If a student's financial aid package exceeds his university expenses, he will typically be entitled to a financial aid refund. Most schools receive a student's financial aid funds, which include grants, loans, and scholarships, directly from the organizations that provide them. The school automatically uses these funds to pay for a student's tuition, room and board, and any other charges on the student's account. The remaining balance can be provided to a student so that she may use that money to pay for school expenses that are not owed directly to the university. Types of expenses that a student may pay for with his financial aid refund include off-campus housing, food, and transportation costs.

In many cases, a student who applies for financial aid will be offered a package of financial assistance that consists of money from several different sources. This package is typically based on a budget established by the school that not only includes the actual cost of attending classes, such as tuition and course fees, but also when a student may reasonably expect to spend on living and personal expenses. While some students may to only choose to accept financial aid that covers their tuition and fees and may choose to use their private funds to pay for other expenses, others may rely primarily or entirely on their financial aid refund to pay their bills.

Every school financial aid office has its own policies regarding financial aid refunds. Typically, a school will not issue a refund to a student until after all expected expenses are paid or after the financial aid has been received. Once the school knows the student's remaining balance, the student may be required to submit a formal request for a refund. In some schools, particularly those with a large student body, the process of issuing refunds can be arduous and may take several weeks to complete. This can present difficulties for students who rely on their financial aid refund to pay necessary expenses such as food and rent. Some schools recognize this problem and may issue temporary loans to students who face delays in receiving their refund.

Many schools have historically issued a financial aid refund via paper check. New technology now makes it easier for a financial aid refund to be provided to a student through direct deposit into a students account. Some schools also provide students with debit cards they can use on campus or from which they can withdraw cash. At these schools, refunds may simply be loaded onto these debit card so that students have immediate access to their money.