How to Use Student Loans for Living Expenses
Considering costs when going to college is essential, and tuition is important -- but you also have to pay for living expenses! Read to find out what you can, and can't, spend student loans on while you're a college student.
If you received financial aid to pay for college, you might think that money only goes to tuition, fees, and books. But your college experience is more than only going to class. You might need some money to cover other costs, like living expenses, such as on-campus room and board or rent for an off-campus apartment.
The good news is that you can use student loans for living expenses, whether they come from the federal government or private lenders. Here’s what you need to know about how to use student loans for living expenses.
Student loans for living expenses
When you complete the Free Application for Federal Student Aid, or FAFSA, your award letter details how much money you’ll get in federal scholarships, grants, and student loans, if necessary. If you’ve exhausted all your free money options, you can use student loans to cover any funding gaps.
Both federal and private student loans let you use your funds to pay for living expenses, whether you’re on-campus or off. Student loans can also be used for:
- Furniture, like a bed or sofa
- Housing supplies — like small kitchen appliances and dishes
- Meals and groceries
- Technology and supplies, like a computer or desk
- Commuting and transportation costs, like gas or a bus pass
You can also use your student loans to pay for dependent child care expenses and other personal needs related to your education. But remember that whatever you borrow now, you’ll need to repay — plus interest — once you graduate or drop below halftime.
What if you use your loans for nonessentials?
There are some things your student loans can’t be used for, including:
- Paying off other debt
- Paying for someone else’s tuition
- Expensive meals and excessively dining out
- A new car
- Entertainment (like your Spotify or Netflix subscriptions)
Most student aid offices aren’t checking every item for every student on what you’re using your student loans to buy. But if your school or lender finds out you used student loans to pay for something you weren’t supposed to, they could end your loan terms and possibly request that your current balance get repaid in full, which includes the principal balance plus any interest accrued so far.
Your current lender could also deny you student loans in the future, which means you’ll need to find another way to pay for school outside of student loans.
How to use your student loans for living expenses
If you need to borrow money to pay for school, there are some ways to manage your student loans that are better than others, like:
- Borrow what you need. The class of 2021 will graduate with an average of $36,900 in student loan debt. The less you take out now, the less you’ll need to repay later. You should take advantage of as much free money as possible through grants and scholarships before taking out student loans.
- Always compare prices. If you need money to pay for living expenses, try looking for many different options. For instance, paying for an Uber or Lyft might cost you more compared to paying for bus fare or a train ticket. If you live off-campus, you might save money if you get a roommate, even if you prefer to live alone. If you can afford it, look for ways to save — even when you’re borrowing money.
- Cover your necessities, then everything else. The majority of your money should go to classes and related costs, like fees and books. If you’re living on-campus, your dorm or campus apartment will also be included in that, too. If you’re living off-campus, you can put the rest of your loans towards rent and related expenses.
What if you run out of money?
After scholarships, grants, and federal student loans, you might still need more money to pay for college. Since everyone’s cost of attendance is different, that means financial aid payouts look different for everyone, too.
Private student loans are there all year-round to apply for. But you might not qualify for private student loans on your own, especially if you don’t have a strong credit history. This is very normal for college students who don’t have much credit usage — or any credit at all.
If that’s your situation, you can ask a cosigner to help you get a loan. The better your credit score — or your cosigner’s score — the lower your interest rate will be. The lower your credit score, the less likely you’ll qualify for a private student loan. And if you do qualify, you’ll end up with higher interest.
Many private student loan lenders have the same restrictions as federal student loans when it comes to what you can use your loans for. But check your contract or read the terms of potential lenders before applying to make sure your living expenses won’t be an issue.
Also make sure you’re eligible to borrow, as many lenders have income requirements and specific minimum borrow amounts. For instance, if you only need a couple hundred dollars to pay for outstanding college costs, this might hold you back from borrowing with some lenders. If that’s your case, look for lenders that have a low borrow amount threshold or find other ways to come up with the money. You could apply for more free money, like scholarships and grants, or ask your college for an emergency loan, which tends to be a short-term, small-dollar loan.
You can also look into getting a job while also going to school. Money from a job isn’t as restrictive as how you use money from student loans. You can use the money you earn from a job to pay for anything you want, not just living expenses. Consider exploring on-campus job opportunities or apply for work at a place near campus so you don’t have to venture too far away. See if departments or colleges within your school are hiring students as well. Many times, school-related job openings are flexible to students’ classes and course load.
Dori Zinn is an award-winning journalist based in South Florida. Her work has appeared in Wirecutter, Bankrate, MSN Money, Yahoo! Finance, Quartz, Credit Karma, Huffington Post. She has a decade of experience covering credit, debt, budgeting, investing, real estate, financial literacy, and other related personal finance topics.
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