Financial aid disbursement is the payment of federal aid to the student (or parent, in some cases) at the beginning of each semester. Your funds usually go straight to your financial aid office, which will apply the money toward your tuition bill.
Once the financial aid office has covered your tuition and fees, it will send any leftover funds to you within 14 days. That said, every school is different, so it’s worth contacting your financial aid office to learn about its specific policies.
What’s more, financial aid disbursement rules can vary depending on your year in school and the type of student aid you receive. Let’s take a closer look at financial aid disbursement for…
- Student loan and grant disbursement
- Parent PLUS loan disbursement
- Work-study disbursement
- Plus: Financial aid disbursement FAQ
Any financial aid you’ve been awarded through a student loan or grant will automatically go toward your tuition, fees and room and board. Once that amount has been applied, your school has up to 14 days to send any remaining funds directly to you (or to your parent, if they’re borrowing a Direct PLUS loan).
Your disbursement is typically split into at least two equal payments over the course of an academic year.
Here are some details to be aware of:
If you are a first-year undergraduate borrowing money for the first time, you could be looking at a delay of 30 days before the loan is disbursed. (That’s 30 days from the first day of the term for which the financial aid is awarded).
Check with your school’s financial aid office to find out whether this 30-day delay applies.
First-time borrowers of Direct subsidized and unsubsidized loans are expected to go through entrance counseling before financial aid disbursement.
The same is true for graduate and professional students who take out Direct PLUS loans for the first time; they must complete entrance counseling, too.
You can typically complete entrance counseling online at StudentAid.gov in about 30 minutes.
To avoid any potential disbursement delays, make sure you do all of the following as soon as possible:
- Register for the number of classes needed to meet the credit requirements to receive your student aid.
- Resolve any issues with your Free Application for Federal Student Aid (FAFSA) so your financial aid disbursement is timely.
- Sign your Master Promissory Note (MPN) for Direct Subsidized and Unsubsidized loans.
If you’re not sure whether you’ve met all of these requirements, contact your school’s financial aid office.
When your loans are disbursed, you will get two notifications: One from the school letting you know your aid has been disbursed and one from your loan servicer confirming the disbursement.
If there are any funds from grant or student loan disbursements left over once tuition, fees, and room and board are paid, the remaining balance, often called a credit balance, will be paid directly to you in the form of cash or check, or deposited into your bank account.
You can do one of two things with your refund:
- Use it wisely to cover other college expenses, like books, supplies and transportation.
- Return student loan money you don’t need for college expenses. By returning extra student loan money, you can minimize your student loan debt and reduce interest fees.
Similar to loans for students, financial aid awarded through parent PLUS loans must be automatically applied to tuition, fees, and room and board first. Also similar to student loans, disbursements of parent PLUS loans are typically split into at least two payments over the course of the academic year.
Any remaining balance is refunded to parent borrowers unless otherwise instructed. Parents can request that refunds be made directly to the student, instead.
Unlike student loans, parent PLUS loans do not require entrance counseling.
Unlike other forms of financial aid that automatically go toward your college costs, the money you earn on your work-study job must be paid directly to you unless you request otherwise.
Expect to be paid by cash or check. If you prefer, you can ask the school to deposit your payments into your bank account. Either way, you must be paid at least once a month.
What paying you means, of course, is that you have complete control over how your work-study money is spent. If you would rather relieve yourself of this responsibility, you can ask your school if they will put the money directly toward tuition, fees, or room and board instead.
- How long does it take to receive my financial aid check?
- How do I get my financial aid money in my bank account?
- What if there’s a problem with a financial aid disbursement?
- How are private student loans disbursed?
- How should I use my refund?
Your aid will typically be sent to your school to cover tuition and fees at the beginning of each semester. Once that amount has been applied, your school will send the leftover funds, called a credit balance, to you. Schools must send this credit balance to you directly within 14 days, but you can contact your school’s financial aid office to find out its exact disbursement schedule.
Speak with your school’s financial aid office about how it will send you your credit balance. If direct transfer into a bank account is possible, find out how to provide your bank account information in a secure way.
Maybe the student aid you received is the wrong amount, or maybe a payment hasn’t shown up at all. Whatever your issue with a student aid disbursement, contact your school’s financial aid office to see about resolving it.
Similar to federal student loans, private student loan money is typically sent straight to your school around the beginning of the semester, which then applies it to tuition and fees. It will also usually be sent on a semester basis, rather than all at once for the full year. Your school should then send any remaining amount to you. Since each private lender is different, though, it’s worth checking with yours to find out exactly how and when it will disburse your loan money.
Financial aid is intended to go toward college expenses, so use it accordingly. As mentioned, returning any leftover funds is a good way to reduce your debt and cut down on interest charges.
That said, you probably need to use some of your student loan refund on textbooks or equipment and supplies such as a new computer. If you live off campus, maybe you need to use your refund for rent, utilities or groceries.
In other words, use your student loan disbursement for things you really need or can’t cover with a part-time job. To help you figure out what that is, get yourself a basic college budget.
Meredith Simonds contributed to this report.
Interested in refinancing student loans?Here are the top 9 lenders of 2022!
|Lender||Variable APR||Eligible Degrees|
|1.74% – 8.70%1||Undergrad & Graduate|
|1.74% – 7.99%2||Undergrad & Graduate|
|4.44% – 8.09%3||Undergrad & Graduate|
|1.74% – 7.99%4||Undergrad & Graduate|
|1.89% – 5.90%5||Undergrad & Graduate|
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|1.86% – 6.01%||Undergrad |
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1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
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. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 4, 2022.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Student Loan Refinance Interest Rate Disclosure Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years 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%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Let us know if you have any questions and feel free to reach out directly to our team.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Apr 22, 2021 and may increase after consummation.
4 Important Disclosures for SoFi.
Fixed rates range from 3.49% APR to 7.99% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
5 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
6 Important Disclosures for Navient.
7 Important Disclosures for 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.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 5/17/2022 student loan refinancing rates range from 2.05% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.93% Fixed APR with AutoPay.
8 Important Disclosures for PenFed.
Fixed Rate Loan Terms: 5 years/60 monthly payments, 8 years/96 monthly payments, 12 years/144 monthly payments or 15 years/180 monthly payments. Annual Percentage Rate is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed rates range from 3.29% to 5.43% APR. Rates are subject to change without notice. Fixed APR: Fixed rates will not change during the term. This rate is expressed as an APR. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.