Your FAFSA will give your college the information it needs to determine your Expected Family Contribution. This amount will be subtracted from your cost of attendance to get the total amount you’re eligible for in subsidized loans. You can use the Fafsa4caster to see how much aid you would be eligible for.
Using Your Financial Aid Surplus
If you qualify for a federally-backed student loan, you can use your financial aid disbursement surplus to pay for your miscellaneous living expenses. In most cases, your disbursement will be forwarded directly to your school’s financial aid office, where the amount of your tuition will be taken out. Once this process is complete, you can ask your financial aid office for a refund of the surplus (whatever’s left over). You can then use that refund to pay whatever expenses you have. It isn’t uncommon for a school to withdraw too much from students’ financial aid disbursements, so keep a close eye out for discrepancies.
If you’re not eligible for a refund or a subsidized student loan, you can still use student loans to pay your living expenses. You may, however, need to take out an additional loan to do so. The downside of this method is that you won’t be able to take out another federal subsidized loan to pay for your living expenses. You, therefore, must take out a private loan, which isn’t backed by the federal government. Private loans typically have better interest rates but are less flexible on repayment terms.
Know Your Net Price
To find out how much you’ll have pay out of pocket with the financial aid you’re receiving, you’ll need to subtract your total financial aid from your cost of attendance, or “sticker price”. The resulting number is your “net price”.
Knowing your net price can help you decide whether you can afford a school or not, and whether you need to borrow more money to do so. It can also help you choose the right school.
For example: you school and your backup plan-and your dream school’s COA is likely greater than your backup plan’s COA. But because of the way financial aid is calculated and disbursed, your out-of-pocket expenses, or “net price” e for both schools.
College Data offers a tool for calculating your net price so that you can plan ahead and make the smartest choice.
Student loans can help you make ends meet when you can’t afford living expenses at your college. However, you don’t want to bury yourself in debt just so that you can afford date nights and morning lattes. It’s therefore very important to create a realistic budget and borrow wisely. You might be better off finding an online job while in college than borrowing to pay your living expenses.
Student Loans for Expenses Outside of College
It’s also important to understand that student loans are not intended to be used at any time other than when you are attending school. While the accessibility of student loans may be tempting to continue using even if you’re no longer attending, these loans are exclusively meant to be used by college students who are actively attending classes.
Minimize Your Borrowing
Living on borrowed money can quickly lead to living beyond your means, which can, in turn, put you in debt for decades to come. If you find yourself in need of too much borrowed money to meet your living expenses, consider attending a less expensive college or finding ways to reduce your living expenses.
Using Student Loans Wisely
The decision to take on a student loan-or multiple student loans-isn’t one to take lightly. If you find yourself unable to pay tuition and living expenses with family contributions, scholarships, and other funds, a loan is likely your best option, but only if used wisely and sparingly. Student loans-even federal ones-can stick with you and accrue interest much longer than other types of debt, and they can’t South Carolina installment loans be shed as easily through bankruptcy. If you’re considering student loans for living expenses, make sure you borrow only what you need, you fully intend to graduate college, and you stick to a budget.
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