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Managing Your Money While in School

Student-Related Tax Credits and Deductions

  • American Opportunity Credit: You may be eligible for an income tax credit of up to $2,500 per eligible student for qualified education expenses.
  • Lifetime Learning Credit: You may be eligible for a lifetime learning credit of up to $2,000 per eligible student for qualified education expenses.
  • Student Loan Interest Deduction: You may be eligible to deduct up to $2,500 in student loan interest from your taxable income.

Tip: You cannot claim American Opportunity Credit and the Lifetime Learning Credit for the same student in the same tax year.

Photo of woman holding a piggy bank

Financial Aid Disbursement

If your financial aid award is larger than your school’s costs to cover your tuition and any other on-campus expenses, you are entitled to receive those excess funds directly. You can use this extra money to cover rent, school supplies, and other expenses.

Some colleges work with financial companies to disburse these additional funds to students on debit or prepaid cards that may also function as the students’ ID cards.

Tip: You don't have to receive your excess federal student loan funds on a card. You can choose to receive any additional aid funds via check or other similar means. You can even return excess funds to your lender if you don’t need them to cover your school-related expenses. That means you’ll have less to repay down the road.

Student Bank Accounts

You will probably open a checking or savings account in the city or town where you will be attending school. Make sure that you shop around to find the financial institution that is best suited to your needs.

Tip: Your school cannot require you to bank with any specific financial institution.

The following questions can help you choose a bank account that is right for you:

Learn more about Opening a Bank Account.

Avoiding Fees

Fees can add up, and increase the cost of banking. Take into account any and all applicable fees when choosing an account. Fees can include:

Avoiding Overdraft Fees

If you make an ATM withdrawal or a one-time debit card purchase that costs more than your available account balance, this is known as an overdraft. If you authorize your bank to allow overdraft transactions, then your account will be charged the amount needed to cover the purchase. In addition, the bank will charge you an extra fee, called an overdraft fee, every time that you overdraft the account.

The average overdraft fee is about $30. Once your account is negative, your bank might charge you for every purchase that causes an additional overdraft, or charge you every day until you repay the overdraft.

If you do not opt into overdraft service, then your bank will decline all ATM withdrawals and debit card purchases made on your account that would cause an overdraft. This means that you will not be able to make a withdrawal or purchase that your account balance cannot cover.

Tip - Avoid Overdraft Fees: If you have opted in to overdraft coverage, you can avoid overdraft fees through proper account management. Keep track of your account balance. Remember that ATM withdrawals, ATM fees, debit card purchases, online purchases, and recurring debits (like cable bills and rent) can affect your available balance.

Tip: If you have previously opted in to overdraft coverage, you can opt out at any time.

Learn More about Overdraft Protection.

About the Student Protection Unit | Consumer Alert: Student Debt Relief Companies