When you sign it, you agree to spend the federal or state financial aid you receive to pay for the cost of attending college. But before you envision financing high-end dorm accessories or spring break trips, understand that the cost of attendance is specifically defined.
Your school establishes a cost of attendance amount COA for what it would typically cost a full or part-time student, in-state or out-of-state, to attend one academic year. It takes into consideration the direct costs of attending your school, like tuition, fees and room and board.
It also includes indirect costs like books, transportation and other education-related expenses. When you receive federal or state aid, the money is actually sent directly to your school.
Your school applies that money to your tuition, fees, and room and board costs. If there is money left over, your school will send you those additional funds, and it is up to you to use that money to cover other educational-related expenses. Not all college expenses — like health insurance, prescriptions and clothing — are covered by federal or state aid.
And the more expensive your school is, the more likely your federal aid package will not stretch to cover all expenses and you will have unmet financial need. To do that, save receipts and ask your financial aid office to increase your supplies allowance.
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Discover student loan offers that best fit your needs. Advertiser Disclosure. By Ben Luthi. Shop for Loans. Latest Research. You will need this information from your parents as well as your own information. Apply online at fafsa. Ask for help at your school or local library if you need it. You can only spend college financial aid on expenses that are directly related to your education. Such expenses include tuition and fees, transportation, books, room and board, supplies and related expenses like child care.
Outside of serious financial aid fraud, which may involve other crimes like identity theft, most instances of misuse of financial aid go unpunished. Even if you did not use this money and have it in a savings account, it is considered income by the IRS so you must file it appropriately. It is possible that you miscalculated your expenses for the year and asked for more money in student loans than you actually need.
Your school will still send you a refund check in this case, but keep in mind that the money you receive is still borrowed money. You will accrue interest on it, and you will have to repay that principal amount. If you have high living expenses, you can use your student loan refund to cover those costs. However, if you have your living expenses covered and do not need the refund check, you should return this money.
That way, you do not pay accruing interest over the next 10 or more years on money you did not need. For example, if you are eligible for the Pell Grant, a merit-based academic scholarship, subsidized student loans, and unsubsidized student loans, you do not need to accept all of these forms of financial aid.
If the Pell Grant and the merit-based scholarship cover your needs, you do not need to borrow any money. If you need a student loan, ask for an amount that covers your remaining education costs. Consider if you have the time to get a part-time job to cover your living expenses. It is important to exercise fiscal responsibility with any financial aid refunds.
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