Typically, the school first applies your grant or loan money toward your tuition, fees, and (if you live on campus) room and board. Any money left over is paid to you directly for other education expenses.
Typically, student loans do not get deposited in your bank account. Instead, the loans are disbursed directly to the school where it is applied to tuition payments and room and board. If there is any money leftover after paying for tuition, the money will then be distributed to the student.
Your school must pay you directly unless you request that the school send your payments directly to your bank account or apply the money to for your education-related charges (such as tuition, fees, food, and housing). Reach out to your school's financial aid office for more information. Was this page helpful?
Typically, your college applies grant or loan money toward your tuition, fees, and, if you live on campus, room and board. Any money left over is paid to you for other expenses.
Private student loan funds are usually disbursed (sent) directly to your school's financial aid office. Personal loan funds are deposited directly into the borrower's bank account. Consider consulting with a tax and/or financial advisor to make sure you fully understand the differences.
Generally, payments go first to fees that are owed (late fees, phone payment fees, etc.), then to interest (including past due interest), then to the principal balance of your loan.
Generally, your grant or loan will cover a full academic year and your school will pay out the money in at least two payments called disbursements. In most cases, the school must pay at least once per term (semester, trimester, or quarter).
The student should keep no cash or cash equivalents saved in their name. Students are punished by the FAFSA for saving any cash. The FAFSA will specifically ask “As of today what is the cash balance of checking, savings…” accounts for the student.
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.
You should expect to get your federal student loan funds before classes start or up to 30 days after classes start. If you receive a federal student loan, you'll receive the funds in at least two payments, otherwise known as disbursements. Your school will likely provide your loan disbursements at least once per term.
When you apply for a student loan, the lender will let you know if there are student loans that go directly to you. If the funds are paid to you directly, you will need to provide your bank details. If the funds are paid to the school, they will require your school's account details.
Apart from recent FAFSA delays, the thing not all borrowers realize is that most student loans aren't disbursed immediately after they're approved. Normally, federal student loans are disbursed a few days before the start of the semester.
Direct Loan funds that are returned within 120 days of the disbursement by the school or the borrower, for any reason, are treated as a partial or full cancellation, with the appropriate adjustment of the loan fee and interest.
Borrowers often wonder how the U.S. Department of Education spends the interest that borrowers pay on federal student loans in the Direct Loan program. Most of the money goes to cover the costs of making, servicing and collecting the student loans, as well as defaults, discharges and loan forgiveness.
The funds you receive for your personal loan are often directly deposited into your bank account. Sometimes you receive a check, but many lenders will send the money directly to your account.
Although there are some broad requirements you must meet to qualify for federal aid, there's no FAFSA income limit. The FAFSA's calculations are complex and consider many factors outside of your earnings, including your school's cost of attendance, your family size, and your year in school.
Filling out the FAFSA can be a bother, and may feel like an invasion of privacy. Submitting the FAFSA requires opening new online accounts, saving passwords, looking up financial information, monitoring emails, etc.
Students selected for verification of their FAFSA form may wonder, “Does FAFSA check your bank accounts?” FAFSA does not directly view the student's or parent's bank accounts.
Federal Grants and Loans
Federal loans and grants, as well as state loans and grants, will be applied first to your student bill to cover tuition and other school costs. Then any leftover will be deposited to your bank account.
Contact the financial aid office at your school to find out when you'll receive your federal student aid. We don't determine when your aid is disbursed. Once we process your Free Application for Federal Student Aid (FAFSA®) form, we send the information to your school, and your school handles the rest.
Any funds you get are first applied to your bill for tuition and fees. Anything leftover will given to you according to school procedures. Or they will credit your student account and you have to request a check.
IDR plans may offer lower payments because they are based on your income and family size. Payments can be as low as $0 per month, depending on your circumstances.
If you make a payment within 120 days of the date your loan is disbursed to your school, the entire payment will be applied solely to the principal balance of your disbursed loan. The payment is treated as a loan cancellation payment, and it will be made effective the same date as when the loan was disbursed.
Here's how funds are sent to your school
A disbursement is funds that are sent to your school. Loan funds may be divided into multiple disbursements (usually one per semester). If you chose a repayment option that requires in-school payments, your monthly payments will begin as soon as your funds are disbursed.