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Can I Use Student Loans To Pay My Rent?

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In a Nutshell

The cost of going to school involves more than paying tuition. Students have other expenses that need to be covered while they’re working toward their degree. The good news is that student loans can be used to pay for rent and other expenses like textbooks, school supplies, housing, transportation, and living expenses.

Written by Attorney Jenni Klock Morel
Updated May 10, 2021

The cost of going to school involves more than paying tuition. Students have other expenses that need to be covered while they’re working toward their degree. The good news is that student loans can be used to pay for rent and other living expenses. The U.S. Department of Education requires that student loans be used for education expenses. You can use student loan funds to pay for tuition and fees, textbooks, school supplies, housing, transportation, and living expenses.

Can You Use Student Loans For Living Expenses?

Yes, student loans can be used to cover living expenses while you’re a student.  These living expenses need to be related to your education though. You can use student loan funds to buy groceries, but can’t use them to cover the cost of spring break in Cancún.

Your School’s Cost Of Attendance

The amount you can borrow in student loans is capped at your school’s cost of attendance. Other aid you receive, like scholarships or grants, is deducted from the amount you can borrow in loans. 

The cost of attendance should be listed on your school’s website. The total cost of attendance for an academic year includes tuition and fees, room and board, books, and living expenses. Don’t be surprised to see more than one cost of attendance listed. The cost differences reflect different circumstances, like living off campus vs. campus housing meal plans, and out-of-state vs. in-state tuition. 

You Have To Fill Out The Free Application For Federal Student Aid (FAFSA)

Before you can receive federal student loans, you must fill out the Free Application for Federal Student Aid (FAFSA). Federal student loans are limited to a set amount each year. The amount you can borrow is determined from your FAFSA. You’ll need to submit a new FAFSA every year. 

Sometimes federal student loan money isn’t enough to cover rent and other costs. Private student loans may be an option to bridge this gap. Private lenders will look at your credit score when determining eligibility. If you aren’t able to qualify for private student loans on your own, you can consider whether having a co-signer is right for you. A co-signer is another person that will sign on to the loan with you. If you default on your monthly payments, the loan lender could collect from the co-signer instead. 

Federal and private student loans are disbursed directly to your school’s financial aid office. The school will pay itself for costs like tuition, fees, and campus housing. The leftover loan amount is then dispersed to you. You can deposit your student loan money into your bank account and use those funds to pay for living expenses like rent or a security deposit.

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Can You Use Student Loans To Pay For Anything?

Student loans are meant to help with education expenses. You’re supposed to spend the money on the things included in the cost of attendance. There’s no one closely examining how you spend the money once dispersed to you, but the government will investigate reported instances of fraud. Also, student loan debt must be paid back. Generally, you can’t erase student loans through bankruptcy. 

Take time to consider what is a necessity and what are things you like to have. Things like Netflix and handcrafted cappuccino may be nice to have, but are not necessities. Little luxuries can quickly add up. Paying for wants instead of needs with your student loans will mean a higher monthly student loan payment later. Now is a great time to fine-tune your budgeting skills. 

Only use your student loans to pay for education-related expenses. Do your best to keep your living expenses low. You’ll thank yourself later when repayment kicks in.  

You Can Pay For These Things With Student Loans

  • Tuition and fees

  • On-campus housing

  • On-campus meal plan

  • Living off-campus rent

  • Utilities

  • Transportation (gas, public transit)

  • Textbooks

  • School supplies

  • Equipment related to your major

  • Personal grooming supplies

  • Health care and medication

  • Groceries

  • Housing supplies (linens, dishes—necessities)

  • Dependent childcare costs

Before you spend student loan funds, ask yourself if what you’re buying is necessary for you to live and continue your education. Paying rent is a necessity. 

Don’t Use Student Loans To Pay For These Things

  • Travel for leisure

  • Business expenses

  • Expensive electronics (purchasing a computer is okay, getting a huge television with surround sound installed is not) 

  • Extravagant food (eating out may be okay, dinner at a fancy restaurant every night is not)

  • A new car (transportation expenses are proper, buying a brand new car isn’t)

  • Making payments toward credit card debts from before you were a student

The main thing to remember is that student loan money is meant to cover educational expenses. If an expense is not related to your education or necessary living expenses during your education, it isn’t a proper expense for student loans to cover. 

Ways To Pay For Living Expenses Besides Student Loan Funds

The less you need to borrow in student loans, the better. Go after scholarships and grants that are open to you. Look into work study programs that pay and give the added bonus of experience in your chosen field. If you can manage it, work a part-time job to help cover living expenses while you’re in school. 

Consider whether getting a personal loan from family or friends would be better than borrowing the same amount in private student loans. There’s a difference between money gifts and loans—put your agreement in writing.

Why You Should Take Out As Little As Possible In Student Loans

You don’t have to make monthly payments on student loans while you’re in school at least half time. Most student loans are accruing interest during that time. That interest is then added to the principal amount of the loan. This means that you will leave school owing more than you borrowed. 

The more you borrow, the more you’ll pay in interest. Generally, it takes borrowers 10 or more years to pay back student loans. During that time, interest is accruing and compounding. The less you borrow the better. 

Federal student loans usually offer lower interest rates and better repayment plan options than private student loans. Always max out federal borrowing before looking at private lenders. If you do need to borrow private student loans, shop around for the best interest rate. Private student loan lenders are not all the same. Taking the time to find the loan that is best for you could save you a lot of money down the road. 

Ways To Decrease Educational Expenses

You can’t do anything about the cost of tuition, but you can save money on other educational expenses. Living in campus housing is likely less expensive than renting a place off-campus. Meal plans that are offered may also be cheaper than buying groceries every week. You’ll also save time by not having to cook or clean up. 

Textbooks are also a significant expense each term. Try to buy used textbooks if available. Look into programs that allow you to rent textbooks. You might also be able to download some books on an e-reader, which is usually a lot less expensive than buying print editions. 

Let’s Summarize...

You can use student loans to pay for rent and other living expenses. Your school’s cost of attendance will largely determine the amount you’re able to borrow in student loans. The amount is re-assessed each year. You’ll also have to fill out a FAFSA form every year as part of the process of getting financial aid. You don’t have to borrow the max that you’re allowed and it’s always wise to consider other ways you can pay for living expenses besides maxing out student loans. Good budgeting and financial planning now will make student loan repayment less of a burden for you and your family in the future. 

Written By:

Attorney Jenni Klock Morel


Jenni Klock Morel is a writer, nonprofit leader, and Social Justice Law Scholar. For years she practiced consumer bankruptcy law exclusively as a debtor's attorney, helping individuals and families file for Chapter 7 or 13 bankruptcy protection. Jenni left the practice of law to... read more about Attorney Jenni Klock Morel

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