Even though college financial aid may seem like free money, you can’t spend it on anything you want. You can only spend your federal financial aid money on purchases that are necessary for you to continue your studies. These necessary purchases may be defined under your school’s itemized cost of attendance.
What should you do with your financial aid money?
The students are supposed to use the money from financial aid to cover expenses such as tuition, books, transportation, and room and board. But if the student chooses to spend the money elsewhere, he or she will encounter problems later on once there are bills to pay. Many schools limit the amount of financial aid any single student can receive.
Does the financial aid office know what you spend the money on?
The financial aid office does not know what you spend the money on. But you do sign a "statement of educational purpose" when you file the Free Application for Federal Student Aid (FAFSA). So, you have agreed to spend it on expenses related to your enrollment in college.
What does financial aid cover in college?
Some schools give students more freedom -- and more responsibility -- to manage their costs with financial aid. The students are supposed to use the money from financial aid to cover expenses such as tuition, books, transportation, and room and board.
Can financial aid pay for my tuition?
It isn’t just your tuition that financial aid can pay for, but there are certain stipulations about what kind of financial aid (grants, scholarships, loans, etc) can pay for what expenses. Here’s what you need to know. There are several different types of financial aid you can put toward your tuition.
Can you use your financial aid money for anything?
Typically, the school first applies your grant or loan money toward your tuition, fees, and (if you live on campus) room and board. Any money left over is paid to you directly for other education expenses.
Can you use fafsa money for personal use?
You can also use student loans for living expenses. You're limited to borrowing the school's cost of attendance — that's tuition and fees, books and supplies, room and board, transportation, and personal expenses —minus any aid you receive.
What can you spend your financial aid refund on?
Spending a loan refund can include:Paying for books and campus meal plans.Paying for transportation to and from school.Picking up additional classes.Buying extra research material for classes.Using the money to pay for living expenses rather than working full time.
What happens if you use fafsa money for something else?
This would make the student liable to the school for those funds. Students can accrue additional debt by misusing their loans. Borrowers end up paying for clothes, gaming systems and other nonessential items for years to come – and at greater costs due to accrued interest.
Can I use fafsa money for a car?
No, you cannot use student loans to buy a car! In fact, in many cases, it is written into your contracts that you are legally bound to, that you cannot purchase a car or any other asset with your student loan. The sole purpose of a student loan is to use it to help cover the costs of studying.
Can I buy a laptop with financial aid money?
Financial aid helps students cover tuition, room and board, travel expenses to the school, textbooks, school supplies, and even laptops. That's right! You can actually use your financial aid to buy a laptop if it's something you need for school.
What happens if I don't use all my Pell Grant money?
If you have money left over from your Pell Grant, you can ask the school to hold the funds for you, or you can receive the remaining amount as a refund. Pell Grants go toward education expenses, except student loan expenses.
Do you have to pay back FAFSA refund checks?
We've got your back! The answer depends on the type of aid you receive. If you receive what's often called “gift aid” — grants or scholarships — the answer is usually no. But if you borrow student loans, you'll very likely need to pay that money back, with interest.
Can I save my financial aid refund?
Holding onto your refund is a good safety net for extra costs, but once the semester is over, give the excess money back to your servicer so you don't spend it on anything non-school-related (and try to pay any interest that may have accumulated while you were holding onto that money).
Can FAFSA see your bank account?
Students selected for verification of their FAFSA form may wonder, “does FAFSA check your bank accounts?” FAFSA does not directly view the student's or parent's bank accounts.
Will FAFSA reimburse me if I pay out of pocket?
Typically, colleges and universities will allow financial aid students to register even if the award has not been disbursed and as long as the student pays any out-of-pocket portion of the tuition.
Can I use FAFSA money for gas?
If you get a refund from any of your FAFSA money from your college, you can also use it to pay your rent for a couple of months, pay for gas to get back and forth to school or pay utility bills for a while.
What can FAFSA loans be used for?
Room and board (meal plans, food, etc.) Off-campus housing (rent, utilities, etc.) Transportation (gas, bus pass, etc.) Computers and software.
Does FAFSA look into your bank account?
FAFSA doesn't check anything, because it's a form. However, the form does require you to complete some information about your assets, including checking and savings accounts. Whether or not you have a lot of assets can reflect on your ability to pay for college without financial aid.
