I was awarded $20,500 for my first year of grad school. Funds were dispersed as expected for fall semester. During spring semester I was told I had an undergrad loan in default which needed my attention before all funds could be dispersed for that semester. I was not told which loan or which school (I attended two undergrad schools). So I went online and completed forms which I felt covered the loans asking for deferment. I never heard any more from my grad school. (No bills, notices, etc.) So I assumed it had been taken care of. I continued on with my spring classes and received my grads at the end of that semester. As I was planning for my second year of grad school, I was told I had outstanding bills for tuition, etc for the past semester. I asked what happened to the Stafford money I had already been awarded. I was told that it could not be dispersed until they had an "official" deferment regarding the defaulted loan. They were then able to tell me which school it was. So I contacted the undergrad school and it took a lot of back and forth paper work, verifications, etc. But the undergraduate school did send word to the graduate school that the default was now in deferment. I went on to receive another 20,500 for my second year of grad school. They have applied funds to the tuition for the current semester. But, the school will not release the part of the loan which is supposed to go to me for my living expenses. They are saying I still owe for tuition of last semester. I asked what happened to the funds which I originally had been awarded which were supposed to go for that. I was told by the time I had the default changed to a deferment, that it was too late for those funds to be applied. So what happened to those funds? Is there some type of time limit before such funds are returned?

You should probably contact your lender about this to find out exactly what happened. Sorry I cannot be more help.