I'm going to be a graduate student. I'm hoping to buy a 3-4 bedroom house and rent out the other rooms to fellow students. I don't have quite enough money for a downpayment... could I use part of my federal student loan for this? Are there restrictions on what student loans can be used for?
2007-02-18 16:49:46 · 9 answers · asked by Anonymous in Education & Reference ➔ Financial Aid
It think the answer is slightly (that is it's slightly legal).
Federal student loans are suppose to pay for educational expenses, such as tuition, books, food, transportation, house and others. The loans weren't intended for downpayment assistance, but they were intended to help with housing. Since a house would be housing it technically would be legal. Furthermore, the feds do very little follow-up and of all the other things you could have spent it on this would be a better choice (than say Plasma TV).
That having been said, here's why I don't think it will work.
1st the loan isn't going to come in a large chuck, but will probably be split per semester. Since you're a grad student you will be able to borrow a lot (18k this year 20k next), but after it pays for tuition, I doubt that you'll have much more than 7k per semester left-over to help with a down payment. Let's say that is just enough to make it.
2nd you then won't have any of the refund money to pay the mortgage payments, buy groceries, pay for utilities, fill your car with gas, etc. Now, there are two ways around that, get a job and/or get paying roommates. The first, job, could cause challenges with accomplishing school work, and it's tough to stay in grad school with a less than 3.0 gpa. The second could be inconsistent; I rarely had, or heard of, 3-4 roommates that were always good for the full rent on time. You're putting yourself in a risky situation, make sure there is a possible reward.
2007-02-19 01:55:29 · answer #1 · answered by Anonymous · 1⤊ 1⤋
Don't do anything until all student loans are paid off in FULL! Student loans are not dischargeable in bankruptcy. There is no statute of limitations. They are a timebomb! Get them paid, and be sure you keep proof that they were paid in full forever! Student loan borrowers have had collection companies and others come back years later stating they still owed on their student loans. Without proof they were paid in full, you have no way to fight back. While you are paying off the balance of student loans, also you must save money. You have little to no debt, so curb your spending to the minimum to ensure student loans are paid off as fast as you possibly can, while saving for your reserves, down payment, etc. BTW, house prices are still dropping in most areas of the country. And another boatload of foreclosures are expected to arrive on the market over spring and summer. However, interest rates will probably rise since inflation (especially food and fuel) is really taking off now. Br frugal and be careful.
2016-03-29 02:16:44 · answer #2 · answered by ? 4 · 0⤊ 0⤋
Half of the Student Loan is meant to help you to live, room and board; while the first portion goes to the collage or school. I don't think there will be any repercussions from using your part towards housing. You are the person responsible to pay the loan back, so I do not think if you use it for your shelter as it is meant, that there will be any problem. Never heard of anyone asking "what" you did with your portion! Only demands for payback!
2007-02-18 16:55:13 · answer #3 · answered by Faerie loue 5 · 0⤊ 0⤋
Tough question. On one hand, your financial aid is supposed to help you cover your housing expenses--but, on the other hand, you are not allowed to buy a car with it. I'd have to say no--unless you only need a very small amount of money from it toward the downpayment.
2007-02-18 16:54:32 · answer #4 · answered by Holiday Magic 7 · 0⤊ 0⤋
It's my understanding that you can use the money however you want to. I used part of my student loan to pay for a car because I needed one to get back and forth to school.
As long as you pay it back when you're supposed to, I believe you can use it for whatever you want.
2007-02-18 16:53:30 · answer #5 · answered by TeacherLady 6 · 0⤊ 0⤋
I never thought about that. I used mine to buy a car and no one ever came after me. But be sure they didn't give you too much. Someone I know did the same thing, and when she applied for the next year they found out that she got too much money last time, so she didn't get as much as she needed for the next year. But I say go for it.
2007-02-18 17:01:05 · answer #6 · answered by Anonymous · 1⤊ 1⤋
Don't think so
2016-07-28 08:46:18 · answer #7 · answered by ? 4 · 0⤊ 0⤋
it can count as part of your "living expenses" so no i dont think its illegal
2007-02-18 16:57:44 · answer #8 · answered by precious02k 3 · 1⤊ 0⤋
yes it is
2007-02-18 16:52:38 · answer #9 · answered by Anonymous · 0⤊ 1⤋
very good question
2016-08-23 18:31:24 · answer #10 · answered by Anonymous · 0⤊ 0⤋