Some students are get refunds from their financial aid. These refunds are NEVER considered assets for FAFSA and financial aid purposes.
Refunds might come because a student receives aid that includes living expenses but lives off campus. Or a student can have merit aid that covers billable costs but still qualifies for a Pell Grant. These are just two reasons a student might get a refund.
Yes, any aid used for room and board is considered taxable income for the student. But that really has nothing to do with financial aid awards or refunds.