Are you expecting excess funds from your federal financial aid funds?
Many students using federal financial aid ask what happens if they receive more federal financial aid than they need to pay for tuition and course material fees. This article will help answer some of those questions.
How funds are awarded
Federal financial aid funds are awarded based on a number of factors and on an academic year basis. The University defines an academic year as the time it takes a student to successfully complete at least 24 credit hours and 30 weeks of instructional time.
Generally, academic years/loan periods are divided into two payment periods. The first payment period ends after at least half of the credit hours and weeks are successfully completed (usually at least 12 credit hours and 15 instructional weeks). The second payment period is the remainder of the academic year.
Let’s assume that during a 24-credit-hour academic year, a student receives $7,000 in federal financial aid while his or her tuition and course materials fees total $5,000. The student authorized the University to retain the financial aid funds needed to pay for future applicable charges during the payment period.
Remember, one disbursement will be paid for each 12-credit payment period scheduled. In this example, the $7,000 financial aid award would be divided in half and scheduled in two disbursements of $3,500 — one for each payment period.
Tuition and course materials fees are charged as incurred. So for each payment period, the student will be charged $2,500, assuming all courses were successfully completed.
Since the first payment period will incur charges of $2,500, and the student will receive financial aid funds of $3,500, the student will receive $1,000 more in aid than is needed for payment period costs. In this case, once all aid is disbursed, the student would be eligible to receive a refund of $1,000 in excess financial aid funds.
Alternatively, excess funds can be returned to the lender to reduce student loan debt, at the student’s request.
The University can release your excess funds to you in one of two ways, and the choice is entirely up to you. Funds can be sent as a paper check, or they can be direct-deposited into your designated bank account.
You will make this election during the application process by completing the Credit Balance Delivery Option on the University of Phoenix Financial Aid Web. You can change this election at any time and as many times as necessary to suit your needs.
Unless otherwise directed by you, any federal financial aid funds received in excess of allowable charges for the payment period will automatically be sent to you no later than 14 days after the disbursement is posted to your account. Once excess funds are determined, the amount will display on your student account summary.
Please contact your Finance Advisor with questions or concerns. I can also be reached directly at email@example.com.