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Financial Aid Disbursement: How It Works

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Content was accurate at the time of publication.

Financial aid disbursement is when your loans or grants are paid out at the beginning of each semester.

Typically, issuers send your financial aid funds directly to the school, and the school then applies the money to your tuition, fees and other expenses. If there is money left over, the school will send the remainder to you, and you can use it to cover your other expenses, such as your textbooks or transportation.

Financial aid disbursement dates vary by school, but are generally between 10 days before the start of the semester and 30 days after classes begin. Factors affecting financial aid disbursement include the type of aid and your year in school.

Disbursement of student loans and grants

With both grants and student loans, any aid you receive will be automatically applied to your school-required tuition, fees and (if you’re living on campus) your room and board.

Schools usually disburse financial aid in two payments per academic year, so you’ll have two financial aid disbursement dates. For example, you would likely receive one disbursement at the start of the fall semester, and another at the beginning of the spring semester.

If you have financial aid remaining after the college applies it to your tuition and other required expenses, it will disburse the remainder to you. Schools must issue the remaining amount to you within 14 days unless you authorize your school to keep the money to pay for future charges.

So when does financial aid disburse for you specifically? Here are some details that could affect the answer:

30-day delay

If you are a first-year undergraduate and taking out federal student loans for the first time, you may have a longer waiting period. First-year borrowers are subject to a 30-day delay after the first day of the school’s waiting period before the college is allowed to disburse your loan funds. Not all schools utilize the 30-day rule, however, so contact your college’s financial aid office to find out if it applies to you.

Entrance counseling

First-time borrowers of federal Direct subsidized and unsubsidized loans must complete entrance counseling before your college can disburse your financial aid.

The same is true for graduate and professional students who take out Direct PLUS loans for the first time — if you’re using federal student loans to pay for graduate school, you must complete entrance counseling, too.

Fortunately, you should be able to complete entrance counseling online at in as little as 30 minutes.

Note that entrance counseling must be completed within a single session, so make sure you have enough time before you begin.

Other disbursement requirements

To avoid any potential disbursement delays, make sure you take care of all the following tasks as soon as possible:

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 another from your loan servicer confirming the disbursement.


If there are any funds from the grant or student loan disbursements left over after 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 else deposited into your bank account.

You can do one of two things with your unused student loans:

  • Use it to cover other college expenses, like books, supplies and transportation.
  • Return the student loan money you don’t need. By returning extra student loan money, you can minimize your student loan debt and reduce interest charges. You can return the unused portion — without paying interest or fees on that amount — within 120 days of the disbursement date. After that, you can repay it, but interest and fees will have accrued.

Disbursement of Parent PLUS loans

Similar to loans for students, financial aid awarded to parent borrowers, such as through the Parent PLUS loan program, is automatically applied to tuition, fees, and room and board first. Disbursements of Parent PLUS loans are also split into at least two payments over the course of the academic year.

The school will issue any remaining balance after covering school-required fees to the parent, unless the parent borrower requests that the funds go directly to the student instead.

Unlike undergraduate and graduate loans, Parent PLUS loans don’t require entrance counseling unless the parent has an adverse credit history. However, parents can take entrance counseling voluntarily if they want to have more information about how their loans work.

Work-study and financial aid disbursement

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, check or direct deposit.

Regardless of payment method, schools are required to pay you at least once a month.

Since you receive work-study funds directly, you’re responsible for using the money to pay for your education expenses. If you’d rather relieve yourself of this responsibility, you can ask your school to put the money directly toward tuition, fees or room and board instead.

Your aid is usually sent to cover tuition and fees at the beginning of each semester. Once that amount has been applied, your school will send the leftover funds, usually called a “credit balance,” to you. Schools must send this credit balance to you 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 to find out how it will send your unused credit balance. Typically, funds are disbursed via check or debit card, but you can also opt for direct deposit to your bank account.

If you have a problem with your financial aid, such as receiving the wrong amount, contact your school’s financial aid office to see what you can do to fix it.

Unfortunately, financial aid delays can happen. The most common reasons for delays include the following:

  • Not registering for enough credits: With most grants and student loans, you must be enrolled at least half time. If you’re below the required credit amount, your financial aid won’t be issued.
  • Incomplete loan counseling: Undergraduate and graduate students must complete entrance counseling before their loans are disbursed. (See above for more details)
  • Unsigned promissory note: Before your loan is issued, you must sign a MPN (See above for more details)

Similar to federal student loans, private student loan funds are sent straight to your school around the beginning of the semester. The school applies the money to tuition and other required fees. If there are funds left over, the school will disburse the remainder to you.

Private student loans are subject to laws affecting disbursement dates. Specifically, there is a three-day waiting period after you receive the loan disclosures before the loan can be disbursed. During that time, you can decide to cancel the loan without penalty.

Financial aid is intended to go toward college expenses, so use it accordingly. Likewise, returning any leftover funds is a good way to reduce your debt and cut down on interest charges.

However, there may be some education expenses that you’ll need to cover, and your financial aid can help you pay for them. Education expenses you should use student loans for include:

  • Textbooks
  • Computers, laptops or tablets
  • Supplies, such as computer software or notebooks
  • Transportation, such as the fee for a parking pass or bus fare
  • Care for dependents, such as day care for young children

If you live off campus, you can use the money to pay for your room and board, including rent, utility bills or groceries.

To help you figure out your monthly expenses, consider creating a basic college budget.

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