What Are Financial Aid Refunds?

Portrait of a hand holding 4 twenty dollar paper bills.

Flickr user Amy Jutras

Financial aid refunds are refunds that are given to students when the amount of loan given to a student is more than what the student needs for the cost of education.

Here’s how it works.

The FAFSA and Financial Aid Packages

After you submit your FAFSA, you will receive a financial aid award letter. This letter gives you the breakdown of your financial aid package. Once you accept the package, your loan servicer will transfer the loan amount to the college you are enrolled in.

If your circumstances change between the time you accept the financial aid and the beginning of the semester, your financial aid package may be adjusted to reflect the change. For example, you may have won a few more scholarships outside of the college sponsorship or the school may decide to ask students to pay separately for something that was initially included in the cost of attendance. Whatever the reason, if the loan amount disbursed to the college exceeds your stated need, you will get a financial aid refund.

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Financial Aid Refunds

This amount that you receive as a financial aid refund may be paid as a check, credited to your account or deposited into your bank account directly. You can accept the money and use it for whatever you want. This is still considered as money loaned to you and it will attract interest. A better idea is to request that it be returned to the creator. If you decide to accept it, you should make sure that you spend it only on school-related items such as books or on memberships.

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