Facing FAFSA processing delays might have you worried about receiving your financial aid on time. However, if you've successfully submitted your FAFSA despite potential hurdles, you'll likely not experience any impact on the receipt of your financial aid, even with these delays. While there are some exceptions or specific scenarios requiring extra attention, you can generally anticipate a smooth disbursement process.
What is a Financial Aid Disbursement?
A financial aid disbursement is the payment of financial aid to the you, the student, through the school. Most types of financial aid are not sent to you directly, they are disbursed to your school first. The school then uses these funds to cover any charges or fees you owe them for the term.
Should your financial aid exceed the cost of your school charges, you'll find yourself with a credit balance. For instance, if you receive $20,000 in financial aid but your total charges for tuition and fees come to $12,000, you would be eligible for a refund of the $8,000 difference. Typically, the process for receiving a credit balance refund begins 14 days after the school has received your financial aid funds.
However, it's important to exercise caution with credit balance refunds. These funds are intended to support your education-related expenses, as outlined in your Cost of Attendance. Such expenses can include rent, food, transportation, and childcare, among others, and are not meant for discretionary spending.
When Do I Get My Financial Aid?
Each type of financial aid will have its own disbursement rules, and your school will have a set disbursement schedule. When it comes to federal student aid, there are very strict rules on how early your school can disburse these funds to your account. The earliest, which is not available at all schools, is ten days before the first day of classes for your payment period.
If you are a first-year, first time federal student loan borrower, you will likely have a longer delay in receiving your financial aid. There is a 30-day delay from the first day of classes, before some schools will be able to pull these funds for these specific students. While this may seem like an unnecessary challenge, it is a bit of a protection for first-year students. First-year students have a higher risk of not attending or quickly withdrawing. Instead of dealing with returning those financial aid funds, it’s a protection to not disburse those funds and confirm enrollment for the 30-day waiting period. Not all schools are required to follow the 30-day delay rule, but you can check your school’s disbursement schedule or ask your financial aid advisor.
In essence, your financial aid will not be deposited into your account until just a few days before your classes begin. Completing your FAFSA in December 2023 does not guarantee earlier receipt of financial aid if you're starting classes in the Fall of 2024. The timing for the release of your financial aid will align with the disbursement schedule of your school.
I Didn’t Receive My Financial Aid Letter Until May
For most four-year schools, with typical Fall/Spring/Summer terms, the receipt of your financial aid letter in or around May won’t delay your financial aid. Although the school has notified you of your eligibility for financial aid, it doesn't mean the funds can be immediately disbursed into your account. Disbursement will typically occur just a few days before your classes start at the earliest. To know the precise timing, consult your school’s disbursement schedule for your specific program's dates.
Now, if you’re attending a non-traditional calendar school, for example a school that has class starts all throughout the year, you may be under some tight timelines. However, the hope is the delays are resolved before July 1, 2024, which would then limit any impact on delay son receiving your financial aid funds. Why is the July 1 date important? Well, the 2024-2025 FAFSA is for financial aid awards for students attending school beginning July 1, 2024, through June 30, 2024. If you are currently attending or planning to attend school which has a start in May or June of 2024, your school is using the information you provided on your 2023-2024 FAFSA application, and they likely have not faced many issues pulling funds for your academic year.
While you may not face delays receiving your financial aid money, there are a few reasons why there could be a hold or issue at the time of disbursement. Some of the issues you could face, are the same issues you could have faced in the past. That’s why we can anticipate a few issues and provide a few tips to avoid any delays.
Incomplete FAFSA Verification or Resolution of Conflicting Information
If your financial aid office has been attempting to contact you to complete FAFSA Verification or resolve conflicting information, it’s extremely important to provide the required information as soon as possible. If you do not complete FAFSA Verification or resolve conflicting information, your financial aid office may place a financial aid hold on your account. They will not be able to process your financial aid, let alone ask for those funds to be disbursed to your account.
They way to avoid this, keep an eye on your email or messages in your school portal to resolve any issues. While FAFSA Verification or the need to provide information to resolve conflicting information may seem overwhelming, the process is rather straightforward. If you are chosen for FAFSA Verification, your school may even provide you a form with detailed instructions to complete the process.
