What to do with a refund from your school

When your aid is more than what you owe the school, the difference comes back to you as a credit balance refund. This page explains how that refund is paid, what part of it may be borrowed money, and the choices you have before you spend it.

Where the refund comes from

Your school applies grants, scholarships and loans to tuition, fees and, if you live on campus, housing and meals. Any amount left over is a credit balance, and federal rules generally require the school to pay it to you within 14 days. Schools may call this a refund, an excess aid payment or a disbursement.

The refund is meant for other education costs, such as off-campus rent, food, books and transportation. Check your student account to see which award created it, because the source decides whether any of it must be paid back.

How you receive it

Most schools pay by direct deposit, a paper check, or a card or account run by a partner company. You have the right to choose, and the school must let you use an account you already own. You can also give the school written permission to hold the balance for later charges, and you can cancel that permission.

Choose your refund method before the term starts, so the money reaches you without delay. The bursar or student accounts office can show you where that setting lives in the portal.

Before you spend a refund

• Which award created the refund
• How much of it is a loan
• Your weekly budget for the term
• Your refund method in the student portal

If part of it is a loan

Any refund that came from a loan has to be repaid with interest. Before spending it, compare it with your term budget and decide whether you need all of it. Returning money you have no use for is the simplest way to borrow less.

For federal Direct Loans, you can return all or part of a disbursement within 120 days, and the amount you return is treated as if it had never been borrowed, with no interest or fees. Ask the financial aid office how to do that, or ask it to reduce future disbursements so less arrives next term.

Other things to keep in mind

If you withdraw from all your classes during the term, federal Return of Title IV rules may require some aid to be returned. That can leave a balance on your account even after the refund is spent, so talk to the financial aid office before withdrawing.

Grant money used for living costs may count as taxable income, so keep your award letters with your tax papers. A school has no reason to ask for your bank password to send a refund, so treat any message asking for one as a scam.