Private College Student Loan

Student loan question--how it's applied?

I am going to take out a loan for the upcoming semester. It's a Federal Direct loan. As I understand it, the school bills are taken directly from the loans first. My grandfather pays for my housing, and he sends the check directly to the school every semester. Will they just apply his check to what I owe and give me the balance (which would then be like dispursing my loan to me)? That's not really the question. I want to know if when they receive the check from my grandfather, will they send it back to him since my fees were already paid, or will it just get added to my account?

Public Comments

1. No. It sounds like a completely separate loan that will be in you name only which means when you graduate or leave school, you alone will bear the responsibility of paying this back. Be very careful with federal loans such as this as they are one of the only types of loans that will remain on your credit after bankruptcy and they can even garnish your wages if you default on them.