Financial Aid Refund, Disbursement, And Payment Process. : Current School News

Financial Aid Refund, Disbursement, and Payment Process.

Filed in School News by on May 17, 2021

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Student loans are an excellent way for you to pay for your education. However, wading through the policies of student loan providers can be time-consuming. While lenders are usually quick to compensate institutions when tuition payment is required, those same lenders may be less prompt when they are making payments to students.

financial aid

What is College Financial Aid?

College financial aid disbursement refers to the aid payment process, which typically happens around the time classes start in the form of a credit to the student’s account.

Do you Know About Sallie Mae?

The Student Loan Marketing Association was originally created in 1972 as a government-sponsored enterprise (GSE) and began privatizing its operations in 1997, a process it completed at the end of 2004 when Congress terminated its federal charter, ending its ties to the government.

The company provides private education loans for students and their families.

 These loans are not made, insured, or guaranteed by any state or federal government.

In 2005, Sallie Mae was among 53 entities that contributed the maximum of $250,000 to the second inauguration of President George W. Bush.

In August 2006, Sallie Mae acquired Upromise, a company that provides rebates to buyers of certain brands, which can be applied to college savings accounts.

Sallie Mae and Upromise plan to market comprehensive financial packages to parents and students, including investment plans, financial aid information, and student loans.

On April 16, 2007, Sallie Mae announced that an investor group led by J.C. Flowers & Co. signed an agreement to purchase Sallie Mae for approximately $25 billion.

Had the transaction completed, J.C. Flowers along with private-equity firm Friedman Fleischer & Lowe would have owned 50.2% of Sallie Mae, and Bank of America and JPMorgan Chase would each have owned 24.9%. Sallie Mae would have ceased to be a publicly traded company.

 The deal fell through in September 2007, with the buyers blaming adverse changes to the business’s outlook as a result of the College Cost Reduction and Access Act of 2007 and the tightening of global credit markets following the 2007 subprime mortgage financial crisis.

 Sallie Mae subsequently began legal action, only to drop it in January 2008 upon completion of a $31 billion funding round, including funding from Bank of America.

SLM Corporation (commonly known as Sallie Mae; originally the Student Loan Marketing Association) is a publicly traded U.S. corporation that provides consumer banking.

 Its nature has changed dramatically since it was set up in 1973. At first, it was a government entity that serviced federal education loans.

It then became private and started offering private student loans, although at one point it had a contract to service federal loans.

The company’s primary business is creating, servicing, and collecting private education loans. The company also provides college savings tools such as its Upromise Rewards business and online planning for college tools and resources.

Sallie Mae previously originated federally guaranteed student loans originated under the Federal Family Education Loan Program (FFELP) and worked as a servicer and collector of federal student loans on behalf of the Department of Education.

The company now offers private education loans and manages more than $12.97 billion in assets. Sallie Mae employs 1,400 individuals at offices across the U.S.

On April 30, 2014, Sallie Mae spun off its loan servicing operation and most of its loan portfolio into a separate, publicly-traded entity called Navient Corporation. Navient is the largest servicer of federal student loans and acts as a collector on behalf of the Department of Education.

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Refund Checks to Students

If you are a college student who is expecting a refund check from your student loan after a portion has been taken out for tuition, you may be waiting for a while. It often takes time to work its way through the full process of the financial aid system.

First, you’ll have to wait for all forms of financial aid to be applied to your bill. These include other forms of financial aid, grants, and all loans.

Grants and Student Loans

Generally, your school will give you your grant or loan money in at least two payments called disbursements. In most cases, your school must give you your grant or loan money at least once per term (semester, trimester, or quarter).

Schools that don’t use traditional terms such as semesters or quarters usually must give you your grant or loan money at least twice—for instance, at the beginning and midpoint of your academic year or program.

How and When to Get Financial Aid

Refunds for all types of financial aid will begin 30 days after the start of the semester.

  • You will receive loan funds in two disbursements each semester.
  • The first disbursement will occur approximately 30 days after the beginning of the semester.
  • If tuition, fees, and bookstore charges are greater than the first disbursement.  The student will not receive a refund until the second disbursement of financial aid is received.
  • The second disbursement of loans will be made after the mid-point of the semester.
  • All financial aid funds will not be released until several weeks into the semester. You will need to plan ahead for non-educational expenses such as rent, transportation, and child care.
  • You must be attending classes and continue to meet all eligibility requirements to receive a disbursement.

Important Note:  Any withdrawals or late starting classes may delay refunds.

When is Financial Aid Disbursed?

The exact date of a student’s financial aid disbursement depends on the specific college he or she attends.

Financial aid is disbursed based on the start of classes or term dates. Colleges and universities set the disbursement date, and disburse aid no more than 10 days prior to the start of the term. The disbursement date can also depend on the type of aid awarded.

For example, a student who relies on federal student loans to pay for college may not see those loans disbursed until 30 days after classes start if the individual is a first-time student at certain colleges.

How is Financial Aid Disbursed?

Federal financial aid and institutional financial aid are disbursed in the form of a credit to the student’s account.

Outside aid, like that in the form of a scholarship from a private company, is disbursed differently from organization to organization. It may come in the form of a check mailed to the student or credit to the student’s school account.

CSN Team. 

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