Summary: Disbursement is the payment of student aid funds. Typically, colleges apply the money to your student account to cover costs like tuition and fees, room and board, and more. Check with the financial aid office to get your school’s disbursement schedule.

Colleges are required to disburse (or pay out) federal student aid funds, including Direct Subsidized Loans, Direct Unsubsidized Loans, and Federal Pell Grants, at the start of each academic term. Federal Work-Study funds are disbursed as the money is earned.

How Student Aid Funds are Distributed

Colleges disburse federal (and sometimes state and institutional) financial aid funds by crediting them to your student account.

Funds are credited against the current year’s charges in this order:

  1. Tuition and fees
  2. Room and board (if you are living in college-owned student housing)
  3. Other school-related charges (with you or your parent’s permission)

The college may also use the money to pay for up to $200 in prior-year charges for tuition, fees, room and board, and other education-related expenses (with student or parent permission).

Credit Balances and Refunds

Any remaining credit balance must be refunded to you within a certain amount of time, depending on when the credit balance was created.

  • On or before the first day of classes: No later than 14 calendar days after the first day of classes
  • After the first day of classes: No later than 14 calendar days after the credit balance was created

Refunds from your student account may be delivered by:

  • Cash
  • Check
  • Electronic funds transfer (EFT) to your bank account
  • Prepaid debit or ATM card

You can use your refund to pay for other college costs, such as textbooks, supplies, transportation to and from school, rent (if you live off-campus), computer equipment and software, dependent care, and other miscellaneous expenses.

Special Disbursement Rule for Textbooks and Supplies

If you are eligible for the Federal Pell Grant, your college has to provide you a way to buy required textbooks and supplies by the 7th day of the term (as long as you will have a credit balance when the funds are eventually disbursed). Contact your school’s financial aid office to find out how to get early access to these funds.

Special Rules for Student Loan Disbursements

There are two special rules that apply to student loan disbursement:

30-Day Delay

  • First-year, first-time undergraduate borrowers may be required to wait 30 days before receiving their first student loan disbursement.

Two Disbursements Rule

  • Student loans must be disbursed in at least two payments, with the second payment made after the mid-point of the loan period. Disbursements must be made in equal installments that can be no larger than half the total loan amount.
  • If the loan period covers more than one academic term, the funds must be disbursed once per term.

These rules may be waived if your college has a low loan default rate. Check with your financial aid office to find out which rules may apply to you.

Other Loan Disbursement Requirements

Before your college can give you your student aid money, several things need to happen:

  • The college must verify your eligibility
  • You must have registered for the appropriate number of classes or units/credits for the payment period
  • If you’re a student and a first-time borrower, you must receive entrance counseling
  • If there was conflicting information on your FAFSA, it must be resolved
  • You have to sign the Master Promissory Note (MPN) for Direct Subsidized and Unsubsidized Loans, and your parent must sign the MPN for the Parent PLUS Loan

Perkins Loan and Grant Disbursement

Colleges have more flexibility with disbursements for:

  • Perkins Loans
  • Federal Supplemental Educational Opportunity Grants (FSEOGs)
  • TEACH Grants
  • Iraq and Afghanistan Service Grants
  • Federal Pell Grants

Colleges may choose to disburse these funds in a single lump sum or in multiple disbursements.


  1. Check your school’s website or contact the financial aid office to find out when student aid funds will be disbursed.
  2. If you are a first-time student loan borrower, attend an entrance counseling session.
  3. If you are eligible for a Federal Pell Grant, contact the financial aid office to get your student aid funds disbursed early to pay for required textbooks and supplies.
  4. Check your student account regularly if you are expecting a credit balance or refund that you need to cover other essential expenses.
  5. If your federal student loans and other financial aid isn’t enough to cover your expenses, consider a private student loan as a possible option.