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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College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. (2)$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. (3)This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 1/27/2021. Variable interest rates may increase after consummation.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
Ascent: Ascent’s undergraduate and graduate student are funded by Bank of Lake Mills or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 9/1/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.
*The minimum amount is $2,001 except for the state of Massachusetts. Minimum loan amount for borrowers with a Massachusetts permanent address is $6,001.