What is Financial Aid Disbursement?

Millions of students attending post-secondary schools depend on a financial package of loans, scholarships and grants from the federal government, state agencies and private institutions. Whatever the source of the financial aid, it's important that the money is used to pay your educational expenses. Generally speaking, financial aid disbursement is the process of sending your money where it needs to go at the proper time.



Most financial aid awards are disbursed, or sent, to your school rather than to you directly. At the beginning of each semester or other school term, your school bills you for tuition, fees and other charges. However, you also receive an award letter notifying you of the amount and type of financial aid you will receive. Providers disburse money at different times, but your school's office of financial aid knows this money will arrive shortly and doesn't require you to pay charges your aid will cover. When the money arrives, your account is credited.


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A financial aid award is often disbursed in two or more portions. For example, suppose you receive a Pell grant from the federal government for the maximum amount of $5,550 per year (as of 2011). The grant will arrive in two disbursements, one for each semester. Each disbursement is in the amount of $2,775 and is applied to one semester of the academic year. Other federal aid and many state and private financial aid awards usually follow the same pattern. As disbursements are sent to your school, they are applied to the charges for the current academic term.



Once you've been awarded financial aid, disbursement is not automatic. You must be enrolled with a minimum half-time course load. Typically this equals six semester or quarter hours. You cannot have any holds on your account. A hold is put on your account because some matter must be resolved -- it may be as simple as an overdue library book. Once any holds are taken care of and you have submitted any required paperwork, disbursement can proceed. A student must pay particular attention to student loans, since you must sign a promissory note for each loan before the money is disbursed.



The financial aid disbursements you receive are applied first to tuition, fees and other items charged to your student account. These can also include books, equipment and room and board costs. If, after your account is cleared, there is money left over, your school will refund it to you by issuing you a check or making a direct deposit to your bank account. You may then use this money for transportation, rent and food if you live off campus or for other expenses.



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