Three years ago, I took out an emergency loan from my university toward the end of the Spring Semester.  Spring classes had ended and I was enrolled in and taking summer courses and used the money to pay for course books. I was going to repay the emergency loan with my federal student loan, which I applied for and received. Unfortunately after the loan came in and paid the loan, my grades for Spring Semester came in and I was dismissed from the school for academic reasons. A few weeks after I left the school I received a bill from the school for $0.00, stating the emergency loan was paid off. Fastword to almost a year later, I receive a bill from the school for the emergency loan with late fees! The school has said they were required by federal regulations to return the entire loan since I failed the Spring semester. I have looked everywhere and have not found this “regulation”. I have looked through the school’s standard academic progress policy and nowhere does it state that all loan proceeds will be returned. Most financial aid officers I speak to say that if the school’s policies don’t state the entire loan will be returned that what the student owes is subtracted and the remainder is sent back to the lender. I should also say that while my grades were sufficient to meet Federal SAP requirements the school has separate academic requirements, so I was eligible for the federal loan.

I would like to know:

Can the school “unpay” itself like this if there are no federal, state or school policies that require them to send the entire loan back?

If the loan agreement stated I would repay the loan in a certain manner ( federal loan) and I fulfilled all the requirements on my part, am I still liable for this bill?

I think the bill was paid when the loan came into my account and was credited to my account, am I wrong?

Any help you can provide would be greatly appreciated! Thank you in advance.