John asks…
How do schools keep track of Direct Loans?
I am getting ready to take out a Direct Subsidized Loan for college. I read that I can only use the money for school expenses like room and board. If I spend my own money now for books and parking passes so I can go to class (which are both covered), can I “reimburse myself” after I get the loan? Also, how do they keep track of what I spend the money on? I feel like I’m going to be watched for every little thing I spend money on.
Nagesh answers:
No, they don’t keep track of it at all. And even if they did, you can pretty much get away with anything being “school related” costs. Computer purchase? Well, you write papers on your laptop, right? Going on spring break and need money for the flight? Well, it’s healthy for students to participate in relaxing, stress-relieving activities. Need gas money? You need to drive to the library sometimes, right? Reimbursing yourself is also perfectly acceptable.
Basically they’re covering their own butts. They put that clause into the terms to ease the minds of taxpayers. The taxpayers want to make sure their tax money is used for school expenses only, so the federal government said, “Um, OK, we’ll just write that in the contract the students sign, and everybody feels better.”
In rare cases, there is need to reclaim the money. An example is if you are blatantly lying to the school: say you apply for additional loan money because you are going abroad. It’s a learning experience, so that’s allowed. The school’s financial aid office sends some forms to your host school, and the host school tells them they have no record of you ever attending. So the school does a little digging, and find out that you are enrolled in two classes at the local community college and you are living with your parents, and using the $20,000 extra loan money as capital to build a marijuana grow house. This in an unacceptable use of student loan funding. Now they can point to the clause in the contract that you signed, and make you give the $20,000 back.
Anything else which is reasonable is acceptable. Not that they will ever do any research–because of privacy laws, they really can’t. They can’t request your bank records or credit card history. Even if they could, it doesn’t really matter to them (and they don’t have the money to afford employees to look into this kind of stuff).
Sandy asks…
Is there a way I can get direct loans without going through my school?
I had a really bad experience with my financial aid office and do not want to go through them. I need to get a direct loan, for this fall semester, but everytime i try something online it says they can’t help me b/c i can go through the office…help!
Nagesh answers:
What they said. If everything you try says go to your school….then go to your school! Not to be mean, but any problems you had probably came from a lack of understanding the processes of the financial aid office. They have rules they have to follow and loads of limitations.
What issue do you have with them exactly? They see tons of people, they might not even remember you unless it was something huge, which I doubt it was. They only remember something crazy or involving the police, in which case you probably wouldn’t even still be in that school anymore, so just go back–they could care less.
Donald asks…
Can I start paying off my direct student loans before the grace period?
This is my first time taking in a loan, so I don’t know much about it.
The direct student loans site has “Repayment” options, such as Standard, Graduated, and so on. Instead of going along with one of the repayment options, can I just make my own payment plan before the grace period?
Thanks in advance.
Nagesh answers:
There is no prepayment penalty on federal student loans. Ever.
If you don’t believe me, read this: http://www.finaid.org/loans/prepayment.phtml
You will make the decision as to a repayment plan when you start repaying the loans, not when you take them out, but I’m glad you’re thinking about this now. Early repayment, if it’s possible for you, is the best way to pay off your loans.
Here’s to graduating without debt! I hope it works for you!
Lisa asks…
How do I contact someone from Starter Loans Direct?
This company named Starter Loans Direct debited my account with out authorization, which caused my account to be overdrawn. I can’t locate a phone number for them
Nagesh answers:
According to their website the company that runs it is called webchex but there is no phone number, just this info
5789 Vegas Blvd, Suite 977
Las Vegas, NV 89108
Fax: 702-921-9858
E-mail: cservice@webchex.org
I’m afraid they look like a scam and you need to contact your financial institution
Mandy asks…
Where is the best place to find direct student loans?
I am attending UCSB in a month and it is going to cost me 7-8k per quarter. What loans would be best for me? Obviously direct subsidized loans would be the best, but is it better to get government loans or loans from the bank or where? Is there a website that compares different loan companies?
Nagesh answers:
May be this site can help you
http://www.thetechnology.net
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