Do Student Loans Go Directly to the School

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If you’re wondering where your student loans go, the answer is simple. They go to the school!

Student loans are not direct-deposited into your bank account. Instead, they go directly to your school. Your school uses these funds to pay for class materials, instructors’ salaries, and other expenses related to running a successful educational institution.

Student loans are also used for other purposes that benefit students. For example, schools often use student loan money to provide financial aid for students who need it. They may also use student loan money to help fund scholarships and other programs that support student success—and even keep tuition costs down for those who don’t qualify for financial aid.

In short: when you take out a student loan, it goes directly toward helping you succeed!

does student loan go straight to university

Student finance usually consists of a Tuition Fee Loan and a Maintenance Loan to cover – or at least partially help with – your university costs.

All full-time undergraduate students are eligible for student finance, provided they meet some basic criteria:

• Residency – you’re a UK national or have settled status, normally live in your home country, and have been living in the UK, the Channel Islands, or the Isle of Man for three years before the beginning of your course.
• Your university or college – you’re studying at a recognised publicly-funded university or college (or a private institution studying a course approved for public funding).
• Your course – you’re studying a recognised full-time course e.g. a first degree, a foundation degree, a Higher National Diploma (HND), or an initial Teacher Training course.
• It’s your first higher education course – you can still get some funding if you’ve studied a HE course before, but it will be limited and you’ll have to make up any shortfall. 

Both Tuition Fee Loans and Maintenance Loans must be paid back once you graduate and you’re earning above a minimum salary. Repayment systems vary from country to country.

You have to apply for student finance for each year of your course – not just your first year. This is to guarantee you get the support you’re entitled to throughout your studies.

You must apply to the student finance body in your country, as well as notify them of any changes to your circumstances, e.g. you leave or change your course. Below is a guide to who looks after student finance in each country. 

It can take up to six weeks to process student finance applications. Make sure you apply early – even if you have a conditional offer – as you can amend or cancel your application if your plans change. 

 

do discover student loans go directly to the school

When your loan funds are disbursed, they go to your school first to pay tuition, fees, and room and board. Any additional funds will be provided to you as a student loan refund to cover other education-related expenses.

While you won’t have to provide your lenders with receipts to show how you spent the money, you likely promised to use the loan funds to pay for education-related expenses when you agreed to the loan terms. Remember that you’ll eventually have to pay back your loans-with interest-so be judicious about how you spend your money.

When You’ll Receive Your Financial Aid

The type of aid you accepted affects when you’ll get your aid.

Grants and Student Loans

Generally, your school will give you your grant or loan money in at least two payments called disbursements. In most cases, your school must give you your grant or loan money at least once per term (semester, trimester, or quarter). Schools that don’t use traditional terms such as semesters or quarters usually must give you your grant or loan money at least twice—for instance, at the beginning and midpoint of your academic year or program.

Note: If you’re a parent taking out a Direct PLUS Loan to help pay for your child’s education expenses, your loan funds will be disbursed according to the same type of schedule.

The following may apply if you haven’t taken out a federal student loan before:

• If you’re a first-year undergraduate student and a first-time borrower, you may have to wait 30 days after the first day of your enrollment period (semester, trimester, etc.) before your school is allowed to give you your loan money. Check with your school to see whether this rule applies.
• If you’re a first-time borrower of a Direct Subsidized Loan or a Direct Unsubsidized Loan, you must complete entrance counseling before your school can give you your loan money.
• If you are a graduate or professional student taking out a Direct PLUS Loan for the first time, you must complete entrance counseling before you receive your first loan disbursement. Note: Counseling isn’t required if you’re a parent taking out a Direct PLUS Loan to help pay for your child’s education.

Work-Study

If you’re going to have a work-study job, you’ll be paid at least once a month.

If you don’t receive the type or amount of financial aid you expected, contact your school. The financial aid office can explain how your aid was determined.

How You’ll Receive Your Financial Aid

How you’ll get your aid depends on the type of aid you accepted.

Grants and Student Loans

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.

If you get your loan money, but then you realize that you don’t need the money after all, you may cancel all or part of your loan within 120 days of receiving it and no interest or fees will be charged.

Work-Study

Your school must pay you directly unless you request that the school

• send your payments directly to your bank account or
• use the money to pay for education-related charges (e.g., tuition, fees, room and board) on your student account.

Direct PLUS Loans for Parents

In most cases, your child’s school will give you your loan money by crediting it to your child’s school account to pay tuition, fees, room, board, and other authorized charges. If there is money left over, the school will pay it to you. In some cases, with your permission, the school may give the leftover money to your child.

If you take out a loan as a student or parent, your school (or your child’s school) will notify you in writing each time they give you any part of your loan money. At the same time, they’ll provide information about how to cancel all or part of your loan if you find you no longer need the full amount. You will also receive a notice from your loan servicer confirming that you received the loan money.

