Hey can you guys give me a few answers I can’t seem to find them anywhere online and my advisors aren’t much help. These are strictly about federal student loans.
- Are they deposited into my bank account or are they deposited on a prepaid card?
- Are they in limited supply or does everyone automatically qualify for the maximum amount?
- If they are deposited on a prepaid card is it possible to get them take it out of the account in cash to pay rent and other cash only expenses?
- If I was to transfer to one school to another and say I still had 2000$ left off of my loan for the previous semester would I be allowed to use that funds at the new school?
Thanks the answers feel free to give any other advice on the subject that you feel I might need
The Direct Loan maximum for a freshman is $5500. You can get that a,punt UNLESS it exceeds the cost of attendance at your college. It is FIRST disbursed to your college and is used to pay for any bills you have with them…so anything they are billing you for…tuition, fees, room, board.
IF there is money left AFTER the school has paid itself, that money will be refunded to you. Each college has their own procedure for doing this. My kids’ colleges used direct deposit into a bank account…NOT a prepaid any type of card.
If you receive a refund for,the first semester…that is yours to use to pay whatever you need to pay. If yountransfer at the END of that semester, and there is money left from the first semester, it’s yours.
Are you expecting a refund?
HOWEVER.
- If you withdraw in the middle of a term, you might have to repay that loan money to the college. It all depends on when you withdraw.
- You won't likely get your surplus refund until,after the drop add date goes by...because the school wants to be sure you are still a student...and full time to get the full amount.
- If your course load drops below full time, you could also be asked to give back some of that money.
- Are they deposited into my bank account or are they deposited on a prepaid card?
Your loans are given directly to the school and any excess is deposited into your bank account.
- Are they in limited supply or does everyone automatically qualify for the maximum amount?
No. They take into account the cost of your school. Ex: I go to a CC and I only qualified for 3500, which is more than I need anyway. If youre referring to Parent Plus Loans that depends on your parents credit and the cost of the college.
- If they are deposited on a prepaid card is it possible to get them take it out of the account in cash to pay rent and other cash only expenses?
They do not come on a prepaid card but you can use the excess from the loans for anything. However youre probably better off just getting a job. Keep in mind you will be responsible for paying that money back.
- If I was to transfer to one school to another and say I still had 2000$ left off of my loan for the previous semester would I be allowed to use that funds at the new school?
Yes. I believe so.
- You need to accept your loans as part of your financial aid in your student portal. You should be able to take $5,500 but some of it might not be subsidized (depends on need).
You will have to do entrance counseling and master promissory note online.
- The loan will have an origination fee deducted and half will be posted to your account for fall semester.
- The school will have you provide information about the bank account you want your refund deposited.
- Each school will refund any overage paid (after all charges and credits have posted to account) on a specified date, you can ask the school when that is.
If you live off campus, you will need to sign a lease, and move in ahead of starting school. You probably won’t have any loan refund in time for first semester.
So you need to plan on working as much as you can this summer.
IIRC, at some schools, excess loan amounts are deposited into your student account which you can use for the campus coffee shop, bookstore, laundry, airport shuttles, etc. The school usually issues a card which you use to debit this account or the student ID card serves as the debit card. It’s not a generic prepaid card like you’d pick up at the drugstore but rather it’s restricted to campus purchases (although sometimes it’s accepted for local transit too).
At the schools I know about, there is always a way for you to move money between that school account and an outside bank account.
Each school can make refunds in any way it wants (with some requirements by fed regs). D1 had a choice of a prepaid card (and that was really pushed by the school, but there is a service fee to withdraw cash from an ATM), an ACH into a checking account, or a hard check mailed to whatever address you give them. The prepaid card is the fastest (same day), the ACH can take a week (but doesn’t) and the hard check takes the longest.
Other daughter gets a hard check and it takes forever. They have switched to a new servicer to meet new federal regs, so now the school processes the amount of the overage about 3-4 weeks after school starts, then they send it to the vendor, but they only send the info on Wednesdays, so if you (they) miss that day it takes another week, then the vender cuts and mails the check. Whole process about 6 weeks after school starts. There is a option to have direct deposit from the vendor and save about a week, but it is so complicated that they had to set up a computer in the financial aid office and help students sign up for direct deposit, and my daughter hasn’t done it.
YMMV depending on the college. My kids were given the option of direct deposit, or a check mailed to them. One of my kids was allowed to leave extra money in the bursars account until the end of the academic year…so any overage from the first semester could be applied to second semester charges.
You need to check the policy at YOU college.
I don’t know of any college that issues prepaid cards of any kid for refunds.
And the thing to remember…the college is going to pay itself FIRST…so unless all of your costs are covered…you won’t GET a refund.
Many do. TCF, BofA, Wells Fargo and other banks have agreements with colleges to supply the cards to all students, sometimes even used as ID’s. There are ATMs on campus, the banks have branches, open other accounts for students.
As I said, my daughter’s school did, and even issued the cards to all students long before they showed up for the first class.
@twoinanddone were these debit cards in your student name…or prepaid Visa cards. There IS a difference.
If your student is required to take a prepaid Visa type card…make sure they get their money OFF of that card ASAP. Many of these cards charge fees per month…and the actual amount can be whittled away by the fees.
If there is a option to have money put in YOUR bank account…I would suggest taking that option over a prepaid card of any kind.
My opinion.
I’m not sure. I don’t think it was a debit card because there was not an account associated with it, but you could put money on the account, so more like a prepaid card. Yes, there was a fee ($2-3 per ATM transaction) so I didn’t want my daughter’s refunds to be on the card. At the time, I assumed she’d only be getting a small amount, if any, for perhaps an overcharge of a fee or if she dropped a class. Turns out the first refund was a big one as she joined a sorority and had her meal plan that I’d paid for refunded, $1800. This semester it was $9000 as she did study abroad and all her FA was paid to her, and then she had to pay her tuition and room charge to an outside vendor.
We picked the option of an ACH deposit to my account years ago when she started. She got the choice of the card, an ACH, or a check. It works for us as I get the ‘refunds’ for funds I actually prepaid. I just pay the new creditor (sorority or study abroad program) and give her anything left over.