Does Financial Aid Automatically Pay Before the Deadline?
The dates for financial aid disbursements of student loan money vary by lender. Financial aid disbursed through the federal government runs on a set schedule, whereas private lenders work case by case. A student's college or university is usually more willing to ignore or relax a deadline for tuition payment when waiting on a disbursement of federal aid as opposed to private lenders.
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Federal Student Loans
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The federal government guarantees financial aid paid through the Stafford loan, Perkins loan and Plus loan programs. As long as a student meets all the eligibility requirements as determined by the student's Free Application for Federal Student Aid, the government will make the required payment to the student's university or college account per the government's schedule. The college, university or technical school the student is attending will not usually bill the student or bar the student from attending classes, even if the deadline for payment passes, because of the federal government's guarantee to make payment.
Private Student Loans
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A private student loan does not carry a guarantee for payment similar to a loan offered through the federal government. The disbursement date of a private student loan depends largely on when a college student applies for the loan and how long it takes for the private lender to conduct an investigation of the student's credit. A college or university might require a student to pay any remaining tuition balance if the student cannot provide proof of private loan approval. This could affect the student's status on class rosters until the university receives proper payment.
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Scholarships and Grant Programs
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Disbursements from private scholarships and grants depends on the payment policies of the organizations holding these funds for the eligible student. A college or university usually receives letters of payment from these private organizations describing the types of financial aid the student will have and when to expect payment. The school can enforce a deadline for private organizations to make disbursements of scholarship and grant money on a student's behalf. Until the school receives the money, the student has to make up the difference.
Federal Grant Programs
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Grant programs available through the federal government, including Pell grants, disburse along with other forms of federal financial aid. The exact date of disbursement depends on when the student completed her FAFSA. Unlike private grant and scholarship programs, a university won't usually pursue a student for a back tuition balance while waiting for federal grant money, because the funds carry the federal government's guarantee for payment. The only way a student could be responsible for a remaining tuition balance is if the federal government rules a student ineligible for a grant, forcing the university to refund the money and come to the student for the balance.
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