What happens if you use financial aid money for something else?

In the most extreme cases, using student loan money improperly is a crime. People convicted of financial aid fraud can end up in jail.

Can I use my financial aid for other things?

Federal student aid from ED covers such expenses as tuition and fees, housing and food, books and supplies, and transportation. Aid can also help pay for other related expenses, such as a computer and dependent care.

Can you use leftover financial aid money for anything?

Typically, the school first applies your grant or loan money toward your tuition, fees, and (if you live on campus) room and board. Any money left over is paid to you directly for other education expenses.

What happens if you misuse financial aid?

If your school's financial aid office discovers that you're misusing federal student loan funds, it could report you to the Department of Education and demand repayment of your loan funds. If you have private student loans and your lender discovers you've misused funds, your loan could go into immediate default.

What happens if you spend your financial aid money?

Any remaining credit balance is then refunded to the student to spend on other costs, such as textbooks, transportation and miscellaneous/personal expenses. There are no controls to prevent you from wasting the money. The financial aid office does not know what you spend the money on.

After the FAFSA: What Happens Next

Does FAFSA check your spending?

FAFSA doesn't check anything, because it's a form. However, the form does require you to complete some information about your assets, including checking and savings accounts. Whether or not you have a lot of assets can reflect on your ability to pay for college without financial aid.

Can I buy a car with FAFSA money?

You can use student loans to pay for a college's cost of attendance, and the cost of attendance includes transportation, so can you use student loans to buy a car? You cannot use student loans to buy a car. If you live off campus, having a car may be a necessity, but the college doesn't require it.

What is the illegal use of student loans?

Using student loans fraudulently – e.g. taking loans out but not actually going to school – is illegal. Using some of your funds for non-educational expenses is at worst a violation of your loan agreement. And if your loan issuer finds out, they could impose whatever consequences the agreement specifies for a breach.

Is it illegal to use student loans for other things?

Ultimately, any leftover loan money is yours to use however you'd like. While you won't go to jail for spending student loan money on expenses unrelated to school, you'll likely pay more over the long run because of the extra interest that accrues (grows) on those borrowed funds.

Can you buy shoes with FAFSA money?

However, the funds cannot be used for personal expenses unrelated to education. FAFSA stands for the Free Application for Federal Student Aid, i.e. the FAFSA is an application for federal need-based aid. You can't spend federal need-based financial aid on anything you want.

What happens if you use student loans for something else?

That money can be taken back by the Department of Education, leaving the student holding a large bill that will need to be paid immediately. Besides the possibility of having your student loans revoked by the Department of Education, misusing those loans has long-term financial repercussions.

Do I have to pay back unused financial aid?

The good news for many students is that much of the money you are awarded through the FAFSA does not need to be paid back. This includes need-based financial aid grants that are awarded by individual colleges, as well as federal and state grants like the Pell Grant or Federal SEOG Grants.

Can you return unused FAFSA money?

Return the Money

But for those with unsubsidized federal loans or private student loans, you'll start being charged interest as soon as the funds are disbursed. Once the student loans are distributed, you can return the funds, or part of the funds, within 120 days.

Can I use my FAFSA money for clothes?

Tuition, fees, supplies and textbooks are among the expenses approved by the federal government, while things like vacations, clothing and some other personal expenses are prohibited.

What happens if you don t use your financial aid for a semester?

FAFSA funds are intended for educational expenses such as tuition, fees, books, and living expenses while attending school. If you don't use the funds for these purposes, you may be required to repay the unused portion.

What counts against you for financial aid?

Your family's taxed and untaxed income, assets, and benefits (such as unemployment or Social Security) all could be considered in the formula. Also considered are your family size and the number of family members who will attend college or career school during the year.

Can you use FAFSA money for gas?

Make a list of necessary expenses you know you will have, and ensure that you keep enough of your aid money to pay for those things. Necessary expenses include textbooks, rent, gas, food, supplies, internet, transportation, etc.

Can you buy a car with student loans?

Information about whether you can use student loan money to lease a car is scarce. The Department of Education forbids using federal student loans to buy a car, so it's safe to assume the same applies to car leases. It's less clear regarding private loans, so check with your lender.

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.

Can you go to jail for misusing student loans?

Under 20 USC 1097, if $200 or more of funds are disbursed through any fraudulent activity you will likely be charged with a federal felony (less than $200 in loss is a federal misdemeanor). The felony charge carries a maximum sentence of five years in prison and a maximum fine of $20,000.

Can you be sued for federal student loans?

You can be sued when you default on a student loan. Though it's more common to face a lawsuit for a private student loan, the federal government has the option of suing you in federal court.

Is it illegal to use student loans to pay off credit cards?

It's not illegal or unlawful to use student loans to make payments towards credit card debt. However, it could be against the terms of your loan agreement. In other words, it won't get you into trouble with the law — but it could cause some issues with your lender.

Can I pocket my Pell Grant?

You can get over $6,000 in financial aid to pay for your education per academic year, and Pell Grants don't have to be repaid. If you're eligible for a larger Pell Grant than you need for school, you could even receive a Pell Grant refund and get the unused money to use for other expenses.

What happens to my leftover Pell Grant money?

You can't use your Pell Grant to directly pay your student loan. However, if there are any funds left over after your school applies your Pell Grant toward your tuition and fees, those funds are given directly to you, and you then may use them to reduce your loan amount.

Is FAFSA free money or a loan?

It is not the financial aid itself. However, the FAFSA enables the student to qualify for many types of financial aid from several sources. Some of this money is free money, some must be earned through work, and some must be repaid.