If you receive student loans to cover college expenses, you may think that funds only go toward fees, tuition, and books. But we both know college is more than just class activities.
You may need some money to pay for other costs such as living expenses like renting an apartment off-campus or on-campus room and board.
Fortunately, you can use your loans for living expenses. And it doesn’t matter whether it’s from private lenders or the government. But there are some crucial things you have to know first.
This guide will show you everything about using student loans for living expenses.
Can You Use Student Loans For Living Expenses?
Yes. You can use your student loans to pay for your living expenses associated with your school. However, your college’s certified cost of attendance (COA) will determine the amount you can borrow for your living expenses.
In a nutshell, the COA is what it’ll cost to attend your college. Your school determines your COA. And it includes the overall cost of attending the school, usually shown as the total cost for one academic year.
How To Use Your Student Loans For Living Expenses
If you need to pay for your living expenses while in college, it’s advisable to file out the FAFSA application. Your school will use your FAFSA information to determine what federal student loans you’re eligible for, including other federal financial aid.
Also, take advantage of any scholarships and grants. That’s because you don’t have to repay anything, unlike student loans. You also have no limit to how many scholarships you can get, so apply as many as you may qualify for.
If you exhaust your federal student loan options, scholarships, and grants, you can use private student loans to fill any financial gaps left. If you choose this route, consider numerous lenders to choose the right student loan for your needs.
Please note: Remember, if you have to borrow, it’s often ideal for taking out federal student loans first. That’s because these loans come with various federal protections and benefits like student loan forgiveness and income-driven repayment plans.
How Student Loans For Living Expenses Work
If you’re an undergraduate, graduate, or professional student, you can use your student loans for living expenses. Typically, student loan funds are disbursed directly to your college to cover tuition and fees.
If there is any money left, it’ll be refunded to you. And that’s what you can use to pay for accommodation and other college-related costs. Remember that federal and private student loans come with their student loan requirements.
Before you become eligible for federal student loans, you must have a financial need. And you must get enrolled at least half-time at an eligible college. With private student loans, you often need verifiable income and a good credit score to qualify.
However, the specific requirements can differ depending on the lender you choose.
Please note: Some private lenders will give you a loan even if you have bad credit. While that may sound good, these student loans usually come with higher interest rates. So if you have bad credit, we recommend applying with a cosigner to increase your chances of getting a loan.
Also see: Law tutoring for students
What Can You Use Your Student Loans For?
- Room and board
- Housing supplies and furnishings
- Housing utilities
- Meals and groceries
- A personal computer for school-related activities
- Dependant child expenses
- Miscellaneous personal expenses
What You Shouldn’t Use Your Student Loans For
- A new car
- Vacations and travel
- Down payment on a house
- Often dining out or expensive meals
- A new wardrobe
- Small business expenses
- Other debt
- Paying for other people’s expenses
Please note: If your financial aid office find out that you’ve spent your student loans on things you shouldn’t have, they could:
- Report you to the Department of Education
- Take your funds back retroactively
- You’ll be responsible for repaying what you’ve already used for college.
There’s also a slight chance that the authorities could investigate and prosecute you for abusing student loan funds. So you need to use your student loans appropriately.
Before using your student loans for living expenses, make sure you use them on only what’s essential. If possible, decrease the amount you spend as much as possible. That can help you avoid massive student loan payments in the future.
If you end up with extra federal or private student loans, you can pay them back to reduce your total loan balance. However, it’s best to always contact an expert before you make any decision.