I have been a student for a lot of years at University and have had several occurences where I couldn't complete my studies as I was mentally unwell. I think it is great that they are offering you a 50% waiver and that you get that back in cash rather than credit, from what I understand. Most Universities aren't so understanding, especially correspondence ones.
With the money, why don't you use what you need for your urgent bills and do the course with the rest. You are always going to be broke as a student. It is almost a badge of honour
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The final decision is of course yours and I hope that it is not too stressful of one to make.