Student loans are intended to pay for college, but education costs include more than tuition. You’re taking on debt to help you pay for college. But what about other college costs? Can you use student loans for anything? Yes, it is possible to use student loans for living expenses in college, under certain circumstances.
When you sign your master promissory note for student loans, you are able to borrow based on the cost of attendance of the school, which includes many living expenses.
Table of Contents
- What can student loans be used for?
- What you shouldn't use student loans for
- what happens if you use it for something else
- Alternatives for living expenses
What can student loans be used for?
Here are a number of expenses that a student loan can be used for -
Room and Board
Meals and Groceries
A personal computer you’ll use for school
Dependent child care expenses
Fees for professional testing, licensing and certifications
As shown above, tuition is just one of the expenses that a student loan can cover.
What you shouldn’t use student loans for?
Misusing student loans is dangerous, student loans should not be used to cover the following expenses -
Vacations and travel
A new vehicle
Down payment on a house
Dining out often or Expensive meals
A new wardrobe
Small business expenses
Your other debt
On anyone else (like to pay for a friend’s tuition)
Once the loan is disbursed it should be used under the name of the person the loan is sent to. Using it for another person’s expenses can be considered as a fraud.
Personal Circumstance can affect student loans
If you’re disabled, your cost of attendance might include expenses for special services you need, like personal assistance, transportation, equipment, and supplies.
When it comes to spending student loans on housing and food, your cost of university attendance will depend on whether you’re living at home with your parents, in campus housing, or in an off-campus apartment or house.
Depending on your personal circumstances, your financial aid administrator Might increase your cost of attendance.
What happens if you use student loans for something you shouldn’t?
The government or your financial aid office won’t tell you the kind of a place you can rent or how fancy your meals can be, but if you spend more money on housing and food than budgeted in your school’s official cost of attendance, you might come up short of funds needed to pay for other expenses, like books.
If tipped off, however, the government will investigate and prosecute those who commit fraud or abuse student loan funds.
Be smart about using your student loans
If you hit your borrowing limits for the most affordable federal loans, compare private student loan rates offered by lenders before turning to costlier federal PLUS loan rates. Try not to borrow more than what you expect your annual salary to be after graduation.
Many borrowers are still paying off their student loans well into their 40s and 50s. So be smart when using your student loans to pay for certain expenses. Stick to a budget while you’re in school, take on a part-time job, and don’t take more out in federal or private loans than you need. Just remember: you’ll be paying the money you borrow back-- with interest.
Don't let the burden of debt overtake you, learn more about student loans
Alternatives To Student Loans To Pay For Living Expenses
Here are some alternatives you can use to combat expenses on living and accommodation -
Work in college
Live at home
Rethink your college
Don’t Use Your Student Loans To Pay For Living Expenses
As a final reminder, you really need to make an effort to avoid ballooning your student loan debt. Taking out loans for tuition and fees can make sense if you’re going to get a good ROI on your school costs, but there is no ROI for living expenses.
It is strongly recommended that you get a job in school, and leverage that to offset living expenses as well as gain valuable life skills.
Minimize Your Borrowing
Living on borrowed money can quickly lead to living beyond your means, which can, in turn, put you in debt for decades to come. If you find yourself in need of too much-borrowed money to meet your living expenses, consider attending a less expensive college or finding ways to reduce your living expenses.