Not Completing Required Entrance Counseling
If you are borrowing a federal student loan for the first time, you will be required to complete Entrance Counseling. Entrance Counseling is loan counseling to explain the terms and conditions of your loan, and your rights and responsibilities. It will also explain how a loan works, how interest is calculated, repayment options, and how to avoid falling behind on loan payments.
You will only be required to complete Entrance Counseling the first time you borrow a Direct Subsidized or Unsubsidized Loan (as an undergraduate or graduate/professional student), or the first time you borrow a Direct PLUS Loan. Parent Direct PLUS Loan borrowers typically will only complete PLUS Credit Counseling if you were informed that you have adverse credit but have qualified to borrow a Direct PLUS Loan with an endorser or you are found to have extenuating circumstances.
If you do not complete required Entrance Counseling, your financial aid office cannot disburse your federal student loans. It’s recommended to complete your Entrance Counseling requirement as soon as you are advised of the requirement. If your school uses the Entrance Counseling tool offered by Federal Student Aid, you will need to complete the counseling in one sitting—so make sure you block off at least 30 minutes of time to complete this requirement. If the school uses their own method, ensure you complete the requirement based on their criteria.
Not Meeting Eligibility Requirements at the Time of Disbursement
Before your school will draw down your funds for your disbursement, they will confirm that you meet the requirement eligibility criteria. While there can be several reasons why you do not meet eligibility requirements, here are some common reasons.
- You are not enrolled in the required credits to qualify for federal student loans. You need to be enrolled and be considered at least a half-time student to qualify for federal student loans. If you decided to only enroll in a one class, you may not meet the minimum enrollment eligibility requirements.
- You didn’t sign your Master Promissory Note to borrow federal student loans. This is the legally binding contract to borrow your federal student loans.
- You have unresolved issues with your FAFSA application. Or they have identified a reason why you may not be eligible for federal student aid, like you defaulted on a federal student loan, or owe a balance on an overpayment of federal student aid.
If you encounter these, or any other issues, it’s best to check-in with your school to discuss your situation.
School Issues Receiving Financial Aid Disbursements
There is a chance schools may face issues pulling financial aid from the federal government. Many schools participating in federal student aid have been drawing (or pulling) funds from the federal government for years. As you can imagine, the process is highly secure. These highly secure methods can be a bit challenging, but there are teams on both the school side and federal student aid side, which work to ensure as smooth of process as possible. Unless you happened to work closely with your school’s financial aid office, you likely would never know that issues have occurred in the past, which were quickly resolved.
Is there a risk with the new FAFSA? The issues won’t likely stem from the new FAFSA application. That system is not part of the cash flow process of drawing funds from the federal government to the schools. However, any system upgrades or changes since the past year could create issues or obstacles that need to be resolved.
While there's always a risk associated with disbursement system issues, this year presents additional challenges for staff at schools and the U.S. Department of Education due to limited staff capacity. The delays caused by FAFSA have necessitated extra effort in handling FAFSA Verification, resolving conflicting information, and assisting students with financial aid appeals. Consequently, the time available for staff to address these regular requests has decreased. This means that any further issues within the financial aid office could significantly strain the staff.
One crucial detail to remember is that the staff in financial aid offices are the unsung heroes. They are the ones making things possible, solving problems, and handling the enormous workload assigned to them. Every year, they face challenges, whether from their own institutions or in dealing with federal aid systems, yet they tirelessly work to meet the critical deadlines that students depend on.
How to Stay Vigilant?
There are several strategies to mitigate the stress of the upcoming year. While some issues may be beyond your control, staying proactive can make a difference. Here’s how:
- Regularly monitor your email or messages on your school portal. Promptly address any issues with your FAFSA application or other financial aid applications to avoid delays.
- If you discover a problem, act quickly to rectify it. Should you encounter a financial aid issue, contact your financial aid office immediately. Use your school’s financial aid website to find the most effective way to get in touch.
- Prepare for meetings with your financial aid office. Having a list of questions and gathering necessary documentation beforehand can streamline the process.
- If you're appealing your financial aid award, approach the meeting with thorough preparation. Review your school’s financial aid guidelines, complete all required forms, and assemble any supporting documents to strengthen your case.
By taking these proactive steps, you can navigate the financial aid process more smoothly and ensure you're prepared for the year ahead.