A part of being a responsible borrower of subsidized and unsubsidized loans is to ensure these funds are used towards your educational expenses. In most cases, your school will disburse your federal student loan money by crediting it to your school account to pay tuition and fees, room and board, and other authorized charges. If the loan disbursement amount exceeds school charges, the remaining balance of the disbursement will be paid to you directly by check or other means.
You may use the loan money you receive only to pay for your authorized educational expenses for attendance at the school in which you were determined as eligible to receive the loan. Authorized expenses include tuition, room and board, institutional fees, books, supplies, equipment, dependent childcare expenses, transportation, commuting expenses, rental, or purchase of a personal computer, loans fees, and other documented, authorized costs. If you use your loan money for anything other than expenses related to your education, the entire unpaid amount of your loan would become immediately due (accelerated). Below are a few examples that are included as authorized expenses.
Tuition, institutional fees, and equipment: The cost of teaching/instruction at an institution, materials, or supplies required of all students in the same course of study.
Room and board: An allowance for the cost of housing and food while attending college or career school.
Books, supplies, transportation, and miscellaneous personal expenses: Commuting expenses and materials such as laptops needed to attend school. Includes reasonable amounts as determined by the school (excluding car purchase).
Dependent childcare expenses: The cost of care during periods that include but are not limited to class, time, study time, field work, internships, and commuting time for the student.
Loan fees: A fee charged for each federal student loan you receive that is a percentage of the total loan amount you are borrowing (gross amount). The loan fee will be deducted proportionately from each disbursement of your loan. This reduces the actual loan amount you will receive (net amount). The specific loan fee that you are charged will be included in a disclosure statement that will be sent to you after the first disbursement of your federal student loan. Please keep in mind you will be required to repay the gross amount.
Information retrieved from StudentLoans.gov
As a loan borrower, you are also required to complete entrance loan counseling. The entrance counseling is a mandatory information session that takes place before you receive your first federal student loan that explains your rights and responsibilities as a student borrower. Entrance counseling is required before you can receive your first direct subsidized or unsubsidized loan as an undergraduate, or your first Direct Plus Loan as a graduate/professional student. For more information regarding the entrance counseling and your rights and responsibilities as a loan borrower you may visit Entrance Counseling | Federal Student Aid. Additionally, to complete or view a demonstration of the entrance counseling please visit studentloans.gov.
By Shalena Gonzales
Financial Aid Specialist, American Public University