Student loans can be used to cover more than tuition and fees. They can pay for lodging, food, commuting, a computer, and study abroad (but not spring break!).
Most qualified education loans can be used to cover the entire cost of attendance — an estimate of total costs for an academic year at a college, as determined by each campus financial aid office — minus any aid you receive.
Let’s take a closer look at what student loans can cover, what they should not, and alternative ways to pay for living expenses.
Key Points
• Student loans can be utilized for essential expenses like tuition, room and board, transportation, books, and personal supplies, as long as the student is enrolled at least half-time.
• Nonessential expenses, such as vacations, car purchases, or entertainment, should not be covered by student loans, as these could lead to financial consequences.
• Utilizing student loan funds for nonqualified expenses may not be actively monitored, but it’s important to remember that this money must be repaid with interest.
• Alternative ways to cover living expenses include part-time jobs, work-study programs, scholarships, summer employment, and selling unwanted items for extra cash.
• Borrowers should exhaust federal student aid options before considering private loans, as they generally lack the borrower protections provided by federal loans.
Can You Take Out a Student Loan for Living Expenses?
Yes, you can take out a student loan to cover living expenses while in school. Federal and private student loans typically include funds for not only tuition and fees, but also necessities like housing, food, transportation, and personal expenses.
When applying for federal student loans, schools determine your cost of attendance (COA), which includes these expenses, and financial aid is disbursed accordingly. However, borrowing should be done wisely, as any money used for living expenses will need to be repaid with interest.
Private student loans can also cover living expenses, but eligibility and terms vary by lender. These loans often require a credit check or cosigner, and interest rates may be higher than federal options.
How to Use Student Loans for Living Expenses Off-Campus
Using student loans for off-campus living expenses requires careful budgeting and adherence to loan guidelines. Once your school disburses the loan funds, any remaining balance after tuition and fees is typically refunded to you. These funds can cover rent, utilities, groceries, and other essential costs. However, it’s important to prioritize necessary expenses and avoid using loan money for noneducational purchases, as this debt must be repaid with interest.
Federal Student Loans vs. Private Student Loans for Housing Expenses
When covering housing expenses with student loans, federal student loans are often the better option due to their lower interest rates, flexible repayment plans, and borrower protections. Federal loans do not require a credit check (except for PLUS loans), making them more accessible to students. Additionally, repayment options like income-driven plans and deferment help borrowers manage their financial obligations after graduation.
Private student loans, on the other hand, may offer higher borrowing limits but typically come with stricter credit requirements and fewer repayment protections. Interest rates vary based on creditworthiness, and repayment terms are often less flexible than federal loans. While private loans can help bridge financial gaps, they should be considered after maximizing federal aid and other funding sources like scholarships and grants.
Living Off Student Loans: Do’s and Don’ts
As long as a student is enrolled at least half-time, student loans can cover a range of expenses at a qualified institution of higher education or at a hospital or health care facility that provides postgraduate internship and residency training programs.
Do
• Tuition and mandatory fees. The first thing student loans should be used to cover is tuition and fees, as these are necessary expenses for getting a degree.
• Room and board. Whether it’s a dorm or an apartment off-campus, the expense can be covered. Board means a campus meal plan or groceries.
• Transportation. Loan money can pay for maintaining, insuring, and fueling your car or for public transportation fares.
• Books and supplies. New, used, or rented textbooks are covered, as are supplies ranging from software to notebooks.
• A personal computer. You can buy or rent a computer with student loan money.
• Dependent care. Child care expenses are covered.
• Study-abroad costs. The Federal Student Aid office lists international schools that participate in the federal student loan program and describes the process.
• Personal expenses. These include cell phone bills, laundry costs, bed linens, towels, a microwave oven, and anything else you normally spend money on.
Other qualified expenses may include utilities and furnishings.
Don’t
• Nonessential travel. This includes vacations, leisure trips, and nonacademic travel expenses.
• Luxury items. Expensive electronics, designer clothing, or nonessential purchases should not be paid for with student loans.
• Entertainment costs. This includes concerts, streaming services, dining out frequently, and nightlife.
• Car purchases. Buying a vehicle or making monthly car payments should not be used with student loan money.
• Business investments. Student loans should not be used for starting a business or investing in stocks and cryptocurrency.
• Credit card debt. Paying off personal credit card balances is not the goal of student loans.
• Noneducational expenses. These may include costs unrelated to education, such as gym memberships or hobbies.
• Recommended: Graduate Student Loans
Can I Get in Trouble for Misusing Student Funds?
The use of student loans for nonqualified expenses could be reported to the Office of Inspector General as fraud, or a lender could call the loan balance due immediately. But in general, no one is tracking how you spend loan money.
