Fed Financial

If I get a scholarship for Graduate School, can I use it to pay off previous undergraduate loans?

I know this isn't conventional but my company is paying for most of my graduate school so if I won a $5,000 scholarship, and already had my current tuition paid off, could I use that money for any educational expenses such as rent, books, and previous student loans from my undergrad degree? I didn't think this was possible but I was in correspondence with a financial aid worker at a University and they said if my current bills were paid off that I would still get that money and could use it for any educational expenses. I asked this question to yahoo answers a couple of days ago and almost everyone said that I wouldn't be able to do this; has this happened to anyone before where they could use scholarship money to pay off loans for their undergrad or associates' degree? Thanks in advance : )

Public Comments

1. Generally I'd say no you can't use scholarship money to help pay off previous loans but it all depends upon how the scholarship is paid out. Most of the time scholarships are put towards tuition and fees first, then you get your bill so your company might only pay a fraction of what they originally were going to pay. Even if your company paid first they would end up getting a refund.
2. You might, depending on who the funding agency is and how they dispurse the money. Usually however, the agency will send the money directly to the school, not you. Even with exact specifications on what to do if you drop out, drop classes, don't have financial need... most schools don't allow the money to be dispursed to the student, but who knows... you might get lucky. Apply anyway!!