Why Did My College Send Me a Check?

Receiving an unexpected check from a college can be surprising, often leading to questions about its origin and purpose. Colleges regularly issue checks to students and former students for various legitimate reasons. Understanding why these funds might arrive, what actions to take upon receipt, and the associated financial and tax implications is important for proper handling. This article aims to clarify the circumstances behind such payments and guide recipients through the necessary steps.

Common Reasons for Receiving Funds

Colleges frequently disburse funds to students when financial aid or other payments exceed the direct charges owed to the institution. Financial aid refunds are a common scenario, occurring when grants, scholarships, or loan disbursements are greater than the student’s tuition, fees, and on-campus room and board charges. The excess amount is then refunded to the student, typically within 14 days after the aid is applied to the account.

Another reason for a refund check can be external scholarships that, when combined with other forms of aid, exceed the student’s total cost of attendance. Colleges apply these funds to the student’s account first, and any remaining balance is issued as a refund. Similarly, students who withdraw from courses or the university may be entitled to a partial refund of tuition and fees, depending on the institution’s specific refund policy and the timing of their withdrawal.

Checks may also represent earned wages for students employed by the college, whether through a work-study program or a general on-campus job. These payments function like regular paychecks and are distinct from financial aid. Students involved in specific academic programs, research, or graduate assistantships might receive checks for stipends or research grants, which are intended to cover living or project-related expenses. In rare instances, a check could be issued due to an administrative or accounting error.

Steps to Take After Receiving a Check

Upon receiving a check from your college, verify its details. Confirm the sender’s name, the amount, and ensure your name, as the payee, is correctly spelled. This confirms the check’s authenticity.

Next, contact the college’s relevant administrative office for clarification on the check’s purpose. The Bursar’s Office, Financial Aid Office, or Student Accounts department are appropriate contacts. Inquire about the specific reason for the payment, the period it covers, and if a detailed breakdown of the amount is available.

Cross-reference the check amount with any recent financial aid award letters, student account statements, or employment records. This comparison helps you understand how the amount was calculated and if it aligns with your expectations. Once you confirm the check’s legitimacy and understand its purpose, you can deposit it into your bank account via a bank teller, ATM, or mobile deposit.

Financial and Tax Considerations

Receiving a refund check from a college has financial and tax implications. If the funds originated from student loans, the amount must be repaid, often with interest, even if issued as a refund. Returning excess loan funds to the lender within a specified period can help reduce overall debt and avoid accruing interest.

The taxability of funds received from a college depends on their source and how they are used. Scholarships and grants are generally not taxable if used for qualified education expenses, including tuition, fees, books, supplies, and equipment required for enrollment or courses. However, amounts used for non-qualified expenses, such as room and board or travel, may be considered taxable income.

Earned income from student employment, including work-study, is always taxable and must be reported on your tax return. Colleges issue Form 1098-T (Tuition Statement) to report qualified tuition and related expenses, and scholarship and grant amounts, by January 31st each year. For earned income, you will receive a Form W-2 (Wage and Tax Statement). If you received a stipend or other payment for services not reported on a W-2, a Form 1099-MISC or 1099-NEC might be issued. Consult with a financial aid advisor at your college or a qualified tax professional to understand your specific situation and ensure tax compliance.