They made a mistake, I have to pay?

On October 6th, my University sent me a cheque for $900. I assumed that it was due to an increase in my bursary. The reason for this assumption is that in May, they sent me a cheque for $750, which I later confirmed was for an increase. However, they did not go out of their way to tell me that, they just sent it. So, when I received this cheque for $900, I simply assumed it was for the same reason. Now, over a month later, I receive a phone call saying that they made a mistake, that I should never have received the $900, and they expect me to pay them back. Am I legally obliged to do this? It has been over a month, I have obviously used a good portion of the money (who would leave a $900 cheque sitting around?). They are "kindly" offering to let me pay them back interest free and on some sort of monthly payment plan, but I don't think I should have to pay them anything. They screwed up, and they should have absorb the cost because of it.

Thanks in advance,
Jay P.