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Private student loan borrowers may overestimate the amount of money they need to borrow to pay for their education. If your private student loan is paid directly to your school and you borrowed more than you needed for tuition and on-campus housing, your lender can issue the remaining money to you as a student loan refund.
Though the word “refund” seems to imply found money, a student loan refund is part of the loan you borrowed and will need to be repaid — with interest.
Here’s what you need to know about student loan refunds and how to request one:
- What is a student loan refund?
- How to request a student loan refund
- How long does it take to get a refund?
- Why did I get a 2022 student loan refund?
- What is a federal student loan discharge?
- Can I get a refund from federal student loan payments?
What is a student loan refund?
If you borrow money from a private lender to pay for your education, the lender will often disburse the loan directly to your school rather than to you. The school will then apply that loan money to your account to pay for tuition, on-campus housing, fees, or other direct expenses.
You may receive more money in private student loans than you need to cover these direct expenses. In that case, the school will refund the difference to you.
A student loan refund isn’t like a tax or other refund where you paid excess money that you receive back and can spend on anything you want. When you receive a student loan refund, that money is still part of the total amount you borrowed from your private lender, and you’ll have to pay it back with interest.
Keep in mind: You must use the student loan refund to pay for educational expenses that aren’t billed directly to your school, like a personal computer or textbooks. Any other use of your student loan refund would be a misuse of your loan.
What should I do with my student loan refund?
You must use your student loan refund to support your education. That means you can spend the money on any education costs you incur that aren’t directly billed to your school.
These expenses may include:
- Textbooks, equipment, and supplies
- Computers, software, and internet access
- Off-campus housing
- Utilities, furnishings, and supplies for housing (whether you live on- or off-campus)
- Transportation costs
- Dependent child care costs
- Personal expenses, like toilet paper or groceries
- On-campus health insurance
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See Also: How to Use Student Loans for College Living Expenses
How to request a student loan refund
Many colleges and universities automatically issue student loan refunds to borrowers with excess loan funds in their accounts. If your school offers automatic financial aid refunds, you’ll receive the refund either by paper check in the mail or through direct deposit into your bank account.
Some schools still require students to specifically request their student loan refunds. The process for requesting a student loan refund will vary from school to school, but you’ll need to follow some general guidelines to make sure you receive your student loan refund.
To start, most schools will inform you in writing anytime the school distributes any loan money. You’ll also generally receive a notice from your loan servicer that the money has been disbursed.
To request a student loan refund, you may need to gather some documentation and submit your request in writing. Make sure you ask your school for the specific requirements to process your request to ensure you get your refund as quickly as possible.
Good to know: While most schools will inform you if there’s excess loan money credited to your account, you can also ask your school’s financial aid office.
How long does it take to get a refund?
Most borrowers can expect their student loan refund to be processed within 14 business days of when their account is credited with the student loan. But refund times can vary depending on the school, the timing, and the number of refunds the school has to process.
If you need the refund quickly in order to pay for necessities, you may be able to request an advance on your refund before the money is officially credited to your account. Check with your financial aid office to see if your school offers such an advance and what process you need to follow to take advantage of it.
Learn More: Emergency Student Loans: 4 Steps Everyone Should Know
Why did I get a 2022 student loan refund?
If you have received a financial aid refund from your school in 2022, that means you borrowed more from your private student loan than you needed to pay for tuition, on-campus housing, fees, and any other educational expenses paid directly by the school. This occurred either because you received more grants or scholarships than you expected, or because you overestimated the amount of money you may have needed from a private student loan.
What is a federal student loan discharge?
It’s important to understand that a student loan refund and student loan discharge are two different things.
Unlike a student loan refund, which can only occur if you borrowed private student loans, a federal student loan discharge is only available to federal student loan borrowers. A discharge releases you from the obligation to repay your federal student loans. A few potential options are available to receive a federal student loan discharge, including:
- Closed school discharge: If your school closes while you’re enrolled or soon after you graduate, you may be eligible for a discharge of your federal student loans.
- Perkins loan discharge: If you have a Perkins loan and work certain eligible jobs or meet certain conditions, you may be able to have your loan canceled or discharged.
