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Student loans cover more than just tuition, fees, and books for school. You can also use them for other college-related costs — including living expenses.
Here’s what’s you should know about student loans for living expenses:
- How to use student loans for living expenses
- What can student loans be used for?
- What shouldn’t student loans be used for?
- What happens if you use student loans for something you shouldn’t?
- How are student loans disbursed?
- Alternatives to using loans for living expenses
- What to do with leftover student loan money
- Frequently asked questions
How to use student loans for living expenses
If you need to cover your living expenses while attending college, it’s a good idea to start by filling out the Free Application for Federal Student Aid (FAFSA). Your school will use your FAFSA results to determine what federal student loans and other federal financial aid you qualify for.
Also be sure to take advantage of any college scholarships and grants — since unlike student loans, these don’t have to be repaid. There’s no limit to how many of these you can get, so apply for as many as you might be eligible for.
After you’ve exhausted your scholarship, grant, and federal student loan options, private student loans can help fill any financial gaps left over. If you decide to take out a private student loan, be sure to consider as many lenders as possible to find the right loan for your needs.
This is easy with Credible — you can compare your prequalified rates from our partner lenders in the table below in two minutes.
|Lender||Fixed Rates From (APR)||Variable Rates From (APR)||Loan amounts||Loan terms (years)|
|4.62%+10||5.86%+10||$2,001 to $400,000||7 to 20|
|4.99%+1||5.1%+||$1,000 to $350,000 (depending on degree)||5, 10, 15|
||4.74%+2,3||$1,000 up to 100% of the school-certified cost of attendance||5, 8, 10, 15|
|3.65%+||5.67%+||$1,000 to $99,999 annually |
($180,000 aggregate limit)
|7, 10, 15|
|7.52%+7||6.99%+7||$1,000 to $200,000||7, 10, 15|
|4.37%+8||5.86%+8||$1,001 up to 100% of school certified cost of attendance||5, 10, 15|
|4.89%+||N/A||$1,500 up to school’s certified cost of attendance less aid||15|
|4.509 - 14.83%9||5.49%9 - 15.83%9||$1,000 up to 100% of school-certified cost of attendance||10 to 20|
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How student loans work for living expenses
Undergraduate, graduate, and professional students are all able to use student loans for living expenses. Student loan funds are typically disbursed directly to your school to cover tuition and fees. Any money left over will be refunded to you, which you can use to pay for housing and any other education-related costs.
Keep in mind that both federal and private student loans have their own student loan requirements. To qualify for federal student loans, you must have financial need and be enrolled at least half time at an eligible school. With private student loans, you’ll typically need good credit and verifiable income to qualify — though exact requirements can vary by lender.
If you’re struggling to get approved for a private student loan, consider applying with a cosigner to improve your chances. Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own.
Check Out: What to Do If You’re Denied a Student Loan With a Cosigner
What can student loans be used for?
Before you take out a federal or private student loan to help cover these costs, it’s important to consider how much that loan will cost you in the future. This way, you can be prepared for any added expenses.
You can find out how much you’ll owe over the life of your federal or private student loans using our student loan calculator below.
Enter your loan information to calculate how much you could pay
With a $ loan, you will pay $ monthly and a total of $ in interest over the life of your loan. You will pay a total of $ over the life of the loan, assuming you're making full payments while in school.
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Learn More: Taking Out Student Loans Without a Cosigner
What shouldn’t student loans be used for?
While student loans can help cover quite a few expenses, keep in mind that you’ll have to pay back whatever you borrow. Because of this, it’s important to borrow only what you need so you can keep your future repayment costs as low as possible.
For example, some expenses you shouldn’t use your student loans for include:
Check Out: Gap Years and COVID-19: What You Need to Know About Student Loans
What happens if you use student loans for something you shouldn’t?
Financial aid offices don’t track exactly how students use their funds, so it’s unlikely that you’ll get in trouble for using your financial aid or student loans in cases where you shouldn’t. But if you spend more money than what’s budgeted in your school’s official cost of attendance, you could end up with fewer funds than you need to pay for other expenses — such as college textbooks or fees.
Additionally, if your financial aid office finds out that you’ve spent funds inappropriately, you could:
- Be reported to the Department of Education
- Have your funds taken back retroactively
- Be responsible for paying back what you’ve already used to the school
There’s also a slim possibility that you could be investigated and prosecuted for abusing student loan funds if your financial aid office finds out — so be sure to spend your funds appropriately.
If you’re worried that you’ve already used some of your funds in the wrong way, chalk it up as a lesson for how not to spend funds in the future. You could also consider saving money from a job or other income source to replace those funds.
Learn More: How Do Federal and Private Student Loans Work?
How are student loans disbursed?
When your lender disburses your student loan funds, they’ll send the money directly to your school. This is true for both federal and private student loans.
The school will apply the funds toward your direct costs, such as tuition and fees, and room and board if you live on campus. If money is left over after paying those costs, the school may send the balance to you as a student loan refund.
