How to use student loans for living expenses

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Whether you’re living at home, at an off-campus apartment or in a dorm, you may need some extra cash 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 the costs of room and board, whether it’s a dorm room or an on-campus apartment. 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.
  • Some home furnishings.

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.
  • Unrelated electronics.
  • Vacations.
  • Business expenses.
  • Other debt.

Misusing your loan funds could result in your lender ending your current loans, denying you future loans or requesting that your balance be paid in full. If you’re required to pay back your loan balance, remember that you owe the principal plus interest.

What are some alternatives to student loans?

Student loans are a popular way to fund education-related expenses, but they’re not the only option. Before settling for loans, exhaust other avenues — especially those that give you free money. These may include:

  • Grants: Grants are offered by the government, colleges and private companies. They are disbursed based on financial need, and they do not need to be repaid.
  • Scholarships: Scholarships are similar to grants, but they are often merit-based. Some also award money if you belong to niche organizations or have unusual interests.
  • Part-time work: If you can, find a summer job or part-time employment while you’re in school to help offset the costs of education. Some colleges offer work-study programs or advertise job opportunities that are more flexible with class schedules.

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 how you can use this money, the most important thing is to be smart about how you’re 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.

Next steps

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, and always remember that you’ll have to pay back anything you borrow.

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Written by
Dori Zinn
Contributing writer
Dori Zinn has been a personal finance journalist for more than a decade. Aside from her work for Bankrate, her bylines have appeared on CNET, Yahoo Finance, MSN Money, Wirecutter, Quartz, Inc. and more. She loves helping people learn about money, specializing in topics like investing, real estate, borrowing money and financial literacy.
Edited by
Student loans editor