Paying for Textbooks and Other Course Materials If You Haven’t Received Your Financial Aid

Schools that participate in federal student aid programs must provide a way for you to obtain your books and supplies by the seventh day of the term if

• you are eligible for disbursement (i.e., the payment of your financial aid) 10 days before the term begins and
• you will have a credit balance (i.e., money left over) after your financial aid is applied to your tuition, fees, and other school charges as applicable.

Your school can tell you if the above criteria apply to you.

How Your School Gets Your Financial Aid Funds to You for Course Materials

You should ask your financial aid office about this because it varies from school to school. For example, if the school offers a bookstore voucher or other means for students to receive their books and supplies through the school or its bookstore, you could obtain your materials that way.

When your school gives you financial aid, sometimes money is left over after your aid is applied to your tuition, fees, and other school charges. This remaining amount is called a credit balance. If you have a credit balance, your school must pay this amount to you directly within 14 days unless you authorize the school to keep the money to pay for future institutional charges.

The amount the school is required to provide is either the amount of your credit balance or the amount needed for books and supplies (as determined by your school), whichever is less. Your school can tell you if this applies to you.

Even if the school’s preferred arrangement is to provide vouchers or other means for you to get your course materials through the school or its bookstore, the school must provide you the opportunity to opt out, receive a check from the school, and obtain the books and supplies on your own unless one of the following exceptions applies:

• The school can demonstrate a compelling health and safety reason for obtaining the materials through the institution or its supplier.
• The school can demonstrate that the materials are not currently available elsewhere or accessible to students via other means.

Saving Money on Textbooks and Course Materials

Depending on what materials are available at your school and for your courses, you may have several lower-cost options to obtain your books:

• If your course uses a hard-copy textbook, consider buying a used copy or renting your textbook from a bookstore or online.
• If you purchase your textbook, consider reselling that textbook, if allowed, when you are done with the course.
• Even with new textbooks, you may be able to save money by shopping around.
• Some schools use open-access texts and online content to offer students further savings over hard-copy textbooks. Open-access texts are available for free.
• If your course uses paid online content, your school may have negotiated a deal with the publisher that will allow you online access at a fraction of the cost you would pay for a physical book. The paid online content may also come with study tools and other content in addition to the textbook.

Your options for course material formats will vary by school, instructor, and course, so learning what your options are and knowing about any cost-reduction initiatives your school may have can result in significant savings.

A Note About ISBNs

Your school must publish the International Standard Book Number (ISBN) for each course text in the online course schedule entry if the ISBN is available. The ISBN identifies the specific edition of the book that’s required for your class and helps you be sure you’re obtaining the right book when you search for it. If an ISBN is unavailable, the school should provide the author, title, publisher, and copyright date.

In conclusion, student loans do go directly to the school. The main reason for this is that the school is the one who performs a service for you and is entitled to compensation for it.

If you pay another person directly, you’re engaging in an illegal activity called “laundering” money—you’re taking dirty money and making it seem clean by passing it through a third party. In most cases, this means that when you get caught laundering money, you’ll have to pay back not just what you stole but also a lot more.

Types of Private Student Loans

Thinking about paying for college is overwhelming for many people. Most need to take out loans, but how do those work? What are the options? You may find yourself being bombarded with flyers, letters and emails from different lenders asking you if you need additional money for college. If you’ve decided that you want to borrow money through a private lender, than it might help to know the types of loans that are out there so you can narrow down your search for what will work for you! In the world of private loans they fall under two distinct groups:

• School-channel
• Direct-to-consumer

School-Channel Private Loans

A school-channel private student loan works with you school after you apply for the loan. The school receives the information that you applied from the lender. The school then verifies that the amount you are requesting in private student loans does not exceed the Cost of Attendance. Remember, your Cost of Attendance is the total of both your direct and indirect costs for that school year and your total funding can’t exceed it. If you have grants, scholarships and/or federal student loans, all of that is counted in your funding. If your school sees that you are trying to borrow more than your Cost of Attendance will allow, they will often reach out to you so that valuable grants and scholarships aren’t lowered, but rather you can adjust the amount you are requesting in private student loans.

Once the amount has been verified the private lender will then finish processing your loan and send the amount you requested to the school. Any extra funds that were not needed to cover direct costs (tuition, dorm fees, meal plans) will then get sent to you to use for indirect costs (gas, school supplies, living expenses).

Direct to Consumer Loans

Direct-to-consumer private student loans do not deal with your school at all, hence the name. The funds that you apply for are sent directly to you without any contact with your school. Often they will advertise a faster, simpler application process with a faster turn-around time in getting your money, but this is often off-set with higher fees or interest rates.