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What to Do With a Student Loan Refund Check

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!

Also see: How to make money in college with a side hustle

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 like rent or groceries
  • A new laptop

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

Key Takeaways

  • There are no rules about what you can and cannot do with a student loan refund check. But be sure to budget wisely, and remember that any amount spent will have to be repaid later.
  • You can choose to put the money towards educational expenses, or next semester’s tuition, to reduce the amount of debt you will graduate with.
  • You don’t have to go all-in on any way to spend your check. You can divide it up however you’d like.
  • For any other questions about student loan refunds, contact your school’s financial aid office.
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. Apply to all scholarships you are qualified for as well. Scholarships360’s scholarship search tool can help students find scholarships to help finance their education! Learn how to write a winning scholarship essay and become more confident when you apply. Best of luck in your future endeavors and remember Scholarships360 that is here to help! 

Frequently asked questions about student loan refund checks 

Why did my college send me a check?

  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.

Can you spend your financial aid refund on anything?

Technically, yes. However, it is recommended to use your financial aid refund towards any education-related expenses such as books, transportation, housing or food.