What can you not spend student loans on?
Federal student loans are meant to cover educational expenses, which means you're not supposed to use the money for other personal expenses, such as travel, clothing, video games, business expenses, a down payment on a home or expensive meals and drinks.
Federal student loans are meant to cover educational expenses, which means you're not supposed to use the money for other personal expenses, such as travel, clothing, video games, business expenses, a down payment on a home or expensive meals and drinks.
Can federal student loans and private student loans be used for the same things? Yes, both federal and private loans can be used for anything your school considers an eligible expense. This usually includes tuition and fees, supplies, transportation, and room and board.
Books and supplies: Student loans also cover supplies you need for class, including textbooks, pens, notebooks and backpacks. Transportation: While you can use private loans to pay for the costs of getting to class — like gasoline, parking passes, bus passes and highway tolls — you can't buy a car with your loan funds.
Most student loans can be used for any education-related costs, including living expenses. But keep in mind that some loans will have limitations on how much you can take out each year, and over the course of your education.
Whether you've got federal or private student loans (or a combination of both), here are acceptable education expenses that you can use your loan money for: Books and supplies. Room and board (meal plans, food, etc.) Off-campus housing (rent, utilities, etc.)
“This allowance may also include costs for operating and maintaining a vehicle that is used to transport the student to and from school, but not for the purchase of a vehicle.” That means unfortunately you can't use student loans to buy a car., no matter what type of student loan you have.
Your school will apply those funds to tuition and fees first. If there are funds left over, it will send you a check, which you can use for education-related expenses like housing, groceries, bills and more. In some cases, students end up with more money than they need.
Any leftover money is issued to you as a student loan refund. The additional funds may be sent to you via direct deposit, school debit account or check. You can use the student loan refund to cover other expenses, like your textbooks, groceries or gas for your car.
| Total (subsidized and unsubsidized) | Maximum subsidized | |
|---|---|---|
| Independent undergraduates (and dependent undergraduates whose parents can't get Direct PLUS Loans) | $57,500 | $23,000 |
| Graduate and professional students | $138,500 | $65,000 |
Do student loans go to your bank account?
Typically, student loans do not get deposited in your bank account. Instead, the loans are disbursed directly to the school where it is applied to tuition payments and room and board.
There is no stipulation that requires the lending institution to send an unused amount of a loan back to the lender. After 120 days, a student can still send any leftover funds back but will likely end up paying some interest if it has accrued.
If you are a student renter, then you may be able to provide your financial aid award letter as proof of income. This document will show how much money you are receiving from scholarships and grants. You can also use it to prove that you have the means to cover your share of rent for an apartment.
Student loans from the federal government, also called Direct Loans, can be used to buy health insurance. However, there are a few factors that determine whether this is or isn't a wise choice.
Federal funds provide this aid, which is intended for education and education-related expenses. This includes anything from books to rent to gas for the car.
While students can't borrow more than the cost of attendance, they might not always need to borrow the maximum amount allotted, she says. The COA typically includes average expenses for indirect costs, and financially conscious students might be able to get by with spending less than the average.
You may return all or part of your loan to us.
Within 120 days of the date your school disbursed your loan money, you may cancel all or part of your loan by returning all or part of the loan money to us. Contact your servicer for instructions on how and where to return your loan money.
A student who has an overpayment of an FSA loan or grant loses eligibility for FSA program aid but may re-establish eligibility by repaying the excess amount or making arrangements satisfactory with the school (optional) or Department to pay the excess amount.
If you work full time for a government or nonprofit organization, you may qualify for forgiveness of the entire remaining balance of your Direct Loans after you've made 120 qualifying payments—i.e., 10 years of payments. To benefit from PSLF, you need to repay your federal student loans under an IDR plan.
Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones. ED will continue to discharge loans as borrowers reach the required number of months for forgiveness.
Is $20,000 in student loans a lot?
If those monthly payments look low compared to what most borrowers pay, it's because most borrowers carry a lot more than $20,000 in student loan debt. As of March 2023, the average federal student loan debt in the United States was about $37,720, according to a BestColleges analysis of Education Department data.
Only a small percentage—about 6% of borrowers—owe $100,000 or more. Nationally, the average student loan balance per borrower is $39,032, so if you have $100,000 in student loan debt, you have about 2.5 times the national average balance.
The average student loan debt for bachelor's degree recipients was $29,400 for the 2021-22 school year, according to the College Board. Among all borrowers, the average balance is $38,290, according to mid-2023 data from Experian, one of the three national credit bureaus.
You could keep the leftover student loan money for the next academic term or school year instead of sending the money back. But, it is better to return the money if it is an unsubsidized federal loan or a private student loan. Returning the money will reduce the amount of interest you will be charged on the debt.
- Student Loan Payments Can Become Financially Crippling. ...
- Default Can Lead to Serious Consequences. ...
- They May Not Be Enough to Cover All Your Expenses.
