Can You Use FAFSA Money to Buy a Car?


So, this is a question that we often get asked, and really, it’s not surprising since financial aid and student loan payments are usually the biggest amounts of money young students have ever received…and it comes right around the time when buying a car seems to be the most important thing on this earth. 


However, the answer is not simple, and we want to use this article to address that, as well as any other issues that arise when people wonder whether they can use FAFSA payments to buy a car. Keep on reading to find out more. 

Can You Use FAFSA Money To Buy A Car?

In a technical sense, yes, you can use FAFSA money to buy a car. Certainly, many people do exactly this and never get caught. This is especially true if they are just using some of their FAFSA payments as a means of covering part of the cash payment for their vehicle.

However, does this mean that you should? No! Does this mean that it is legal? No! Here’s why: 

After you have been issued FAFSA payments, whether through student loans, scholarships, or grants, the first person to get the money is not yourself, but your chosen school or college. They will take out the fees and tuition needed to clever your costs. 

You will then get the remainder deposited into your bank account. From here, this is yours to do whatever you wish with, provided it is spent only on direct costs related to your school or college education. This may include travel, living expenses, accommodation, food, books, and other supplies. 

Now, the rules may vary depending on whether you have a general loan that you pay back, a scholarship, or a grant, but in general, all of these money sources state that the money should not be spent on assets such as a car. 

They do allow you to use the money for gas and car repairs, but they do not allow you to use it to buy a car outright.

The gas and car repairs are related to travel expenses, and this is seen as a vital part of your studies as you need to get to and c=from college if you live off-campus. They also do not allow you to finance a car or get a loan on a car using any of your student finance payments.  

At the very least, if you are caught you could get all your FAFSA payments revoked. AT worst, you may face jail time! Is it worth it for a car? No…we’ll take the bus thanks! 

Can You Use Student Loans To Buy A Car?

No, you cannot use student loans to buy a car! In fact, in many cases, it is written into your contracts that you are legally bound to, that you cannot purchase a car or any other asset with your student loan. 

The sole purpose of a student loan is to use it to help cover the costs of studying. This means that it can be used for school supplies, books, living costs, food, transport, and other costs accrued whilst at college. 

This does mean that your student loan may be able to be used for gas and car repairs, especially if you travel to school in your own vehicle. However, financing a car with a student loan is strictly prohibited, and if you are caught doing so, you may even face jail time! 

Can You Use FAFSA Money For Anything?

Technically, FAFSA money (that is, money that has been awarded based on assessments by FAFSA) can only be used to cover costs associated with your education. 

With this in mind, you cannot just use this money to pay for anything and everything. Of course, there may be gray areas with this as what is essential for some may not be essential for others. 

For example, some people may feel that using their FAFSA money to pay for clothes is essential whereas others will not. 

Likewise, many students cannot seem to get their heads around why FAFSA money cannot be used for their purchase of a car. After all, if they are going to be using the car to get to college or school, surely it is related to their learning?! 

However, the argument there is that there are other options, and there are strict guidelines in place that tell people that they are not allowed to use these payments for the purchase of any sort of asset like a car. 

When it comes to your FAFSA money, please be sensible and try to use it solely for educational costs. This includes books, supplies, equipment, food, accommodation, and travel (such as gas, bus tickets, train tickets, etc). 

You can check your contracts and agreements with your funding body to be certain of what is expected of you and what you can spend the money on.

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