What happens if financial aid exceeds the amount you owe?
If your financial aid award exceeds the amount you owe the school for tuition and other expenses at the time of disbursement, you will receive a financial aid refund. Each school has its own method and schedule for issuing students refunds (disbursement).
How to get a refund from financial aid?
Each school has its own method of financial aid refund disbursement, but there are three primary options: 1 Check – Some schools will write a check for the amount of the leftover balance and mail it to the student’s preferred mailing address. 2 Direct Deposit – Students may be given the option of having their financial aid refund sent to their bank via direct deposit. You will need to provide your school’s financial aid office with your bank account and routing information so they can make the deposit. 3 Student Accounts – The last option many schools provide is to have the leftover balance credited towards the student’s school debit account.
What is a Financial Aid Refund?
Instead, they apply the award to tuition and other required costs at the start of the semester. When there’s a balance left over, the school issues the student a financial aid refund.
What to do if you don't need a refund from a student loan?
If your refund was from a student loan, and you don’t need the money after your tuition, room, and board, and books have been paid for, consider working with your school’s financial aid office to return the excess funds. This will reduce the amount you need to pay back on your loan after school.
When Will I Receive My Refund?
The disbursement schedule is up to each school’s financial aid office and typically happens after essentials have been paid for each semester.
What is financial aid?
In the realm of higher education, financial aid by definition is any grant, scholarship, loan or work-study job that helps students pay for their education. Financial aid comes from a number of sources, including foundations, corporations, community fundraisers, schools, state agencies and the federal government.
How Do I Apply for College Financial Aid?
Applying for financial aid is an easy process if you have the right materials. Before you open the FAFSA application, find your Social Security number or Alien Registration number if you aren’t a citizen. Gather up your FSA ID and income information, such as tax returns from the previous year or a record of investments. You will need this information from your parents as well as your own information.
What is the FAFSA?
The FAFSA takes your parents’ income and investments into account as well as your own situation in order to determine how much money you will need to go to college. The American federal government’s FAFSA definition includes three types of student aid: federal grants, work-study jobs and student loans. Federal grants and work-study jobs give ...
How much does the Department of Education pay for financial aid?
The Department of Education pays out more than $120 billion annually in these three types of financial aid.
When do you fill out the FAFSA?
To receive college financial aid, make sure you fill out the Free Application for Federal Student Aid before the beginning of the school year. Applying for federal student aid is free.
Do schools keep track of student purchases?
Even though you will have to sign documents that say you promise to use financial aid only for these items, most schools usually do not keep track of students’ purchases. Outside of serious financial aid fraud, which may involve other crimes like identity theft, most instances of misuse of financial aid go unpunished.
Do you have to pay back student loans?
Federal grants and work-study jobs give students a limited amount of money that they don’t have to pay back. However, if you borrow money with a student loan, you will have to pay it back with interest.
Why do students get financial aid?
The student's financial aid money goes to cover the expense of staying on campus. On the positive side, the student never has to worry about paying the college. But it also means students don't have the opportunity to learn how to manage a budget. Another common program among colleges and universities is a book credit.
What are the different types of financial aid?
There are many types of financial aid: Scholarships, grants and loans are the most common. These types of aid come from different organizations. Students might apply for a scholarship directly from their own college. Alternatively, they might seek aid from a private organization that sets aside funds to help students.
What do schools give students?
Some schools give students more freedom -- and more responsibility -- to manage their costs with financial aid. The students are supposed to use the money from financial aid to cover expenses such as tuition, books, transportation, and room and board.
What should a student's spending plan include?
Students should create a spending plan and stick to it. The plan should take into account when the student will receive money through financial aid and other sources , and it should also include necessary expenses plotted out through the course of the year.
How long do you have to pay student loans after graduation?
Many student loans have a grace period of six months after graduation before requiring the student to begin payments. Because the student must pay the loan institution more money than what he or she received as financial aid, it's best to restrict the size of the loan request to the bare minimum.
Why do schools give students more freedom?
Some schools give students more freedom -- and more responsibility -- to manage their costs with financial aid. The students are supposed to use the money from financial aid to cover expenses such as tuition, books, transportation, and room and board. But if the student chooses to spend the money elsewhere, he or she will encounter problems later on once there are bills to pay.
