Student loans are intended for educational expenses like tuition and textbooks, but you can also use them to make rent payments. Federal student loans are disbursed to your school, and then any remaining balance goes to you, the student. You can use this money to cover living expenses, including rent. Private student loans may offer more flexibility, you should review the loan terms carefully.
Written by Attorney Jenni Klock Morel.
Updated August 22, 2023
Can I Use My Student Loan Money To Pay for Living Expenses?
Yes, generally speaking, you can use student loans to cover your living expenses. These living expenses need to be related to your education though. There are certain things you can and can’t use your student loan money for. For example, you can use student loan funds to buy groceries, but can’t use them to cover the cost of spring break in Cancún.
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Can I Use Student Loans To Pay for Anything?
The short answer is: no, you can't use your student loan fund to pay for anything. Student loans are meant to help with education expenses. While there’s no one closely examining how you spend the money once a loan is dispersed to you, the government will investigate reported instances of fraud.
Student loan borrowers can only use their student loan funds to pay for education-related expenses.
What Can I Pay for Using My Student Loan Funds?
You can use your student loan money to pay for necessary school expenses, which may include any of the following:
Tuition and fees
On-campus meal plan
Living off-campus rent
Transportation (gas, public transit)
Equipment related to your major
Personal grooming supplies
Health care and medication
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 higher education.
What Can’t I Pay for Using My Student Loan Funds?
There are restrictions on what you can use your student loan money to pay for. You can’tuse your student loans to pay for the following:
Travel for leisure
Payments toward credit card debts from before you were a student
Expensive electronics (purchasing a computer is okay, getting a huge television with surround sound installed is not)
Extravagant food (occasionally eating out may be okay, dinner at a fancy restaurant every night is not)
A new car (necessary transportation expenses are okay, buying a brand new car is not)
The main thing to remember is that student loan money is only 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.
How Much Money Can I Get in Student Loans?
The amount you can borrow in student loans is capped at your school’s cost of attendance (COA.) 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 whether you’re living off campus or on campus, whether or not you have a meal plan, and whether you get out-of-state or in-state tuition.
How Do I Start Receiving Student Loan Funds?
Before you can receive federal student loans, you must fill out the Free Application for Federal Student Aid (FAFSA). Federal loans are limited to a set amount each year. The amount you can borrow is determined from your FAFSA. You must submit a new FAFSA every year.
Some college students find that federal student loan money isn’t enough to cover their costs. In this case, you may opt to apply for private student loans to bridge this gap. There are pros and cons to private loans, and you should be sure you understand the terms of the loan before you agree to it.
Private lenders will look at your credit score when determining eligibility. If you don’t have a great credit score, you may be able to get private loans with the help of a cosigner. Beware though, the cosigner will be on the hook to make your student loan payments if you fail to do so.
How Does Student Loan Disbursement Work?
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 housing expenses like rent or a security deposit.
How You Can Pay for Living Expenses Without Using Student Loan Funds
The less you need to borrow in student loans, the better. Try to go after scholarships and grants that are open to you. Paid work study programs are great since they give the added bonus of experience in your chosen field. If you can manage it, work a part-time job to help cover personal expenses while you’re in school.
Take Out as Little as Possible in Student Loans: Here’s Why
Student loan debt is no joke. While most loans don’t require monthly payments while you’re still in school, some loans still accrue 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.
Also, the more you borrow, the more you’ll pay in interest. Federal student loans usually offer lower interest rates and better repayment plan options compared to private student loans. If you do need to borrow private loans, shop around for a private student loan lender with the best interest rate.
How Can I Decrease Educational Expenses While in School?
Going to college costs a lot of money. 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 off-campus housing — living with a roommate could further help cutdown housing costs. Meal plans may also be cheaper than buying groceries every week.
Textbooks are also a significant expense each term. Try to buy used textbooks if available or 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.