The student loan industry is highly fragmented. In particular, private student lenders operate on widely divergent timetables and may frustrate even the most organized of student borrowers. Whereas lenders that compensate educational institutions directly have a vested interest in making timely tuition payments, lenders that make payments to students may be less prompt.
The refund checks that colleges issue students whose lenders have overpaid for tuition may take some time to materialize. If you're expecting such a refund check, you should keep several things in mind.
First, your refund won't appear until all of your loans, grants and other forms of financial aid have been applied to your total bill. Work-study jobs are an exception to this rule: Since your work-study income will come in on a weekly basis, it doesn't count as financial aid for the purposes of your refund. Your financial aid award will be calculated based on your total "cost of attendance," which includes tuition costs as well as living expenses and costs for school supplies and extracurricular activities. The size of your refund check will be limited by this metric: Your institution simply won't cut you a check that exceeds your total cost of attendance.
You'll receive your check once all of your financial aid, including supplemental forms of financing like ParentPLUS Loans, has posted to your account. In most cases, this occurs within 14 days of the start of classes for the semester. However, first-time student borrowers may experience a delay of up to a month after the official beginning of the semester. In all cases, refunds won't be issued for classes dropped after the "drop" deadline.
The exact length of this lag may depend upon the policies of the lender in question and the nature of the educational institution. Community colleges tend to handle large numbers of students who receive financial aid. As a result, their financial aid offices may be overworked and understaffed. By contrast, many elite institutions produce quick refunds that may post as soon as one week after the start of classes.
Depending upon the policies in force at your institution, you may be required to receive your refund electronically. If you don't have a bank account, you may need to make alternate arrangements. Most institutions maintain strict policies against disbursing these refunds to anyone other than the student borrower. Unfortunately, this disqualifies parents and other relatives from accepting refund transfers.