Are there student loans that go directly to you?

Many students need loans to cover the cost of college. While a majority of student loans are sent directly to the schools, there are some exceptions. You'll also receive any excess loan money after your college balance is completely paid. In this article, we covered the basics of financial aid disbursement and explained when you might see your student loan money in your own bank account.

How student loan disbursement works

Financial aid is sent to the student or the school, depending on the type of aid and the source, but most is transferred directly to the student's account with the school. There, the money is used to cover the college bill, including tuition, fees, room and board, and more. If there's money left over after the bill is fully paid, it's refunded to the student, either by check or direct deposit.

Some scholarships and student loans can be sent directly to the student. In these cases, the student just has to adhere to any terms or rules that came with the money. For example, if the money has to be used for tuition, the student will then send it to the school. If the award or loan can be used for any costs related to education, the student can decide how to best spend it.

Are there student loans that go directly to you?

Most federal and private student loans go directly to the school, not the student. However, there are some private lenders who give the money to the student instead.

Are federal student loans paid directly to the student or the school?

Federal student loans and grants are paid directly to the school to cover tuition, fees, room and board, and related costs. If you find that you don't need all of the federal loan money to cover your expenses, you can cancel all or part if at any time before the loan is disbursed or within 120 days of disbursement by notifying your school . Excess money from direct PLUS loans can be sent to the student or parent.

Work-study programs aren't loans, but these payments can also be sent directly to the school or the student. If the student would like direct payments, they can request paper checks or direct deposit. If they'd like to put the money towards their total college bill, the payments go into the student's college account.

Financial aid disbursement dates vary depending on the school. Visit your college's financial aid department to learn more about when you can expect excess loan payments and reach out if you have any questions or concerns.

Are private student loans paid directly to students or the school?

Banks, credit unions, and other lenders offer either school-channel or direct-to-consumer private student loans.

• School-channel private student loans are sent directly to the college. If any money is left over, the student can receive the excess by direct deposit or check or ask the school to send it back to the private institution to lower their loan amount or debt.
• Direct-to-consumer private student loans go directly to the student to spend the money on education-related expenses of their choice, such as tuition, books, and meal plans.

In most cases, students should go with a school-channel private student loan over a direct-to-consumer loan, if they have the option. School-channel loans tend to have lower interest rates and fewer fees. It's also generally safer, as you'll be sure your college bills are covered. If you opt for a direct-to-consumer student loan, put it towards mandatory expenses first to avoid potential issues with your bill that could affect your eligibility to attend classes.

How much should you borrow in student loans?

Colleges and private lenders determine how much you're allowed to borrow in federal and private loans. Each school has a cost of attendance (COA), and your loans generally can't exceed this amount.

For example, if you have scholarships that cover a majority of the COA, you might be able to borrow very little compared to a student with a smaller financial aid package.

Generally, you should borrow only what you need. The more you take out now, the more you'll owe later in interest. The COA, while helpful, is an estimate. You might need less to attend. Consider your bills and personal expenses to determine how much you truly need in loans. You can also use a student loan calculator to see just how much different loan amounts will cost you in the long run.

You have to pay back loans – but you don't have to pay back scholarships. Be sure to consider all your funding options like scholarships, grants, and federal aid. Visit the Citizens Student Hub today to get started.