What Can I Use Financial Aid For?

In a nutshell: Textbooks, yes. Beer, no.

The world of financial aid can be confusing. Many students miss out on serious opportunities because they are not sure how to find financial aid or what expenses might be covered by it.

Cost of Attendance

Federal financial aid is calculated based on a few different areas of expense: tuition, room and board (or equivalent cost of living for students living off campus), books and other academic expenses, such as a personal computer, and transportation. These factors, added together, represent the total cost of a student's college attendance. If you have a dependent, or a disability with related costs, or if you will be studying abroad, these also come under consideration when financial aid is calculated. Collectively, this is known as the Cost of Attendance (COA).

Financial need is determined by the COA, minus the Expected Family Contribution (EFC), which is determined by a set formula applied to the information on your FAFSA (Free Application for Federal Student Aid). Each college uses this information to come up with a financial aid package. Some colleges are able to provide more aid than others; a few colleges meet all of a student's demonstrated financial need. The difference may be made up with loans and third-party scholarships.

What happens to the money?

In many cases, your bank account will not actually see the money from your aid package. Instead, federal aid is administered by the college and applied to your bill. If the total cost of tuition is 8,000, and you receive 6,000 in aid, the aid money will probably go directly towards the cost of offsetting your tuition. If a Federal Perkins loan is part of your package, your school may either apply the money directly to expenses, such as room and board, or may provide you with a check.

In addition, the Federal Work Study program allows students with financial need to obtain jobs on campus (or certain off-campus jobs). These earnings are managed directly by the student. There is usually a limit on the number of hours a student may spend at a work-study job. The total amount of work-study money you may earn is determined by your college's aid office.

Article References

U.S. Department of Education
http://studentaid.ed.gov/PORTALSWebApp/students/english/aideligibility.jsp?tab=funding

http://studentaid.ed.gov/PORTALSWebApp/students/english/campusaid.jsp

College.Gov
http://www.college.gov/wps/portal/