Skip to main content
VCOM Campus

Returning Federal Student Loan Funds

Federal loan funds that are returned within 120 days of disbursement will have all origination fees and accrued interest negated from the amount returned. Returning federal student loans this way will directly reduce the principal of the loan. Funds returned after the 120-day window has passed will be treated as a pre-payment and will pay interest before principal.

If you have unneeded funds from your federal student loan stipend and it is within 120 days of disbursement, it is financially smart to return that money. If you anticipate having unneeded funds following a future disbursement, you can request that the Office of Financial Aid cancel or reduce the upcoming disbursement.

Steps to return federal student loan funds:

  1. Go to the https://studentaid.gov/ and log in. Once you are logged in, you should be on the “Dashboard”.
  2. You will see a summary of your loans titled “My Aid”. Click on “View Details” above the loan summary to view your loan details and loan servicer(s).
  3. Scroll to the bottom of the page to the “Loan Breakdown”. Find the loan that you want to make a payment on and click on the small box next to your loan servicer’s name. This will take you directly to their website.
  4. Contact the loan servicer and tell them that you want to return unneeded funds within the 120-day disbursement window so the return will reduce the loan’s principal. Make clear to the servicer that you are making a payment within the 120-day disbursement window. This will allow your servicer to treat this payment as if you are returning unused funds and ensure that the return is credited against the principal of your loan, with the origination fees and accrued interest negated.
  5. You can also create an account with your federal student loan servicer and make the payment that way. If you decide to make your payment this way, you must ensure that the servicer treats the payment appropriately by applying the payment against the principal of your loan, with the origination fees and accrued interest negated.
  6. Follow up in a month or so by logging into https://studentaid.gov/ and checking the balance of the loan to make sure the servicer reported the reduction. You can also view the payment breakdown under the loan details.