Whether living at home, at an off-campus apartment or in a dorm, you may need to borrow money to cover living expenses while attending school. Most people turn to student loans because of the high costs of college tuition, but that’s not the only thing loans can help with.

In addition to tuition, fees and textbooks, many student loans cover the cost of room and board for on-campus and off-campus students. Here’s the breakdown of how to use student loans for living expenses.

Can you use student loans for living expenses?

If you live on campus, your student loans can help cover living expenses up to your school’s cost of attendance (COA). You can also use the funds to pay for living expenses off campus, including:

  • Rent.
  • Transportation (gas, parking fees, bus fare, etc.)
  • Meals and groceries.
  • Housing utilities and supplies.
  • Home furnishings.

After student loans are applied to the balance due from your college or university, any leftover balance is returned to you directly. These funds can then be used for anything related to the cost of attending school, including the expenses listed above. You may also use this money for textbooks and supplies, computer equipment needed for your studies and other necessary purchases.

While there is some flexibility around what you can use these funds for, remember that the money is borrowed and you will be charged interest. Stick to using your loans for needs, not wants, and use a budget to keep expenses under control.

What is cost of attendance?

A college’s cost of attendance (COA) is the estimated cumulative cost to attend school, often calculated by term or academic year. This estimate includes tuition, fees, room and board, adjusted for the cost of living where your school is located. Your school’s COA determines the maximum amount you can borrow in student loans.

Can I use my student loan for nonessentials?

While your student aid office and lender aren’t regulating every line item of where you spend your loans, you may face consequences if they discover that you’ve used your loans for unnecessary purchases. Nonessential purchases may include:

  • A new car.
  • Business expenses.
  • Frequent meal deliveries or restaurant visits.
  • Other debt.
  • Unrelated electronics.
  • Vacations.

Misusing your loan funds could result in your lender canceling your current loans, denying you future loans or requesting that your balance be paid in full. Remember that you owe the principal plus interest. Though it’s relatively uncommon, misusing your student aid could result in being convicted of a crime: financial aid fraud.

Limiting your borrowing and use of student loans is also important because there are limits to how much you can borrow. Federal loans and many private lenders have lifetime limits in place. You cannot borrow more once you’ve maxed out your loan allowance.

Before spending any student loan funds on nonessential expenses, remember there could be an impact on your long-term financial health. You will owe this money back plus interest after finishing school. Even if you encounter financial hardship and need to file for bankruptcy, discharge of student loans for this reason is rarely granted.

Tips for saving money on living expenses

The money you receive in student loans is based on your school’s cost of attendance, which varies based on where you go to college. While there are a few rules about loan usage, the most important thing is to be smart about spending your student loan funds. If you want to save money on living expenses, consider these tips:

  • Cover your must-have needs first: Your tuition, fees and major expenses, including living arrangements, should get the bulk of your student loan money.
  • Look for less-expensive alternatives: Even if you need to buy something for school, you’re not obligated to always buy the most expensive option. When it comes to supplies, see if you can buy a less-expensive or older version, look for something secondhand, investigate renting and borrowing options or split the cost with a friend.
  • Crunch the numbers on housing options: You may be required to live in an on-campus dorm for your first year of school, but after that, you may be better off renting an off-campus apartment. Choosing off-campus housing without an expensive meal plan could save you money.
  • Spend only what you need: Even if you were approved for a large loan amount, you’re not required to spend it all. Any loan money you use on living expenses will come with an extra charge in the form of interest.

The bottom line

While you can use student loans for living expenses, be smart about how you spend your money. Your loans can cover a lot of things, but not everything. Don’t spend more than you need because you’ll have to pay back anything you borrow. You can apply for scholarships and grants to access free money for school that doesn’t have strings attached.