Thursday, December 27, 2012

What you should be doing with your student loan refund

DON'T BREAK THE BANK: You're responsible for paying
your entire student loan back to your lender, including
any money you receive from your loan refund.
One of the most popular posts on our blog is about student loan refunds. It seems that many students have questions about what student loan refunds are and what they should do with a refund if they receive it. We want to address some of these questions and share additional information to help you better understand what to do, and equally important, what not to do, with your student loan refund.

If you missed our previous post, a student loan refund is the money left after you've paid for your tuition, fees, and sometimes, your books if you received a book voucher.

Once you've registered and paid for your classes with your financial aid money, including loans, you might have a credit balance. This is money that's in excess of what you needed to pay. If you do have a credit balance, you might be eligible for a refund from your loan dollars. If you have student loans, whether you receive a loan refund or not, you need to repay your loans as this is money you are borrowing.

In order to receive your refund, you must attend and actively participate in your courses -- something most colleges check with attendance policies. This ensures students who receive their loan refunds are using it for educational purposes, including transportation, housing, and daycare. Your refund is not intended for entertainment or anything not related to your education.

There are three options for what you can do with your loan refund. You can:
  • Pay it back to your lender. This is our #1 recommendation. It will limit the interest you have to pay on the refund, saving you money and hassle down the road.
  • Keep the money on your debit card for school-related expenses.
  • Use the money for school-related expenses. 
No matter which option you choose, you're still responsible for paying your entire student loan back to your lender, including any money you receive from your loan refund. What's more, the longer you take to pay the money back to your lender, the more interest you'll accrue.

All undergraduate students are allowed to borrow up to $57,500 in federal loans for educational purposes. If you decide to keep your loan refund instead of paying it back to your lender, you could run out of money to pay your tuition two or three years into earning your degree. So borrow only what you need for each session, and if you do receive a refund, it's best to pay it back to your lender right away.

If you have received a loan refund on your debit card, you'll receive a letter from us that reads as follows.

"Dear Student,

You recently received loan funds on your debit card for the current session. These loan funds are in excess of tuition, fees, and book costs, which may be used for indirect educational expenses. Please note that Peirce College grants, scholarships, and leadership awards are not included in this refund. Any additional charges incurred after the receipt of your loan funds on your debit card will be your financial responsibility.

Loan funds must be paid back and limits are in place for undergraduate students. Loan limits for an independent student are $57,500 and $31,000 for a dependent student. As a reminder, the student portal -- My Finances tab has more information about student borrowing and loan repayment. To view your loan borrowing history, you may access the following link: http://www.nslds.ed.gov. If you choose not to use the loan funds that are on your debit card you will need to return funds to your student account by calling the Business Office at 215-670-9600 to make a payment on your student account or make a payment online through the student portal under My Finances. This form must also be completed and returned to the Business Office. Please note that funds will not be returned to the lender until the above mentioned form is received by the Business Office. 

1. _____ Return funds to the Department of Education to lower my loan debt.


2. _____Hold money on my account for the 2012-13 academic year for any additional charges.

________________________ _________________________
Print Name ID#

________________________ __________________________ _____________________
Signature Date Contact Number

Return this letter to:
Peirce College Business Office
1420 Pine Street, Philadelphia, PA19102
or email completed form to Billing@peirce.edu

If you have any questions, please contact the Office of Financial Aid at 215-670-9370 or FinancialAid@peirce.edu.

Sincerely,
Ruthann Lisser
Supervisor, Financial Aid"

To find out how much you should borrow and for any other questions regarding your loan refund, call us at 215.670.9370, email us at FinancialAid@peirce.edu, or stop by our office to speak with a Financial Aid Specialist. We'll work with you to find out if you need to borrow, and if so, how much you need to complete your education.

If you do receive a loan refund, we can also help you decide the best way to use it. We're looking out for your best interests when it comes to borrowing -- we're trying to minimize the payments you'll have to make back to your lender, saving you money in the long run.

Do you have any other student loan refund questions that we can answer here on the blog? Be sure to ask them in a comment below, and a financial aid specialist will be happy to answer them for you!