College PLUS Loans, Allowed Educational Expenses?

If you are a parent and you receive any excess funds (by check or by electronic deposit) from a loan, you cannot use the money for anything that does not directly relate to your child's college expenses.

Your school establishes the maximum amount that can be borrowed based on your cost of attendance minus any other financial aid. And the school assigns the values for each allowable cost.

The expenses that PLUS loans can pay are described by the Higher Education Act of 1965 (as amended), Sec.472.*

These are:

• tuition and institutional fees
• room and board
• books, supplies, equipment (including a computer) and miscellaneous personal expenses
• dependent child care expenses
• transportation and commuting expenses
• loan fees (federal or private student loans)
• other documented, authorized costs

Also, expenses related to a student's disability, to a student's approved study abroad, or to work experience in a cooperative education program, are allowed.

If you have an unpaid charge on your student account from the previous year, college plus loans for the next year can only be used to pay up to $200 of it. The rest must be paid using non-federal funds.

So, on to the main questions...

Where Is My Refund and What Can It Be Used For?

Refunds have to be given within this time frame:

• If your account is first credited with a balance after the first official day of classes for that semester, the school must pay you within 14 days from the first day that the credit balance shows up on your account.
• If your account is first credited with a balance on or before the first official day of classes for that semester, the school must pay you within 14 days from the first official day of classes for that semester.

So that's when the money has to move from the school to you- but when you receive it depends on the mail (if you get a check) or your bank (if you get it by electronic transfer).

Direct PLUS loans refunds are supposed to be spent on those things from the list that the school does not charge you directly for- like books. As long as you get those things, it does not matter if you spend less than the amounts estimated by your school. So if you want to save money and buy college textbooks online, you can. Of course if you don't have the refund until two weeks after classes start, it might be difficult not to use the college bookstore credit. So it makes sense to hang on to some excess college PLUS loans money to use for next semester.

Other Documented, Authorized Costs?

These can only be determined by your school's financial aid office. A financial aid administrator can use their "professional judgment" to decide what is authorized and what is not. As for "documentation", that is also up to your school. It can be as simple as a write-up of a meeting with the student, or even just a statement signed by the student.

So allowed, educational expenses for college PLUS loans are either those that are listed, or those that are approved by your school.