Can You Take Out Student Loans for Living Expenses?
Many college students need help paying for housing and living expenses. Fortunately, both federal and private student loans can be used for things other than tuition and fees, like on- or off-campus room and board, personal supplies, groceries, and more.
Going to college is very expensive, with tuition and fees for most schools totaling tens of thousands of dollars annually. And unfortunately, it’s not just tuition you have to worry about.
While you’re attending college, you also need to be able to cover basic living expenses such as housing, food, and transportation. For many people who go to college straight out of high school, college is the first time they’re responsible for these costs.
Most students, even those pursuing a graduate degree or professional certificate, don’t have the income coming in to pay for all of their expenses. The good news is student loans — both federal and private — don’t have to be used solely for tuition. Student loans for living expenses can be a lifesaver, allowing you to pay for the things you need while you focus on getting your education.
On this page:
- What Can Student Loans Be Used For?
- How to Use Student Loans for Off-Campus Housing
- Living off Student Loans: Dos and Don’ts
- Can I Get in Trouble for Misusing Student Loan Funds?
What Can Student Loans Be Used For?
Student loans are meant to be used for all expenses associated with higher education, including:
- Tuition and fees
- Books and other classroom supplies
- Study abroad expenditures
- Fees for licensing, certification, or professional testing
- On- or off-campus housing
- Groceries, toiletries, medications, and other personal items
- Dependent care, provided you inform the school’s financial aid office
You can’t just borrow an infinite amount of money, though. Each school estimates the total annual cost to attend, including both required school fees and living expenses. This estimate is referred to as the Cost of Attendance (COA). You’re permitted to borrow federal student loans up to the school-certified COA for the school you select, minus other financial aid such as scholarships and grants.
When you take out student loans, the loan proceeds are distributed directly to your school by the lender. Your school deducts the cost of tuition and on-campus room and board, and you receive the remainder of the funds. If you’re living off campus and the school isn’t taking out money for a dorm room and meal plan, you’ll get a larger refund check.
The money you get back comes in one lump sum you can use for whatever you like, but since it has to cover all your living expenses over the course of the entire semester, you should be careful to budget the cash so it lasts.
How to Use Student Loans for Off-Campus Housing
Once you receive the student loan refund check from your school, you can deposit the money into your bank account just like any other check. You can then use the money for anything you want — things like rent, utilities, grocery bills, and more.
Unfortunately, some students use student aid money for unnecessary or even luxury purchases. In fact, LendEDU has found that more than half of students with loans actually use some of the money to pay for spring break vacations.
It’s important to remember you won’t get any more funds until the next semester, so you should try to avoid using borrowed money for those types of expenses. Budgeting apps such as Mint can help you monitor spending from month-to-month to reduce the likelihood you’ll end up short on cash before your next refund check comes.
You should also keep in mind that any money you borrow has to be paid back once you graduate. The lower you can keep your loan balances, the less indebted you’ll be and the easier it will be to get your student loans paid off. Good money management practices can make your student loan funds stretch further so you can borrow smaller amounts or use some of what you borrowed to make optional loan interest payments while in school.
Cover In-School Living Expenses with an Ascent Student Loan
- Undergraduate and graduate student loans available
- 0.25% interest reduction for automatic payments
- No application, origination, or prepayment fees
Living off Student Loans: Dos and Don’ts
Student loans may seem like free money, but the debt you take on can follow you for years to come. If you run out of student aid too soon, you could find yourself forced to rely on credit cards or personal loans to pay the bills — which could put you even further in debt.
Since most college and graduate students have little or no time to work and earn money while in school, it’s even more important to be responsible with your spending to make sure your loan money doesn’t run out and force you into this bad financial situation.
The key to keeping your borrowing costs at a minimum is to know what you should and shouldn’t spend your student loan money on. Here are some things it’s good to pay for with student loans:
- Tuition costs and fees
- School activities that enhance your resume or deepen your learning
- Study abroad programs that give you exposure to different cultures and the chance to learn new things while living in a foreign country
- Books and other supplies you need for classes
- Essential living expenses, including reasonable rent, food, toiletries, and personal items
- Tutoring or training you need to excel in your college career
- Professional testing, certificates, or licensing
- A computer you need to perform schoolwork
Some of the things you shouldn’t use your loan funds to cover are:
- Spring break trips
- Nights out at bars
- An expensive apartment
- Designer clothing
- Expensive electronics
- Restaurants or takeout
- Treating your friends
- Buying a car you don’t absolutely need to get to class (or buying a vehicle that’s too expensive0
Can I Get in Trouble for Misusing Student Loan Funds?
Your student loans are supposed to be used for educational expenditures and essential living expenses. If your student loan lender finds out you’re misusing funds, such as by paying for spring break trips or bar-hopping, it’s possible your loan could be terminated and you could be forced to pay back the full amount borrowed.
However, it’s very unlikely lenders will look into what you’re using the funds for or take any action if they find out you’re having some fun with your student aid money.
Although you want to borrow the minimum amount of money you need to attend school and have a reasonable standard of living, you need to avoid taking out too many student loans. Student loans for living expenses are available, but it’s important to use the money wisely so you don’t run out of money and need to take on other consumer debt during the course of the academic year.
Author: Christy Rakoczy
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