Is it illegal to spend student loan money on noneducational expenses?

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Danial Harber asked a question: Is it illegal to spend student loan money on noneducational expenses?
Asked By: Danial Harber
Date created: Sat, Jun 5, 2021 11:35 AM
Date updated: Sat, Jun 25, 2022 4:31 PM

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Top best answers to the question «Is it illegal to spend student loan money on noneducational expenses»

  • Students who spend their federal loan money on noneducational expenses may not be breaking the law, but they could face legal action from the DOE if their actions are discovered. In some cases, this may include repaying subsidized interest.

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According to the Department of Education’s Office of Federal Student Aid, “All loan funds must be used for your education expenses.” Education expenses include tuition and fees; books and ...

According to the Department of Education’s Office of Federal Student Aid, “All loan funds must be used for your education expenses.” Education expenses include tuition and fees; books and supplies; and general living costs.

It's technically illegal (or at least a breach of the federal loan agreement) to spend your loan money on non-educational expenses. However the chances of you being audited for this is pretty low. I would pull out what you originally put in (or have stop losses set to just above this number).

"The only thing I can say is, if students spend their money on electronics, they won't have enough left to buy books, which they need to pass classes," said Bryant.

Many college students make poor decisions with their student loan refunds – spending the money on noneducational purposes, such as spring break vacations and buying new clothes. Accounts of student...

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. But they have no way of knowing what you spent the money on unless someone calls them up and tells them. That said, the wisest thing to do is to not use student ...

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