When students receive student loans that exceed the cost of classes, fees, room and board, books, and other college-related expenses, few return the excess. Instead, they use that extra money to pay for food, gas, and other living expenses. Many focus on those expenses they have now and forget that they will have to pay back the loans later. Those who get a significant amount more than they need may even use the money to take a vacation or make expensive purchases.
But they will have to pay that money back once they graduate. Even if the amount of excess money isn't much per year, by the end of four years, they may have taken out $10,000 or more in excess loans that they did not need.
Students have anywhere from 30 to 120 days after their loan money is disbursed to return any funds that they do not want. There is no fee or interest charged on this returned money. In fact, a student is allowed to cancel a student loan if they want. This could save students a large amount of money later in life.
To cancel a student loan, the student must notify their school's financial aid office within the deadline period. The second option for those with loans through the William D. Ford Federal Direct Loan Program is to contact the Direct Loan Servicing Center.
Find out quickly at what rate you can refinance your student loan.