If you’re heading to school this semester and expecting a student loan disbursement, you may be surprised to find that you received less than the amount you borrowed. It’s a frustrating situation, especially when you’re counting on that money to cover your educational costs. But why does this happen? Let’s break down some common reasons for this discrepancy and what you can do to prevent it from causing any more confusion.
Loan Fees Can Take a Big Chunk Out
One of the main reasons your loan might be less than expected is because of loan fees. Federal student loans, such as Direct Subsidized or Unsubsidized Loans, come with a small fee deducted from your total loan amount before the money even reaches your school. These fees usually range around 1% of the loan amount. For instance, if you borrowed $10,000, you may end up getting about $9,943 after the fee is deducted.
Private loans can also have fees, though they vary depending on the lender. Always read the fine print to understand any additional costs attached to your loan.
Your School’s Cost of Attendance Plays a Role
When you apply for loans, your eligibility is based on your school’s cost of attendance (COA). This figure includes tuition, fees, room, board, and other living expenses. If your financial aid package is adjusted or if you’re enrolled in fewer classes than expected, your loan amount may be adjusted as well.
In addition, if you receive other forms of aid like grants or scholarships, your loan amount could be reduced to make sure your total financial aid doesn’t exceed the COA. This means that your loan disbursement could end up being smaller than what you borrowed.
Timing Could Be the Issue
Loan disbursements aren’t typically made all at once. Schools usually release loan funds in installments, often at the start of each semester. If there’s a delay in the processing or if you accepted your loan late, you might see only part of your loan disbursed initially.
Schools might also release the money in stages based on enrollment or other factors. If you’re expecting the full amount right away, you may have to wait a little longer for the remainder.
Dropping a Course Could Lower Your Loan Amount
If you drop a class or reduce your credit hours after receiving your loan, your eligibility could change. Federal student loans are often based on full-time enrollment, and dropping below that status could lead to a decrease in the loan amount. This means that if your course load drops, your disbursement could be smaller than expected.
Withdrawing from School Could Mean Paying Back More
If you decide to withdraw from school or drop below half-time enrollment, the school might need to return part of your loan funds to the lender. This can result in an even smaller disbursement amount, as the school adjusts the loan based on your updated enrollment status.
Key Takeaways:
If your student loan disbursement doesn’t match what you expected, don’t panic. Start by checking if fees have been deducted, or if your loan has been adjusted for any of the reasons mentioned above. Contact your school’s financial aid office for clarification on your disbursement amount and make sure everything is in order.
Being informed about your loan disbursement process is essential to avoid any surprises when it comes time to pay for your education.
