Overhaulin'

If I get a student loan, will it affect my financial aid and can i use that loan to finance a car or buy used?

I mean I do need a reliable car to get back and forth to the college. Could'nt that be considered an educational expense?

Public Comments

1. No, they don't consider getting a car a necessity. Also, after you get a car, you'll have to worry about insurance and gas which you can't try to write off as a educational expense. Your financial aid will more than likely be affected by getting an additional student loan if it is not a federal loan offered through FAFSA. If you get the loan, then your level of need generally goes down. Same goes for getting a scholarship. The financial aid dept is very particular about how much money they give out.
2. A Federal student loan is awarded with any other grants you are eligible for by filling out your FAFSA application (www.fafsa.ed.gov). The government will not award you a loan just to go out and buy a car. The student loan money is technically supposed to be used for educational expenses. If all of your tuition and fees and book expenses are covered and you receive funds back either from grants or the student loan, what you do with money is your choice--if you choose to buy a car with it, you chose to do that. If you went and got a regular auto loan through a dealership or credit union financing it - and then used the leftover money to help pay that down - it would be treated as your transportation expenses related to education which is a legitimate expense. I hope this makes sense to you. To find out what you can legally claim as an educational expense for tax purposes, check out the IRS website at www.irs.gov and do a search for the Hope or Lifetime Tax Credit.
3. Racingmumble doesn't appear to have paid attention to student loan information when it comes to buying a car with a student loan. Purchasing a car with a federal student loan is the one use of these monies expressly forbidden by federal regulation. A student loan is considered part of your financial aid and the total amount you are eligible to borrow depends on your other aid and unmet need. No, cars are not considered an educational expense. Sorry.