As soon as the new college year starts, students start looking forward to their financial aid refunds – but for all the wrong reasons.
The refund check is handed over to students after financial aid is applied to their account. All types of financial aid refunds will begin after thirty days of the start of a semester. Many students sound quite fascinated by the idea of getting their financial refund. But what they don’t realize is what that refund check really is.
A refund check is an amount that is given to you from your college, but it’s not a reward or present. It is the left-over money from your financial aid package. They provide it to you after your tuition and fees have been paid. This left-over balance can come from scholarships, grants, or loans.
It can be alluring to use that extra money to enjoy some non-essentials. That means anything that does not directly add to your academic needs. Many students spend their loan refunds on new clothes and trips. If the refund you received is from a student loan, keep in mind that you will have to pay it back after school.
Below we discuss some helpful things you may not know about your financial aid refund and how you are supposed to use it:
1. Greed is a Curse; Only Take What you Need!
Do not be over-excited by the extra money you do not need. You can avoid the enticement altogether by only taking the amount of money you require to pay your tuition and fees. First, though, you must determine how much financial aid refund you should accept. Well, obviously, it should not be every single dollar that they give to you. As you get the award letter from your college, decide how much money you actually need by looking over your expected costs. That is how you would know how much aid you should decline.
2. Be Honest with your Needs and Return Extra Money!
Undoubtedly, this is a helpful strategy. If you do not need the extra money, you must return it to your college since this money is not free. There are lots of repayments and interests linked to it. Therefore, if you get what you do not need, you must return the money to keep your debt balance low in the future.
Perhaps, you only need to consume half of the check you got to cover the cost of your needs. So, the rest could go back. Also, you can give all of your refunds right back to your loan servicer if you can manage things without consuming them. It will solve many of your long-term worries. You will be able to get rid of a chunk of your student loans even before you graduate.
3. You can Keep the Financial Aid Refund in your Account
If you are unable to decide your needs right away, you can hold the money in your account. However, don’t keep it in your bank account after the current semester. You should preferably only let it stay as protection against the possibilities of some extra charges throughout the semester — nothing else. So, keeping your refund untouched gives you a kind of safety net for additional costs. But as soon as the current semester is over, return the excess money back to your college. It will prevent you from spending that money on anything that is non-school-related.
4. You can Expend the Amount on School Supplies or Notes
Basically, you get this financial aid refund package, so that you can cover other school-related costs outside of tuition. Therefore, any of them will be a worthwhile expense to spend your refund on. For instance, if you need any help from outside the college to support your academic needs, you can use this fund to get it. Those supplies may include books, calculators, notebooks, or even a laptop if you seriously need one.
5. Apply it to Transportation
If your college is far away from your hostel or living apartments, it may be costing you much to get to attend the classes. Even if you have come by bus or drive yourself, this daily routine travel expense can get costly. Also, if you need to purchase a parking pass, it adds to every day’s travel expenses.
So, estimate how much it will cost you to get to the college and to park there. Make a budget for your travel expenses, and then you can spend on it from that financial aid refund. Now, do we have to mention that you definitely shouldn’t overspend the money from this refund on unnecessary trips? We didn’t think we would have to!
6. Spend it on Living Expenses
We understand that living expenses can get out of control. So, first, make sure you are not wasting money on expensive lunches in the trendy district. However, even if you live on or off-campus, undoubtedly, housing is costly. Meal plans, groceries, insurance, utilities, and rent could add up to a massive amount of your monthly expenditures. So, make sure you are still making a budget carefully and only spending money on what you truly need. However, your housing cost can be considered a school-related thing, as well.
As long as you are spending the financial aid refund on school-related things, you do not need to feel guilty about it. Colleges and schools offer you this amount because they think that you might need it to handle your daily expenses. So, just go into it cautiously. While you spend this money, you must keep the fact in mind that every dollar you are consuming today is binding your future financial independence further.
Moreover, figuring how to manage your monthly budget while you are in college is a wonderful exercise you will benefit from all your life. You’ll already be learning to live within your means. And remember, a good budget is telling your money where it should go instead of wondering where it went.
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