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Whether living at home, at an off-campus apartment or in a dorm, you may need to borrow money to cover living expenses while attending school. Most people turn to student loans because of the high costs of college tuition, but that’s not the only thing loans can help with.
In addition to tuition, fees and textbooks, many student loans cover the cost of room and board for on-campus and off-campus students. Here’s the breakdown of how to use student loans for living expenses.
Can you use student loans for living expenses?
If you live on campus, your student loans can help cover living expenses up to your school’s cost of attendance (COA). You can also use the funds to pay for living expenses off campus, including:
- Rent.
- Transportation (gas, parking fees, bus fare, etc.)
- Meals and groceries.
- Housing utilities and supplies.
- Home furnishings.
After student loans are applied to the balance due from your college or university, any leftover balance is returned to you directly. These funds can then be used for anything related to the cost of attending school, including the expenses listed above. You may also use this money for textbooks and supplies, computer equipment needed for your studies and other necessary purchases.
While there is some flexibility around what you can use these funds for, remember that the money is borrowed and you will be charged interest. Stick to using your loans for needs, not wants, and use a budget to keep expenses under control.
What is cost of attendance?
A college’s cost of attendance (COA) is the estimated cumulative cost to attend school, often calculated by term or academic year. This estimate includes tuition, fees, room and board, adjusted for the cost of living where your school is located. Your school’s COA determines the maximum amount you can borrow in student loans.
Can I use my student loan for nonessentials?
While your student aid office and lender aren’t regulating every line item of where you spend your loans, you may face consequences if they discover that you’ve used your loans for unnecessary purchases. Nonessential purchases may include:
- A new car.
- Business expenses.
- Frequent meal deliveries or restaurant visits.
- Other debt.
- Unrelated electronics.
- Vacations.
Misusing your loan funds could result in your lender canceling your current loans, denying you future loans or requesting that your balance be paid in full. Remember that you owe the principal plus interest. Though it’s relatively uncommon, misusing your student aid could result in being convicted of a crime: financial aid fraud.
Limiting your borrowing and use of student loans is also important because there are limits to how much you can borrow. Federal loans and many private lenders have lifetime limits in place. You cannot borrow more once you’ve maxed out your loan allowance.
Before spending any student loan funds on nonessential expenses, remember there could be an impact on your long-term financial health. You will owe this money back plus interest after finishing school. Even if you encounter financial hardship and need to file for bankruptcy, discharge of student loans for this reason is rarely granted.
Tips for saving money on living expenses
The money you receive in student loans is based on your school’s cost of attendance, which varies based on where you go to college. While there are a few rules about loan usage, the most important thing is to be smart about spending your student loan funds. If you want to save money on living expenses, consider these tips:
- Cover your must-have needs first: Your tuition, fees and major expenses, including living arrangements, should get the bulk of your student loan money.
- Look for less-expensive alternatives: Even if you need to buy something for school, you’re not obligated to always buy the most expensive option. When it comes to supplies, see if you can buy a less-expensive or older version, look for something secondhand, investigate renting and borrowing options or split the cost with a friend.
- Crunch the numbers on housing options: You may be required to live in an on-campus dorm for your first year of school, but after that, you may be better off renting an off-campus apartment. Choosing off-campus housing without an expensive meal plan could save you money.
- Spend only what you need: Even if you were approved for a large loan amount, you’re not required to spend it all. Any loan money you use on living expenses will come with an extra charge in the form of interest.
The bottom line
While you can use student loans for living expenses, be smart about how you spend your money. Your loans can cover a lot of things, but not everything. Don’t spend more than you need because you’ll have to pay back anything you borrow. You can apply for scholarships and grants to access free money for school that doesn’t have strings attached.
FAQs
Student loans can be used for any education-related expenses, which include living expenses during college. So if you have any of those funds left over after paying costs such as tuition and fees, you may be able to use that money to directly pay for what you need.
Can I use student loan for moving expenses? ›
Can a federal student loan be used to help cover residency or relocation costs? Unfortunately, there are no federal student loan options available to cover residency or relocation costs, meaning you may not borrow any new federal loans to cover these expenses.
Can student loans be used for spending money? ›
Generally, you can use private student loans for living expenses and education costs. If you spend student loan money on non-approved expenses, the lender may terminate the loan. You'll also pay student loan interest rates for expenses that aren't necessary. Here's a closer look at what falls into approved categories.
Can student loans be used for housing expenses? ›
Student loans can cover more than tuition. They can also cover living expenses, such as housing, groceries, and toiletries. These expenses are part of your school's cost of attendance (COA), which lenders use to determine how much money you should receive.
Can I use student loans for whatever I want? ›
Can federal student loans and private student loans be used for the same things? Generally, yes – both federal and private loans can be used for anything your school considers an eligible expense. This usually includes tuition and fees, supplies, transportation, and room and board.
Will FAFSA cover living expenses? ›
Federal student aid from ED covers such expenses as tuition and fees, housing and food, books and supplies, and transportation. Aid can also help pay for other related expenses, such as a computer and dependent care.
What can student loans not be used for? ›
Debt: Don't use your loan to pay off credit cards, a car note, or other debt. You also can't use it to pay for a down payment on a new house or condo. Non-school services: You can't use your loan for hiring cleaners, paying gym fees, or any other non-education services.
Can I use my student loans to buy a car? ›
Can I use student loans for car payments? No, you can't use student loan funds to make car loan payments. Transportation expenses to get to and from school are an approved expense, but you can't use the loan money to buy a car. You can, however, use student loan funds to pay for gas and vehicle maintenance.
What happens to student loan money you don't use? ›
Students in this situation may wonder “what happens if I don't use all of my student loan?” In most cases, colleges will refund the money to the student. Continue reading to learn more about what happens to unused student loans so you avoid taking only what you need to be a successful student.
Can I use student loans for groceries? ›
After your school deducts what's needed to pay for expenses such as tuition and room and board, it will disburse any remaining money to you for education-related expenses. But these expenses aren't just books and class fees. Student loan funds can be used to pay for rent, groceries and more.
So the short answer is, yes, students can use money from federal or private student loans to pay their monthly rent or any other living costs. 1 However, the type of housing that a student chooses will dramatically affect the size of the debt that must be repaid later.
Do student loans count as expenses? ›
You can take a tax deduction for the interest paid on student loans that you took out for yourself, your spouse, or your dependent. This benefit applies to all loans (not just federal student loans) used to pay for higher education expenses. The maximum deduction is $2,500 a year.
Can you use a personal loan for living expenses? ›
Key Takeaways. Personal loans aren't usually designed for education or business costs. Consider reviewing your budget if you're trying to use a personal loan for basic living expenses. The interest rate on a personal loan can be higher than your potential annualized investment return.
Can I use student loans as proof of income? ›
Can I Use Student Loans as My Proof of Income? For full time students applying with a qualified co-signer, student loans can often suffice as proof of income on the rental application.
Do student loans count as household income? ›
Many students borrow money or accept grants and scholarships to help pay for higher education. Fortunately, student loans aren't taxable, so you don't report student loans as income on your tax return, and you don't have to pay taxes on certain types of financial aid.
Can I use a student loan to buy a car? ›
“This allowance may also include costs for operating and maintaining a vehicle that is used to transport the student to and from school, but not for the purchase of a vehicle.” That means unfortunately you can't use student loans to buy a car., no matter what type of student loan you have.
