When students receive a federal loan, a FAFSA refund check may be issued if the entire loan extends more than the cost of tuition and other necessary expenditures. Students will likely receive a FAFSA refund for what is left over from the initial loan amount.
However, before asking “When do I get my financial aid refund?” students should understand the responsibilities that accompany the money.
A financial aid refund check is one of the many ways in which the remaining balance can be dispersed. In some cases, it will be up to the student to determine which way he or she wishes to receive the remaining funds. Some students may choose to have the money deposited within their personal bank accounts, or use the finances for other school necessities such as room and board or books.
A FAFSA refund check is provided to students as “extra” money that is left over from a student’s financial aid package. When a student receives a financial aid refund check, it will be after the financial aid covers:
Related Article: Receiving Your Federal Student Aid
A student who receives the financial aid reimbursement will often be able to choose whether the leftover money is received through check, cash, direct deposit to his or her bank account or otherwise. Since FAFSA refund disbursement tends to take place at the beginning of the semester, a student will likely have the freedom to do with what he or she chooses with the remaining loan money. In some cases, however, thousands of dollars end up being refunded to a student, which can be potentially dangerous, especially for students who have limited experience when it comes to financial responsibility.
A FAFSA refund check is determined by a few different factors. When financial aid is assessed, the financial aid office at a chosen school will consider the cost of attendance as well as the toward tuition. The school will subtract the expected contribution from the cost and determine how much a student will be need. The size of the FAFSA loan can take into a few different variables, which is why some loans can be much higher than a student’s needs. When a student loan exceeds a student’s actual expenses, the result is a financial aid refund. Once a surplus from all available sources of aid is assessed, including federal and private loans, a student can be issues a refund check for FAFSA to cover the difference.
Students that are expecting a FASFA refund should anticipate that the additional funds are likely not to be paid until after the add/drop period for classes. Once the grace period in which a student can tweak his or her schedule ends, penalties will be enforced for students who still want to make changes. However, the cost for those classes will be set, which means a refund check for FAFSA can be disbursed. Usually the disbursement period for refunds is about three to four weeks into the semester, yet certain schools may have a particular timeframe that they follow.
When a FAFSA refund check is disbursed, a student likely will have the option in which the payment is made. While many students opt to have a check sent for the leftover funds, refunds can also be directly deposited into a student’s personal bank account as well as a student’s school account. In the case where the federal loan is taken out by the parent of the student, the remaining refund amount will be sent directly to the parent. If a parent wishes for his or her child to have the refund check for FAFSA, then he or she will need to provide written notice to do so.
One of the biggest issues that can arise from a FAFSA refund check is that it is provided to a student who has limited knowledge of how to budget and spend money responsibly. In cases in which a FAFSA refund check is issued, a student will receive thousands of dollars in additional, unexpected money, with very little if any direction in how to spend it. The problem is that when a student receives financial aid reimbursement, it may seem like a surplus in the moment, but after he or she graduates, that money will still need to be repaid. So when a student receives an extra few thousand dollars a semester or year, he or she will still be responsible for that money later on after graduating. This can potentially lead to extremely high . Accepting a student loan refund without assessing the financial implication can end up being a quite costly mistake for a student in the long term. Students should consider that the less they borrow for college expenses, the less that will need to be repaid after graduation.
When many students receive a large FAFSA refund check, the initial thought for how to spend it may be something unrelated to school or something lavish for themselves. However, there is another option for financial aid refunds—returning it. For students who are aiming to spend responsibly and thinking about the long term, returning a refund check for FAFSA is always an option. The excess amount will be removed from a student’s financial aid package when the refund check is returned to the Department of Education, which means the student will be free of repaying that amount post graduation. Students should consider that retuning the refund check is similar to paying off that amount of the loan almost immediately.
Students who wish to keep the FAFSA refund check can still spend the money wisely. Spending a loan refund can include:
It is important to remember, however, that despite how a student chooses to spend his or her refund check for FAFSA, the money will always need to be repaid in the end, with accrued interest.
Related Article: How to Complete the FAFSA Form