But unlike a tax refund, you’re not free to spend your student loan refund money on anything you want. As explained earlier, you must put the money toward school-related expenses. Misusing the funds could lead to significant consequences.
Alternatives to using loans for living expenses
While student loans are one way to pay for living expenses, they aren’t your only option. Here are a couple of other alternatives to consider:
- Apply for scholarships and grants: Because college scholarships and grants don’t have to be repaid, they can help keep your costs low while paying for living expenses. You might qualify for federal grants or school-based scholarships after filling out the FAFSA. There are also many private scholarships and grants available from nonprofit organizations, local and national businesses, and professional associations in your field.
- Get a job. Working a part-time job during college can help you earn extra money for living expenses while also building your resume. You could also consider applying for a job through a work-study program.
Other ways to potentially lower your costs overall include:
- Buying used textbooks or renting them
- Living off-campus and getting a roommate (or living at home if possible)
- Carpooling with a friend that has a similar schedule to you
Also see: How to Cover Tuition Costs With the Post-9/11 GI Bill
Check Out: Tuition & Room and Board: On-Campus vs. Off-Campus Costs
What to do with leftover student loan money
It’s best to borrow only what you need to pay for school and related costs so you can avoid excessive student loan payments in the future. But if you end up with extra federal or private student loan funds, there are a couple of ways to handle it:
- Pay it back. If you don’t need all of your student loan money, you could pay it back to lower your overall loan balance. With federal student loans, you can cancel some or all of your disbursement within 120 days and return the money to your school.
- Save it for necessary expenses. If you have fluctuating or limited income, you might have a hard time getting the money you need for rent or other necessities each month. Saving your extra loan funds for upcoming payments or expenses can give you something to fall back on in case your other income doesn’t come through. If you don’t end up using the money, you can always pay it back toward your loans later.
Just remember that you’ll have to pay back whatever you borrow — so be sure to only keep your extra funds if you need to.
Learn More: How to Get Student Loans for Past-Due Tuition
Frequently asked questions
Here are the answers to several commonly asked questions regarding student loans for living expenses:
How can I live off student loans?
You can use student loans for almost any education-related expense — meaning you can potentially live on them. However, keep in mind that some loans come with student loan limits that will determine how much you can borrow.
Here are the undergraduate and graduate student loan limits you can expect:
|Loan type||Loan limits|
|Direct Subsidized Loans||$3,500 to $5,500 per year|
|Direct Unsubsidized Loans||Dependent undergrad: $5,500 to $7,500 per year ($31,000 total limit)
Independent undergrad: $9,500 to $12,500 per school year ($57,500 total limit)
Graduate and professional: $20,500 per year
($138,500 total limit)
|Direct PLUS Loans||Up to the cost of attendance minus any other financial aid received|
|Private student loans||Up to the cost of attendance
(depending on the lender)
Check Out: How to Get a Student Loan With No Credit Check
How do I get financial aid for living expenses?
To get financial aid for living expenses, you’ll need to complete the FAFSA. How much you’ll receive in financial aid will depend on several factors, including your school’s cost of attendance, your year in school, and whether you’re an independent or dependent student.
If you’re a dependent student, it will also be affected by your Expected Family Contribution (EFC) — which is how much your family is expected to contribute toward your education.
Learn More: How Long Does It Take to Get a Student Loan?
How should students pay for monthly expenses?
There are several ways you can pay for monthly costs as a student. For example, any extra financial aid or student loan money after your tuition is paid for will be refunded to you. You can then use these funds to pay for rent or other monthly expenses.
Check Out: Best Graduate Student Loans
Should I use a personal loan to pay for living expenses?
Many lenders won’t allow their personal loans to be used to pay for college, but you may still be able to use a personal loan to pay for your living expenses.
However, it’s not usually the best idea. Unless you have very good credit, it’s likely a personal loan interest rate will be higher than the interest rate you might get on a student loan — even a private student loan.
Also, student loans typically have more flexible repayment terms than personal loans. With federal student loans, you have access to IDR plans and loan forgiveness. Many private student loan lenders will allow you to defer payment until after graduation or make interest-only payments while in school. But personal loans require you to begin repaying them as soon as the money is disbursed.
Learn More: Paying for Trade School: Financial Aid and Student Loans
Can I use my student loan to buy a car?
Generally no — buying a car doesn’t fall under necessary education expenses, so you can’t use a student loan for it. However, you could use a student loan to help pay for gas or other transportation expenses.
Check Out: 4 Ideas for Building Credit as a College Student
Can I use my student loan to pay off credit cards?
If you’ve covered education expenses with a credit card while waiting for your student loan funds, you could pay off your card with those once you’ve received them. But in other cases, it could be considered an improper use of your student loan funds to pay off credit card debt.
If you decide to take out a private student loan for living expenses, remember to consider as many lenders as you can to find the right loan for you. This is easy with Credible: You can compare your prequalified rates from multiple lenders in two minutes — without affecting your credit.
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See: 8 Best Small Student Loans
Jamie Young contributed to the reporting of this article.