Feb 09, 2021
Student loans are designed to help you cover qualified education expenses, like tuition, fees and on-campus housing. Once the school applies the loan proceeds to your tuition bill, it's possible that you could receive what is commonly referred to as a "student loan refund."
A student loan refund most often happens if you're borrowing money to help cover college costs beyond tuition, fees and housing. For instance, you might need funds to pay for textbooks, to purchase a new laptop or for other qualified education expenses.
Using a student loan refund to cover these expenses can keep you from having to rely on a credit card or personal loan that might carry a higher rate. If you get a refund keep in mind that it's not free money. Interest will continue to accrue even if you aren't making payments, and it will be added to your loan balance once you enter repayment.
If you end up with more money than you really need, talk to your school or lender to find out how to give it back. Lenders know this situation happens and many give you a period of time to return the funds without charging you interest. This time frame varies, so check the requirements sooner than later.
Beyond tuition, housing, meal plans and fees, don't forget to factor in the cost of books, which may be less predictable from one semester to the next. You can easily calculate your costs with our loan amount calculator.