Why Did My School Send Me a Check?

Receiving a check from your school can be a surprising event, often leading to questions about its origin and purpose. Many students find themselves in this situation for a variety of reasons, ranging from excess financial aid to changes in enrollment status. This article aims to clarify the common scenarios that lead to a school issuing a check, providing insight into why you might have received it and what steps you can take next.

Understanding Financial Aid Refunds

Colleges and universities first apply awarded financial aid, including federal student loans, private loans, grants, and scholarships, directly to your tuition, fees, and other direct educational costs. If the total amount of aid disbursed to your student account surpasses these direct charges, a credit balance is created. This remaining amount is then refunded to you by the institution.

For instance, if your grants and loans total $15,000 for a semester, but your tuition and fees are only $12,000, you would receive a $3,000 refund. Schools typically process refunds after the add/drop period, once all financial aid has been applied and direct educational expenses are covered.

Other Common Refund Scenarios

While excess financial aid is frequent, other situations can also lead to a school issuing a check. Tuition overpayment occurs when a student or someone paying on their behalf remits more money than the amount due for tuition and fees. This might happen if a payment is made before financial aid fully disburses, or due to an administrative error. The school then refunds the surplus amount back to the payer.

Refunds may also result from changes in a student’s enrollment or housing status. If a student withdraws from a course or if a course is canceled by the institution, a prorated refund of associated fees might be issued. Adjustments to housing or meal plans mid-semester, such as moving off-campus, can generate a refund for the unused portion of those services. Additionally, some checks may represent stipends for specific academic programs, such as research assistantships, or reimbursements for approved student expenses incurred during studies.

What to Do With Your Check

Upon receiving a check from your school, it is prudent to first verify its purpose. Examine the memo line on the check and any accompanying documentation or statements for details about why the refund was issued. Your student portal or online financial account provided by the school can also offer insights into recent transactions and credit balances.

If the reason for the check remains unclear, or if you suspect a discrepancy, contact the school’s bursar’s office or financial aid department directly. Be prepared to provide your student identification number, the check amount, and the date you received it to help them investigate promptly. Once you understand the check’s origin and confirm its validity, deposit the funds into your bank account without delay. While it may feel like extra money, carefully consider how to use these funds, especially if they originated from student loans, as loans will eventually need to be repaid with interest.

Tax Considerations

The taxability of funds received from your school depends on their source and how they are used. Generally, grants and scholarships are not taxable if they are used for qualified educational expenses, such as tuition, fees, and course-related books and supplies required for enrollment or attendance. However, any portion of grants or scholarships used for non-qualified expenses, including room and board, travel, or other personal living expenses, may be considered taxable income. Loan proceeds are typically not taxable, as they represent borrowed money that must be repaid.

Schools typically issue Form 1098-T, Tuition Statement, by January 31st each year to report qualified tuition and related expenses, as well as scholarships and grants received. This form is an informational document that can assist you or your tax preparer in determining eligibility for education tax credits or deductions. It is advisable to consult a qualified tax professional for personalized guidance, especially if the refund is substantial or if you have questions about its specific tax implications for your individual circumstances.