Are Student Loan Funds Sent Directly to the Student or the School?

Everyone knows student loans are used to fund your higher education, but how exactly does the distribution of money work? Are your federal or private student loans disbursed directly to student, or is it sent to your school instead?

A student holding money.

So are federal or private student loans disbursed directly to the student or to the school?

Well, it depends. Most financial aid—including scholarships, grants, work-study paychecks, and loans—will go directly to the school, where it’s applied to your tuition payments, college fees, on-campus housing payments, and more. Once all outstanding college expenses are paid for, those funds can be transferred to you for everyday living expenses.

That being said, some scholarship or loan options will let the funds go directly to you, the student. Many find this ideal since they can determine what they do with the funds. Others find that sort of control a bit too tempting to spend the money on more superfluous things—which is exactly why so many financial aid sponsors opt to send directly to the school in the first place.

So, in short, both options are out there, but more than likely the money will be sent directly to your school instead of your own bank account.

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