Both federal and private student loans are disbursed to your school, which takes out tuition and fees, and if you live on campus, room and board. Any remaining money goes to you, so it would be hard for lenders to tell if you’re using the remainder as intended.
It can be tempting to go on a spending spree with your student loan refund, but remember that you will pay, or are paying, interest on that borrowed money.
Federal student loans have annual and aggregate limits that may seem generous, especially for graduate and professional students.
Private student loans can help fill gaps in need. These loans are not backed by the federal government and therefore not subject to its qualification rules. They may also lack the borrower protections available to federal loans, such as deferment. It’s a good idea to obtain a private student loan only after maxing out federal student aid. A cosigner can often help a student qualify.
Recommended: A Guide to Private Student Loans
Other Ways to Cover Living Expenses
Aside from using student loans, there are several ways to pay for living expenses while in school. Here are some ideas.
Part-Time Job
Getting a part-time job can help students make extra money to cover costs. Generally, these side hustles offer flexible hours so students can more easily juggle work and class. Some students may also be able to find a job that’s related to their major or career of choice.
Recommended: Jobs That Pay for Your College Degree
Work-Study
Federal work-study may be offered as part of a student’s federal aid package and is based on financial need. Work-study programs are available to undergraduate, graduate, and professional students, regardless of whether you are a full-time or part-time student.
Becoming a Resident Assistant
A resident assistant (RA) is usually assigned to a particular floor or wing of a dormitory to oversee dorm residents. RAs might lead mandatory floor meetings, organize monthly social gatherings, and referee the occasional roommate disagreement. Not only do you typically get a better room than others on your dorm floor, you also get free housing.
Scholarships
Merit scholarships are often awarded to a student based on their skill or ability for a certain speciality. They’re offered through private companies, nonprofit organizations, colleges and universities, and professional and social organizations. As you’re researching scholarships that you might be eligible for, pay attention to any requirements. Some awards have certain conditions, such as requiring that the money be used only for tuition, while others allow you to use the funds for whatever you want.
Recommended: Grants for College — Find Free Money for Students
Tuition bills are due.
Prequalify for a no-fee student loan.
Summer Job
As an alternative (or addition) to a part-time job, you might want to consider a summer job or paid internship. During the summer, students may have more free time to work more hours and rack up cash to help cover their housing and living expenses for the following year.
Selling Unwanted Items
Cleaning out your closet? Selling castoffs on buy-and-sell apps and websites can be a quick way to earn money.
The Takeaway
Student loans can be used to cover housing, food, transportation, supplies, and other college essentials. Funds shouldn’t be used for “nonessential” expenses, like vacations, new clothes, pricey meals, or other debt. In general, no one tracks how you spend loan money. But remember, this is borrowed money that will have to be repaid, with interest. A part-time job, work-study program, and scholarships are different ways to earn extra money for expenses.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
FAQ
Which living expenses are most often paid for with student loans?
Student loans commonly cover essential living expenses such as housing (rent or dorm fees), utilities, groceries, transportation, and personal expenses. They may also help pay for school-related costs like books, supplies, and technology. Federal and private loans can be used for these necessities but should be borrowed responsibly.
Do you have to tell the lender if you change housing?
Yes, you should inform your lender if you change housing, especially if it affects your residency status or financial situation. Keeping your contact information updated ensures you receive important loan-related communications, including billing statements and repayment details, helping you avoid missed payments or potential issues with your loan.
Can you take out more funds if your living expenses increase?
If your living expenses increase, you may be able to request additional student loan funds by appealing to your school’s financial aid office. They may adjust your cost of attendance, allowing you to borrow more. However, federal and private loan limits still apply, so additional funding isn’t always guaranteed.
Can you use student loan money on monthly car payments?
No, student loans are meant for education-related expenses, including tuition, housing, and supplies. While transportation costs like gas or public transit may be covered, using student loan money for monthly car payments is generally not allowed.
Can you use student loans to pay for a gym membership?
Student loans shouldn’t be used to cover membership to a gym. Many schools have a gym or fitness center on campus that’s available to students and included in the cost of tuition.
What should you do with leftover student loan money?
It’s a good idea to return the excess money to the lender — it lowers the total cost of the loan. You could also use the funds to pay for qualified educational expenses, like tuition, housing, child care, or transportation.
Can you use a student loan to pay a tuition bill that is past due?
In some cases, you can use a student loan to pay a past-due tuition bill, but it depends on the lender and school policies. Federal and private loans typically apply to current or future expenses. Some schools may offer emergency loans or payment plans for overdue tuition balances.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
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