Are you a student who received a student loan refund check? Lucky you! Refund checks can be thousands of dollars — that’s a lot of money! It’s easy to want to spend it, but there are important things to consider when you receive a refund check. Continue reading to learn about students’ options when they receive their refund!
Related: How to create a budget in college
What is a refund check?
When students borrow loans or receive financial aid, the amount borrowed is based on their school’s cost of attendance. The cost of attendance is an estimated amount that includes tuition, fees, room and board, textbooks, supplies, and other expenses related to education.
It is just an estimate, so oftentimes the borrowed amount exceeds the actual amount paid for the semester. When this happens, your school will give you a refund to pay the difference. The refund can come in the form of a check, direct deposit, or credit to your school account. Refunds are disbursed every semester, usually after your school’s add/drop period.
It’s important to know that refund checks are not “free” money. Any amount that students choose to spend will have to be repaid with interest. Below are some tips to be sure you use your refund in the best way!
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Spend it on essentials
Receiving thousands of dollars can be exciting. Students may want to spend their refund on things like clothes, technology, or a vacation. This is not the wisest thing to do, and it can form poor financial habits. Students should spend their refund on things related to the cost of attending college, or something that will advance their future. Some of these costs include:
- Textbooks, notebooks, and other supplies
- Transportation or a parking pass
- Living expenses such as rent or groceries
- A new laptop
Quick Tip
Remember, a student loan refund check is money that you will eventually have to pay back with interest. Unless you are in need of additional money, the best option may be to return the refund so you don’t have to pay interest.
Other essentials that a refund check can be used for are investing in a college fund for graduate school or using it to pay off other debts, such as credit card debt.
Remember, your school gave you financial aid because they thought you’d need it. Don’t feel bad about spending your refund check if you have to. Just be sure that you’re smart about it because it will have to be paid back.
Also see: How to save money in college
Save your refund for an emergency
College life can be unpredictable. Another way to use a student loan refund check is to save it for an emergency. You can accept your refund and leave it in your bank account just in case any unforeseen expenses arise.
Saving your refund for an emergency is a great way to start building good financial habits.
Return it to pay off student loans
Students don’t have to accept or use their refund check. If you’re not in need of extra money, you can return the refund before it starts to accrue interest. Returning a refund check is essentially paying off a chunk of your loan balance early. You can also choose to accept some and return the rest.
See also: Paying off student loans early
Key Takeaways
Keep reading:
For students, college can be a financially challenging time. Learning how to fill out the FAFSA is an important first step in the financial aid process.Learn how to write a winning scholarship essay and become more confident when you apply. of luck in your future endeavors and remember, Scholarships360 that is here to help! Make sure that you apply to all the scholarships you qualify for while you are eligible!
Frequently asked questions about student loan refund checks
A refund check is money that is directly deposited to you by your college. It is the excess money left over from your financial aid award after your tuition and additional fees have been paid. Your college may send you a check or the money may be deposited into your checking account. Why did my college send me a check?
Technically, yes. However, it is recommended to use your financial aid refund towards any education-related expenses such as books, transportation, housing, or food. Can you spend your financial aid refund on anything?
