How to Understand What a Student Loan Can Be Used For

Posted by Anonymous , 9/4/2007 Tags:UnderstandStudentLoanUsed
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How to Understand What a Student Loan Can Be Used For

Introduction

Yes, it's called a student loan and it's meant to pay for school, but what constitutes a school expense? Whether you're scrupulous or paranoid, you might want to find out what to do with that financial aid check. Here's how to understand what a student loan can be used for.

Instructions

Difficulty: Easy

Steps

1

Step One

Understand how the money is handled before you get it. Most grants and loans are automatically applied to your tuition first, so you don't have to worry about that. After that, most schools will write you a check for whatever is left over.
2

Step Two

Be smart. Just because you can spend your money on whatever doesn't mean you should. As a general rule of thumb, you should stick to spending money on school expenses such as books, room and board, and transportation.
3

Step Three

Visit a financial aid counselor. The quickest way to find out is to ask your school's financial aid office. They have the final say on all matters of financial aid.
4

Step Four

Explain extra expenses (dental, car repairs, computer) to your financial aid office in full. Depending on the institution, your circumstance may demonstrate sufficient need to expand your loan.
5

Step Five

Bring a copy of your rent contract and utility bills to be confirmed by the financial aid office of your school. If you are living off campus, you can get your school to include your bills in the cost of attendance.
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Step Six

Consider meeting with private lenders. Private lenders will usually have loan terms delineated on paper as well as explained to you in person. Alternative, non-government loans will vary widely in their terms.

Overall Tips & Warnings

  • Don't be stingy. The rates for student loans are highly favorable, so if you genuinely need something, don't hesitate to take advantage of your loan.
  • Student loans often have much lower interest rates than commercial credit cards. It might not be a bad idea to use some of your loan money to pay off credit cards. But use your common sense and avoid getting further into debt.
  • Remember, you have to repay your student loans no matter what you spend it on. Resist the urge to spend what seems like free money at the time.
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