How Federal Student Loans are Disbursed

You have been approved for financial aid for college and you want to know how federal student loans are disbursed. Your school has used your FAFSA (Free Application for Federal Student Aid) to determine the student loan amount you qualify for, and you are registered for your classes. As you wait for your term to begin, your college or university is creating a financial aid package for you to cover the costs of attendance. At this point you, are wondering when you will get the money and how to pay for your courses with the funds.  

Different Colleges Have Different Policies

Your federal financial aid is sent directly to the school you will be attending and will be dispersed to you according to the school’s schedule. Not all colleges or universities disburse federal funds from student loans right away. For example, some online schools offer express classes that take only six weeks. Federal funds are often disbursed after the student has confirmed attendance in the second term, and the student’s account holds a balance due until that time. Other colleges may disburse before the first term begins. What remains the same between learning institutions is that the federal financial aid awards always go towards paying tuition and the associated costs of attendance first. Any funds left over will be disbursed to the student from the school after the payments to the college have been processed.   

What Happens if You Withdraw from Classes after Receiving Federal Funds?

If you choose to withdraw from a class after receiving a disbursement of a federal student loan, be prepared to lose some of your financial aid going forward. Dropping a class is a detriment to receiving financial aid and being in good standing as a student to remain eligible for federal funds for college. If you withdraw from courses and fall below the status of a half-time student, your loan disbursement will be canceled entirely for that term. You must also be aware that if you fall below a half-time student status, you will enter the grace period for repayment and have 6 months until you will be required to start making payments on the federal student loan funds you borrowed while you attended college classes half-time or full-time.

Contact Your School’s Financial Aid Department

If you are still unsure how your federal student loan will be disbursed to you, you should contact your school’s financial aid department. The financial aid staff will be able to answer all of your questions about when and how you will receive your student loan funds from the school. They can provide disbursement dates as well as the method of payment. Some schools will send students a check in the mail. Others require the student to have an account with the school and to use a special debit card to acquire the funds. Because each college has its own financial aid policies and procedures, your best bet is to contact your school directly for additional information about your loans.


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