What are the benefits of living off campus?
One of the benefits of living in campus housing is that all your room and board expenses get looped into one bill and sometimes include a campus food plan. If you plan to live off campus, you'll need to budget money for your rent and utilities as well as food.
How to budget for college?
To create a budget, evaluate how much money you have to spend from scholarships, grants, work-study programs, savings and family contributions. Then, deduct your school’s total cost of attendance. The resulting number is how much you’ll need to borrow in student loans.
What happens when you get your financial aid award letter?
When you get your financial aid award letter, you may be offered more student loans than you really need. Or you may find that you have extra money after paying your regular bills. However, you should only use the minimum necessary to pay for school due to the following reasons:
What is dining out under Cost of Attendance?
Dining out. Under the cost of attendance, the allocation for meals is meant to be a reasonable amount for a meal plan or groceries. It’s not designed to cover frequent deliveries or restaurant meals.
What can I use my car loan for?
Transportation. You can use your loans to pay for the maintenance of your car, fuel or bus and taxi fares.
How long does it take to repay student loans?
Most borrowers take 10 years or more to repay their loans, so you could end up paying thousands more than you initially borrowed.
What is authorized use of student loan?
Authorized Uses of Student Loans for Living Expenses. When you take out a student loan, you have to sign a loan agreement that states the loan’s terms, including its interest rate. In the agreement, it also lists authorized uses of the money.
Can you use student loans to pay for housing?
Student loans can be used to pay for your housing . You can use borrowed money to pay for a dorm room, but you can also use student loans for living expenses off campus, such as getting an apartment with friends. Meals. The COA includes an allowance to cover your meals.
What happens if a college finds out a student has used a loan inappropriately?
If a college's financial aid office finds out a student has used loans inappropriately, the school can report it to the Department of Education via a hotline and retroactively take the misused money back. This would make the student liable to the school for those funds.
How do students accrue debt?
Students can accrue additional debt by misusing their loans. Borrowers end up paying for clothes, gaming systems and other nonessential items for years to come – and at greater costs due to accrued interest. They may also be unable to afford actual needs, such as rent, if they exhaust their refunds early in the semester.
What to do before borrowing a student loan?
Before borrowing the full amount, the Student Loan Ranger advises students to take time to assess their financial needs fully. If this is your first year in college, calculate your own cost of attendance – don't rely on the school's estimate. You may need less money for personal expenses than the school projects.
What are some examples of living expenses?
That might mean you purchase a more expensive new car instead of a used vehicle. Other living expenses include meals. You'll need food – and maybe you prefer takeout to generic groceries.
What happens if you reject a federal student loan?
Keep in mind that if you reject part of your federal student loans, you may be able to borrow additional amounts later if it's in the same academic year. At that point, you'll be sure that money went toward an appropriate purchase – and not on nonessential spending.
Can students accrue additional debt?
This would make the student liable to the school for those funds. Students can accrue additional debt by misusing their loans. Borrowers end up paying for clothes, gaming systems and other nonessential items for years to come – and at greater costs due to accrued interest.
Can student loans be used to invest in crypto?
Using student loans to invest in cryptocurrencies presents a more difficult rationalization. While these digital or virtual currencies that use cryptography for security offer pros and cons when paying for your education, it's much harder to say they are a necessary educational expense.
What is a financial aid refund?
A financial aid refund is the FASFA refund check that students receive from the college after tuition and material fees have been paid.
What should a student use the money for?
The student should use the money to cover expenses related to going to school, which include day care costs, buying or repairing a car, gas, food, clothing, and housing expenses. However, a student could also blow the money on a huge party if he wanted to, though that would be inadvisable.
What happens if you don't enroll in classes?
If he applies and enrolls, but doesn't attend a single class, the money returns to the government, and the student is required to withdraw from the classes. If he doesn't withdraw and still doesn't attend classes, the Pell Grant will not pay his balance.
Does the Pell Grant have to be repaid?
Unlike subsidized and unsubsidized loans , the Pell Grant doesn't have to be repaid. The money is sent directly to the college the student attends, and in turn, the college releases the funds to the student after using the money to cover any tuition or material balances.
