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I'm curious about my rights to my own private loan. (Co-signed by my brother) After getting my tuition and fees, I took out a loan to cover the remaining costs after aid.

I do live with my parents - however, they purchased a car and cell phone in my name and then told me that I must pay for it myself. And because those bills are attached to me, my credit will obviously go down if I don't pay them. My parents do not support my living at all, even though I live with them.

With that being said, I also have to add on car bill, gas, groceries, etc onto that private loan. I do not have time for a job, as I am taking 18 credit hours. So I desperately need the money in order to survive while going to school.

Now, my school is denying my loan with the amount that I am asking for. They told me that if I want to take out that loan then they will only accept it if I reduce it.

In my own personal opinion, they do not know the circumstances of my financial/home life, therefore shouldn't have any say in what I take out of a private loan. I am not doing this to buy clothes, unnecessary things, or anything that isn't absolutely needed. Which I have explained to them, but they do not care.

I tried to search for any laws about private loans, but I am not an expert in law at all.

Could somebody please help me? If you know anything about whether or not they are even allowed to do this, that would be helpful.

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    Is it actually that you've applied for a private loan with your brother as a co-signer? And the university says that the amount is too much? – mkennedy Feb 7 '18 at 21:09
  • "they purchased a car and cell phone in my name and then told me that I must pay for it myself." Do you need the car and phone? – JAB Feb 7 '18 at 22:35
  • So to summarize. I took out a private loan, which was co-signed by my brother. Because it is a student loan, it goes directly to the school. But the school is saying I don't need that money because I live with my parents. @mkennedy – Nathan Thompson Feb 8 '18 at 1:30
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    @NathanThompson If the car and phone are both in your name but you were not party to the decision to purchase them, then that's a clear case of fraud and, if you're willing to take the step to do so, threatening your parents with legal action may well convince them. Of course, if you're actually using both you probably would not have any footing to do so, and you would probably be out of a home even if you were to succeed. – JAB Feb 8 '18 at 2:20
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    A lot of this is extremely irrelevant to the question, either as commentary or as detail, and including it puts this squarely in the realm of legal advice for a specific case. I very strongly suggest rolling back your edit that replaced the removed text. – Nij Feb 12 '18 at 6:16
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Student loans work very differently than any other ordinary loan you could take out. They have explicit restrictions that limit what kinds of things you can use them for, including your tuition, books and other required materials (sometimes even a laptop), room and board, groceries, transportation (like a bus pass), and a few other minor essentials for going to school (like school-provided health insurance, if needed). Your university should publish a public cost of attendance document somewhere which lists exactly what expenses are needed to attend there, and only those expenses can be covered with student loan financing.

Student loan financing explicitly cannot be used to buy a car or pay off loans. You'd also be hard-pressed getting them to consider a phone plan essential, so you can't use that financing for your phone either.

Now the other part of a student loan is that it's not actually a loan where you get all the money up-front. It is disbursed on an as-needed basis. It can almost be thought of as a pre-approval. It is a maximum amount that a certain bank is willing to allow you to take out in order to pay for college expenses, but not necessarily an amount that you will actually receive in full. That is up to the school and how much they evaluate you are eligible to take out.

When the school is evaluating how much student loan financing you can receive each term, your car loan and phone plan are simply not relevant. They're not covered expenses for that financing, and they are things that you should be covering on your own outside of any school expenses. They are evaluating how much you actually need to cover all of your tuition and material expenses, and maybe groceries if you convince them that's necessary. Since you're living with your parents, room and board is not included.

So yes, an university can control how much of a student loan you actually receive. They're explicitly in charge of determining that. If you want loan money that is not ultimately controlled by the school you are attending, then you would need to get a personal loan, but that doesn't really solve your problem since it's unlikely you'd find a personal loan with deferred payments.

If the car and phone plan are causing you financial burdens, then you'll need to pursue other legal options to get out of those contracts (you might be able to void them if they were created in your name without your consent, or you might be able to strong-arm your parents into taking over financial responsibility). You cannot use a student loan to cover those payments, and the university will not give you additional money because of those financial obligations.

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If I understand your question correctly, you've borrowed some money from your brother and your school is refusing to loan you more money ("denying my loan with the amount that I am asking for"). If that is incorrect, please advise in a comment.

Lenders generally evaluate the financial circumstances of prospective borrowers so they can judge the risk that the borrower will default on the loan. This is perfectly legal; disclosing that information is a condition the prospective borrower accepts when applying for the loan.

A very important criterion for lenders is how much debt the prospective borrower already has. This is entirely reasonable and legal: a borrower who already owes someone else a large sum of money is less likely to be able to repay the debt than one who has no debt at all.

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    "If I understand your question correctly, you've borrowed some money from your brother" - It doesn't sound that way. He said "co-signed by my brother", which is nowhere near the same as borrowing from his brother. – D M Feb 7 '18 at 20:55
  • I was approved for a private student loan from Sallie Mae. My brother co-signed that loan. Because student loans go directly to the school, my school has seen it and decided that I don't need it because I live with my parents. – Nathan Thompson Feb 8 '18 at 1:34
  • I think you've misread the question in several major aspects, and this answer doesn't make any sense in the context of education loans. – Nij Feb 9 '18 at 22:56

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