Federal Student Loans: What Do They Pay For?
Yay! So, you finally received the approval letter that you are able to receive student loans for your upcoming semester. As you look at the loan amount, you may start to feel excited inside because you KNOW your cost of attendance is nowhere near this price. Does this mean you actually have money to spend on yourself?
While there will be no one standing over you with a rule to smack your hand, you should never simply take out the max amount of loans you are offered, especially if you will just spend the money on unnecessary items. Below, we will go over some of the ways you can use your student loan and how it is supposed to be used.
1. Your Tuition and School Fees
If you did not read all of the fine print on your FAFSA, you did agree to only spend your financial aid on school related items. One of the first things that your loan covers is tuition and school fees. Fortunately, this covers a wide majority of things that are related to your school expenses. Some of the items covered include:
· Books and supplies
· Tuition for classes
· Additional tuition for lab fees, online classes, etc.
· Transportation for school
· Dependent care costs
· Licensing fees
As you noticed above, you can use your financial aid to pay for dependent care while you are in school. Many schools offer a daycare on-site to help you study without the worry of what your children may be doing.
2. Your Room and Board
Your student loans will pay for your room and board whether you live on campus or off of campus. If you live on campus, your loan account will likely be automatically debited to cover your cost of living there for the semester.
If you plan to live off campus, you will be responsible for paying rent at your apartment or home and will need to make sure you set the money aside, so that your bills do get paid. While there is no cap on the amount you spend on rent, make sure that you rent a place that falls within your budget, so you do not run out of money quickly.
3. Other School-Related Necessities
Lastly, your student loans will cover other items that are considered school expenses such as computers, parking fees, food while on campus, etc. It is important to make sure that you only use the money on things that are related to your education or you may find that you graduate with a very large and hefty student loan repayment bill.
One of the biggest mistakes that some students make is they think that the money is for them to live on and use as they please. While it may seem like a good idea at the time, the only thing that will happen is you will end up spending every penny you have and be left in debt that you cannot claw your way out of.
Always be smart about how much money you borrow and try not to take out more than you actually need for your semester.