Legal Question in Education Law in North Carolina

I go to an accredited University and I believe they are committing fraud. I initially received institutional scholarship money along with federal grants and loans through FAFSA. In the middle of the school year, the school began telling students they could not receive a refund on their federal loans (unsubsidized, subsidized and parent plus loans), if their is a credit on their account after tuition and all fees are paid. Because of this "new policy" I decided not to keep the scholarships my school gave me so I increased my Parent Plus Loan, so that I could pay for my education and also receive a refund. Currently I received an outside scholarship that has nothing to do with my school. I have an over $2,000 credit on my account which should be distributed to me through a refund. When I asked them about my refund, they claimed I do not qualify for the refund. They claimed there is a new policy in place. I have never received notice of this new policy, and the school should not have the right to keep my money. That scholarship is not theirs and my father's Parent Plus Loan does not belong to them. It should be illegal to steal students' money because the school is having financial hardships. Is this illegal? How can a school keep money from a loan that I have to pay back, or from a scholarship that was not issued by them?


Asked on 4/19/13, 5:37 pm

1 Answer from Attorneys
Kenneth Love Ken Love Law

There are a ton of new rules revolving around student loans. It is very possible that your school has a policy that you can only borrow what you need and not get a refund check. As a former student paying student loans, I would strongly recommend that you only take what you need. I have watched many people get in trouble in taking out too much money and then struggling to pay it back. Check with your financial aid department and ask to see their policy. If that doesn't work contact the US Department of Education.

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Answered on 4/20/13, 1:18 pm


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