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Financial Aid Disbursement: How It Works

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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 loans and grants

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:

30-day delay

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.

Entrance counseling

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 in about 30 minutes.

Other disbursement requirements

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.

Parent PLUS loans

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.

Frequently asked questions

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.


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