- Disability discharge: If you become permanently and totally disabled, you may be eligible for a discharge.
- Discharge due to death: Borrowers who pass away before paying off their federal student loans will see their loans discharged. You can’t pass your loans along to your heirs.
- Bankruptcy discharge: In certain rare circumstances, declaring bankruptcy may allow you to discharge your federal student loans, although this is not an automatic process.
- Borrower defense to repayment: If your school failed to do something related to your loan or your education, you may be eligible for a discharge.
- False certification discharge: If your school falsely certified that you were eligible to receive federal student loans, you may be eligible to have those loans discharged.
- Forgery discharge: If someone fraudulently took out loans in your name, you can have those loans discharged.
- Unpaid refund discharge: If you withdrew from school, and didn’t use your federal student loans that were disbursed to the school, the school was required to refund the money to the federal loan servicer. If the school failed to refund that money, then you may be eligible for a discharge of the portion that should have been refunded.
Check Out: Do Student Loans Count as Income on My Taxes?
How much of my loan can be discharged?
Depending on what type of federal student loan discharge you’re eligible for, you may see all or just a portion of your loans discharged.
When it comes to unpaid refund discharges, however, you can only expect a discharge of the amount of money the school failed to refund to your servicer. In other words, the unpaid refund discharge only discharges any loan funds that you didn’t use. You’re still responsible for the total amount of the loans you did use.
How do I apply for an unpaid refund discharge?
If your school has not refunded unused federal student loan money back to your servicers after you’ve withdrawn, you’ll need to contact the school and try to resolve the issue with the financial aid office. If you’re unable to resolve the situation with the school, you’ll then need to complete the Unpaid Refund Discharge Application form and send it to your loan servicer.
Can I get a refund from federal student loan payments?
Unfortunately, there’s no such thing as a federal student loan refund. But since a student loan refund is actually part of the loan you’ll have to repay (and pay interest on), the lack of a federal student loan refund is not a bad thing. It can help keep you from taking on more debt than you can afford.
If you’ve borrowed federal student loans and are feeling overwhelmed by the cost of your monthly payments, you have some options:
Deferment
A federal student loan deferment allows you to temporarily pause making payments. During the deferment period, no interest will accrue on your loan, so your total balance won’t increase while your loans are paused.
Forbearance
Like deferment, forbearance is a temporary postponement of your federal student loan payments. But unlike deferment, interest will continue to accrue while your loans are on forbearance. That means your loan balance will be higher at the end of your forbearance period if you don’t make interest payments during that time.
You can request a general forbearance from your loan service provider for the following reasons:
- Economic hardship
- Medical expenses
- Employment change
Loan servicers also have the discretion to grant forbearance for other reasons, so you can request a forbearance even if your reasons for needing it aren’t on the above list.
The companies in the table below are Credible’s approved partner lenders. Whether you’re the borrower or cosigner, Credible makes it easy to compare rates from multiple private student loan providers without affecting your credit score.
| Lender | Fixed Rates From (APR) | Variable Rates From (APR) |
|---|---|---|
 Credible Rating  Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.   View details | 3.15%+ | 1.73%+ |
| ||
 Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details | 3.99%+1 | 2.29%+ |
| ||
 Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details | 3.22%+2,3 | 1.29%+2,3 |
| ||
 Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.  View details | 3.65%+ | 2.67%+ |
| ||
 Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details | 4.52%+7 | 4.63%+7 |
| ||
 Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details | 5.25%+8 | 2.92%+8 |
| ||
 Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details | 4.89%+ | N/A |
| ||
 Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.  View details | 3.75% – 13.72% APR9 | 2.62% – 12.97% APR9 |
| ||
| Compare private student loan rates without affecting your credit score. 100% free! Compare Private Loans Now Trustpilot | ||
| Lowest APRs reflect autopay, loyalty, and interest-only repayment discounts where available | 1Citizens Disclosures | 2,3College Ave Disclosures | 7EDvestinU Disclosures | 8INvestEd Disclosures | 9Sallie Mae Disclosures |
About the author 
Emily Guy Birken
Emily Guy Birken is a Credible authority on student loans and personal finance. Her work has been featured by Forbes, Kiplinger’s, Huffington Post, MSN Money, and The Washington Post online.
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