Shortly after my 18th birthday, I opened a white envelope from my on-campus mailbox. I tore it open and stared at a hefty check for more than $2,000.
Suddenly, I wasn’t a penniless college kid.
I felt powerful. I could make purchases without calling my parents. It felt like adulthood (awkwardly thrilling at the time).
The best part? I literally did nothing to earn that money aside from attending classes: it was my financial aid refund.
What Is a Financial Aid Refund?
A financial aid refund is the cash you receive after your school applies all awarded aid to your student account.
If your aid exceeds what you owe for tuition and fees, the surplus is returned to you as a check, direct deposit, or school bookstore credit.
Here’s the caveat: that windfallmight include borrowed money, so it isn’tfree cash. Loans carry interest that you — eventually — have to repay.
So who’s really in charge now?
6 Thoughtless Things I Blew My Financial Aid Refund On
I thought each purchase was a brilliant idea at the time.
1. I Bought Stuff I Didn’t Actually Need
Seeing a sizeable bank balance made it effortless to fall into the trap of online shopping.
I splurged on clothes, luxury purses, and shoes. Most of those things now gather dust, making this the spending category I regret most.
2. I Spent Money on a Flight to Africa
The summer after freshman year, I volunteered at a district hospital in Rwanda.
The round-trip cost about $2,500, but the experience was invaluable, so I don’t regret that outlay.
3. I Went on a Spontaneous European Adventure
After sophomore year ended, I flew to Amsterdam with only a backpack and my passport. The trip cost over $3,000.
It was unforgettable, but travel is a discretionary expense — I should have waited until I’d graduated and stabilized my finances.
4. I Lent Money to Friends
This one’s tricky; you’re criticized whether you help or not. I lent money to friends more than once.
Outcome: I’m no longer close with some of those people, and I lost over $700 because I never got repaid. Harsh lesson learned.
5. I Embraced the Full College Party Life
I probably attended every single happy hour during freshman year. I don’t want to calculate how much I wasted.
I definitely spent a large chunk of that year’s refund on nights out, because it was the only time I didn’t have a part-time job to subsidize my social life. My parents gave me $100 a month for living costs, which usually vanished by midmonth.
Getting that refund check meant I didn’t feel compelled to tighten my belt. I didn’t host epic dorm parties, but I did blow money on nonacademic things.
6. I Donated to a Neighborhood Organization
As if I hadn’t already given away enough, one year I donated half my refund to a local Zen Center I was involved with. They needed equipment and were struggling to cover rent.
It was a generous act, likely worthwhile, but you should stabilize your own finances before bailing out others. At the time, I had more than $3,000 in credit card debt — exactly where that refund should have gone. I didn’t, and I’m still paying the price.
How Other Students Spend Their Refunds
I wasn’t the only person making questionable choices with loan money.
A 2016 survey by Student Loan Hero — while not solely about refunds — highlights how students divert loan funds to non-educational uses.
The study found 41% of respondents used loan money for monthly bills, 15% bought clothes, 13% spent it dining out, 19% paid for cars and insurance, 3% used it for vacations and 2.5% spent it on drugs or alcohol.
Staff at Savinly reported using their refunds to cover several months of living expenses in advance, buy laptops, splurge on fancy dinners, or purchase amusement park annual passes. Clearly, this wasbeforethey were Savinly readers.
What Financial Experts Recommend Doing With Your Refund
Katharine Perry, a financial advisor at Fort Pitt Capital Group who works with millennials, warns students not to view refunds as free cash.
“Nothing around student loans is free,” she said. “So students should be cautious with that money.”
Her recommendation: use refund dollars for indirect college costs — books, supplies, off-campus housing, transit, and similar expenses.
If those costs are already handled via a job or parental help, what then?
“Put it into a savings account,” she suggests. “You never know when you’ll need a cushion.”
And don’t touch it. “Be responsible,” she advised. “Keep it as an emergency buffer and be thoughtful about spending.”
Should you use the refund to repay student loans? Perry says that may not always be ideal. She recommends allocating extra funds toward the debt with the highest interest rate.
“Student loans will weigh on you after graduation, so aim to eliminate any other high-interest debt first,” she added.
How I’m Handling This Year’s Financial Aid Refund
Rather than repeating past mistakes, I’ve promised to be smarter this time, especially since this is likely the final refund I’ll receive.
Although some experts insist refunds should immediately go toward debt, I’ve taken a slightly different approach.
I already have a clear strategy to pay down my obligations. Because of that plan, my student budget is extremely tight.
Even after I started controlling my spending, my account can dip so low that I panic at the grocery store, afraid my card will be declined. Unexpected costs could be devastating.
So instead of blowing or gifting this year’s refund, I’ve chosen to let it serve as a financial cushion, following Perry’s guidance.
The funds are parked in my checking account rather than my savings because I maintain a separate savings routine and want to test my impulse control.
I want to prove I can manage having a higher balance without splurging just because it’s there.
That buffer also eases my anxiety after recent unexpected expenses — like my dog’s emergency vet care. For once I don’t want to hold my breath when paying for essentials.
Keeping the refund may be a modest step, but it’s progress.
Your turn: What have you used your financial aid refund for? Share your experience below.
Alex Turner is a junior content writer and engagement coordinator at Savinly and a senior at the University of Tampa. His favorite part of Amsterdam was the fries with mayo.
For more guidance on managing your aid and refund wisely, check out these resources: financial aid award letter tips and what not to buy for college supplies.
