Cashing Out the Ed Award

In response to the questions I often receive about how to cash out the ed award:

The education award can be used for what's known as 'Cost of Attendance' (COA) expenses.

COA expenses include tuition, books and fees for part-time students.

However, for half-time or full-time students, COA expenses include tuition, books, fees and other miscellaneous expenses. Contact your financial aid office to see what expenses are covered. When I was a financial aid counselor, our COA expenses for full-time students included tuition, fees, books, rent, food, transportation (bus fare, gasoline, etc., NOT the purchase of a car...or boat in one case I won't mention), entertainment (after all, college students have to have SOME fun), and miscellaneous expenses. Basically all the minor expenses you rack up as a college student.

Once your tuition and fees were paid, we would refund to students their remaining financial aid (loans, scholarships, etc.) in the form of checks, one at the beginning of the semester, and one a few weeks later.

So, if you are a full-time student, and your tuition is $2,000, and you submit an ed award voucher for $4,000, we would pay your tuition, and then cut two checks to you for the remaining amount. You would then deposit those checks into your checking account and buy food, clothing, supplies, pay rent/utilities, airfare if you were studying abroad, etc. It's all perfectly allowed, legal and fine.

This is what's meant when members refer to 'cashing out' the ed award.

Again, contact to your financial aid office to see what's covered by Cost of Attendance expenses and how 'overage' (the amount of financial aid, including the ed award, that's left over once tuition/fees are paid). Cost of Attendance is defined differently by each school.

(I'll talk about strategies for students only attending one or two classes later on.)

NOW PAY ATTENTION.

Some AmeriCorps members have looked at this policy and thought, 'Well, what if I enroll full-time, cash out my ed award, and then drop out of school?. Wouldn't that be cool? Then I could get my tuition refunded to me, and use the ed award for a trip to Mexico.'

Yes, that would be very cool IF IT WEREN'T ILLEGAL AND PUNISHABLE BY LAW. And let's face it, you really don't want to piss off the US government these days unless you have some sort of cluster bomb fetish.

And, yes, of course this is all hyperbole, I doubt more than a dozen former AmeriCorps members have ever been carpet bombed, but I'm trying to make a point. Don't intentionally abuse the overage policies of your college financial aid office.

However, if you are attending college as a half-time or full-time student, using your ed award overage to buy pizza and pay rent is perfectly fine, and no different from using your Stafford Loan overage to do the same thing.

In fact, if you're paranoid about using your ed award in this way, simply borrow through the Stafford Loan program, use the Stafford overage to pay for your pizza and rent, and then use your Ed Award to repay your loan (perhaps repaying it over the course of two or more years in order to distribute your tax burden).