You’ve filed the FAFSA and accepted your award letter, but now what? How do you physically get that money you need to pay for college? That happens through a process known as financial aid disbursement.
What is Financial Aid Disbursement?
Financial aid disbursement is the process by which financial aid money gets paid to the institution or person that it needs to go to. For the most part, your financial aid money goes directly to your college. Some forms of financial aid (like work-study funds) go directly to you.
The disbursement process is fairly automatic—you don’t have to do anything except maybe complete loan entrance counseling. Your college and your lender will keep you in the loop about when your money is coming, how you’ll receive it, and how much you borrowed.
When Will I Receive My Financial Aid Money?
Colleges and universities disburse financial aid money at least twice per year—generally once per term. The only exception to this is work-study funds, which must be paid at least once per month.
The specific timeline depends on your school’s policy. However, you can get a good idea of the timeline based on your borrower status and the type of money you’re receiving:
Parent, Parent PLUS Loans—These are disbursed at least twice per academic year directly into the child’s school account for tuition, fees, room, and board. Remaining funds get sent to the parent or student at the request of the parent.
First-Year Student, All Federal Aid Money—At many schools, your first disbursement takes place 30 days after the first day of enrollment. If your semester started September 1, you wouldn’t receive any money until October 1.
First-Time Undergraduate Borrower, Direct Loans—You don’t receive funds until after you complete loan entrance counseling. Then, you might have to wait 30 days after the first day of enrollment.
Repeat Undergraduate Borrower, Direct Loans—You will receive funds at least 10 days prior to the start of term.
First-Time Graduate Borrower, Grad PLUS Loan—You don’t receive funds until after you complete loan entrance counseling.
Student, Work Study Funds—Assuming you work throughout the year, you will be paid at least once per month. Your college might even pay biweekly.
How Much Do I Get Disbursed?
Colleges and universities disburse financial aid in at least two installments each year. At most institutions, you’ll receive funds at the start of the fall semester and again at the start of the spring semester.
For example, say that your financial aid award equals $15,000.
Fall Semester: The college will apply $7,500 to your student account to cover tuition, room and board, and related fees (in that order). Anything left over gets refunded to you.
Spring Semester: The college will apply $7,500 to your student account to cover tuition, room and board, and related fees (in that order). Again, anything left over gets refunded to you.
The total amount will equal the amount listed on your accepted financial aid package. If you notice a discrepancy, reach out to your college’s financial aid office.
Can I Return My Financial Aid Disbursement Refund?
Sometimes, your financial situation changes in a good way. When this happens, you can return any unused loan money within 120 days of disbursement without having to pay any interest. If you wait longer than 120 days, you might owe a small amount of interest on the returned amount.
Reasons you might return disbursed financial aid funds include:
- You accepted more financial aid money than you ever actually needed
- Off-campus rent is much cheaper than anticipated
- You switched to a cheaper on-campus dorm
- You were hired as an RA and no longer need to pay for room and board
- You won a scholarship over the summer
- Your books cost less than you thought they would
- You received an inheritance
- You got a new job
Return unused borrowed funds whenever possible—even if it’s only a few hundred dollars. It might seem like an easy way to stash some quick cash, but it will cost you in the end.
Grant money works differently. If you receive a refund from a Pell Grant, keep the money to help pay for your books, supplies, housing, transportation, and other related college expenses. Grants do not have to be repaid and do not accrue interest.
Financial Aid Disbursement Refund for Books and Supplies
Your financial aid package is based on the total cost of college—not just the bill you’ll owe the school for tuition and on-campus room and board.
If you’re like most students, the biggest chunk of your financial aid money will go directly to your college to pay for tuition, fees, room, and board. The rest of the money gets refunded to you to use to cover any other college-related costs, including books and supplies and living expenses.
How Do I Get the Financial Aid Money Needed to Pay for Books and Supplies?
Your college or university will refund you any remaining financial aid money after using it to pay for tuition, room and board, and required fees.
Remaining funds get disbursed to you as directed—a check or a deposit into your bank account. Some schools also offer students book vouchers for the student bookstore, but you can opt out of these and purchase books on your own. It nearly always makes more financial sense to get your books somewhere else.
When Do I Get the Money for Books and Supplies?
Colleges and universities participating in federal student aid programs must give you a way to purchase your books and supplies by the seventh day of the semester. Of course, this only applies if:
- You are eligible for financial aid disbursement 10 days prior to the start of the term
- You will have money left over (a credit balance) after applying funds to room/board, tuition, and required fees
How Much Money Do I Get for Books and Supplies?
Within the first week of the term, your school must disburse the lesser of:
- Your expected credit balance
- The actual amount needed to cover books and supplies or the amount that was used to calculate the cost of attendance
If there is any other money remaining, your school will get that to you at some point during the semester. The exact time frame for those refunds is up to the college. That’s why it’s important for you to plan for expenses like off-campus rent, transportation, and groceries.
When Does Financial Aid Repayment Begin?
Repayment can start as soon as your loans are disbursed, or you can wait until you hit your repayment period:
Undergraduate borrowers and grad PLUS borrowers don’t have to start repaying their loans until six months after graduation, leaving school, or dropping below half-time enrollment.
Parent borrowers can make payments immediately or choose a deferment option:
- Defer all payments until their child graduates or falls below half-time enrollment
- Defer all payments until 6 months after their child graduates or falls below half-time enrollment
Remember, disbursement day is more than just the day you get your loan funds. It’s also the day that your unsubsidized Direct loans and/or PLUS loans start accruing interest. If you can afford it, at least start paying off the interest while you (or your child) are in school. The more you pay off now, the better off you’ll be in the future.
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