Many or all companies we feature compensate us. Compensation and editorial research influence how products appear on a page. Student Loans How Student Loan Refunds Are Used [Original Research] Published Jan 22, 2025 5-min read Expert Approved Expert Approved This article has been reviewed by a Certified Financial Planner™ for accuracy. Written by Rebecca Lake, CEPF® Written by Rebecca Lake, CEPF® Expertise: Student loans, mortgages, home-buying, credit, debt, personal loans, education planning, insurance, investing, small business Rebecca Lake is a certified educator in personal finance (CEPF®) and freelance writer specializing in finance. Learn more about Rebecca Lake, CEPF® Reviewed by Erin Kinkade, CFP® Reviewed by Erin Kinkade, CFP® Expertise: Insurance planning, education planning, retirement planning, investment planning, military benefits, behavioral finance Erin Kinkade, CFP®, ChFC®, works as a financial planner at AAFMAA Wealth Management & Trust. Erin prepares comprehensive financial plans for military veterans and their families. Learn more about Erin Kinkade, CFP® Student loans can help you pay tuition and fees to attend school, but how else can you put them to work? We surveyed 1,000 respondents to find out how students use their loans to cover the costs of completing their education. Our research showed that borrowers most often use student loan refunds to cover things like textbooks, supplies, groceries, and basic living expenses. Let’s explore the details of the most common student loan uses. Table of Contents Methodology Key findings Discussion Living on campus vs. off campus GPA Understanding of repayment terms Missed payments after graduation Takeaways Methodology To complete our survey, we polled 1,000 respondents who had received a student loan refund. The full survey consisted of 15 questions. Respondents were asked to share information about: What type of student loans they had Whether they had a cosigner Their housing situation (on-campus or off-campus) Whether they’d ever been late on a student loan payment How they used their student loans For the student loan uses question, respondents could choose from 17 options, including an open-ended response. Key findings 50.56% of respondents who lived on-campus and received a student loan refund used those funds for course materials, such as textbooks and school supplies. 47.19% of respondents who lived on-campus and received a student loan refund used those funds for personal expenses, such as groceries and toiletries. Students who lived on-campus were 23.98% more likely to use their student loan refund on course materials than those that lived off-campus. Students who lived on-campus were 44.12% more likely to use their student loan refund on personal expenses than those who lived off-campus. Students with a GPA of 3.5 or above were 9.14% more likely to use their student loan refund on electronic devices, such as a laptop or tablet, than those with a GPA below a 3.5. Borrowers who understood their repayment terms were 15.52% less likely to miss a payment on their student loans than those who didn’t understand the terms. Borrowers who missed a student loan payment were 0.53% more likely to have spent some of their student loan funds on dining out, entertainment, or gambling than those who didn’t miss a payment. Discussion Living on campus vs. off campus We were interested in whether living on-campus or off-campus made a difference in how borrowers used their student loans. The top student loan uses for on-campus students included: Textbooks and supplies Groceries and toiletries Course materials Personal expenses On-campus students were more likely than off-campus students to use their loans for course materials or personal expenses. Why? There are several possibilities. One is that students who live on campus may receive less financial support from family versus off-campus students. Another is that off-campus students may be working and using their paychecks to cover expenses. On-campus living may also be more expensive. Average budgets for on-campus students range from $29,910 to $62,990 versus a base budget of $23,590 to $35,190 for off-campus students, according to CollegeBoard. GPA Do grades make a difference in how students use their loans? Students with GPAs of 3.5 or higher were more likely to use their student loan refunds to buy a laptop, tablet, or other electronic device versus those with lower GPAs. It’s tempting to assume that students with higher GPAs may take their education more seriously, which explains how they use their loans. However, it’s important to consider how GPA, household income, and levels of familial financial support correlate. A Princeton University study found that lower GPAs correspond to lower household incomes while students with higher household incomes earn higher GPAs on average. This could suggest that the respondents in our study with lower GPAs may be using more of their loan refunds to cover basic needs, versus spending on “extras”. Understanding of repayment terms Student loans come with plenty of fine print, and our survey indicates that how well a borrower understands the terms influences how they manage their loans. Borrowers who understood their repayment terms were less likely to miss payments. That suggests they perceived the risks of falling behind, which can include: Late fees Credit score damage Default These borrowers’ awareness of their repayment terms could have also made them more mindful about how they used their loans. Missed payments after graduation Once you leave school, it’s time to repay your loans, and of course, you want to pay on time or early to stay in good standing with your lender. Our survey found that borrowers who missed at least one loan payment were slightly more likely to have spent some of their loan money on dining out, entertainment, or gambling. Is there a link between late payments and what some might perceive as irresponsible spending? Maybe, but consider the part that a lack of financial education might play. According to the World Economic Forum, around 50% of Americans lack basic financial literacy. If students don’t go to college with some basic personal financial knowledge, they may not have a budget or a system for paying bills. They might not track their spending or even fully understand how their loans work. All of that can add up to a recipe for student loan mismanagement, which can be corrected. Takeaways Our survey revealed interesting insights about student loan use. If you have student loans or plan to borrow to fund your education, here are a few helpful tips to keep in mind. If you…. Get a student loan refund but don’t need it, consider paying it back to your lender right away to reduce what you owe. Need your refund to cover living expenses while in school, write a monthly budget and have a plan for how you’ll use the money. Would like to avoid a student loan refund altogether, only borrow what you need to cover your cost of attendance.