the information remains unclear, don’t hesitate to contact one of the financial aid advisors. That’s what they’re there for!

What Should I Do With My Financial Aid Refund?

While your school and the government won’t be monitoring the money in your bank account, it’s a good idea to use your financial aid refund only for necessities.

If your refund was from a student loan, and you don’t need the money after your tuition, room, and board, and books have been paid for, consider working with your school’s financial aid office to return the excess funds. This will reduce the amount you need to pay back on your loan after school.

You will have a little more leeway if your refund was from a grant or scholarship instead of a student loan since you will not need to pay that money back. Still, exercising fiscal responsibility is important. Make sure you take care of any critical expenses before spending elsewhere.