5 things student loans can pay for (and 5 things it can't)

Student loans can help you cover a lot of your costs in college, but not every expense will qualify. (iStock)

If you’re not flush with savings or you’ve maxed out your federal financial aid, you might look toward private student loans to cover the costs of your higher education.

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While this can be a smart way to pay the bills, these loans aren’t free. You will need to pay the money back (plus interest) over time, and you may even need to start paying it back immediately, while you're still in school.

Fortunately, interest rates on student loans are quite low right now, so you might save some cash if you act fast. Tools like Credible can make evaluating these loan factors easy. You can get customized rates based on your credit profile, expected loan amount, repayment terms and more within just minutes.

Another way to save money on your loan? Only take out what you need. Get a good handle on the costs you’ll need help with before you apply for your loan, and take out just the bare minimum. You should also earmark the funds for specific expenses to keep you from spending frivolously (Student loans are given straight to your college, but once your tuition and school-initiated expenses are covered, the extra balance will fall right in your pockets. This can be risky if you’re prone to impulse buying).

Need help estimating how much your expenses will be? Here are the five things you can use your student loans for:

1. Tuition

The biggest charge your loans will likely cover is your tuition. According to the National Center for Education Statistics, the average annual tuition for a four-year public school is $17,237, while a private school clocks in at $44,551. Your loans may also cover school-related fees for labs, internet access, and more.

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2. Housing

You can use your loan funds to cover housing, too — whether you live on- or off-campus. It’s not just limited to your monthly rent or dorm fee, either. Your loans can also go toward housing-related expenses, like your gas, water, or electric bill.

3. Food

You’re free to use your student loans to pay for meals, including those eaten on campus (i.e., a meal plan) or those off. If you’re eating off-campus, make sure you’re being careful about your spending. You should also limit those off-campus meals to just a few times per month to minimize your costs.

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4. Supplies

From books and printer paper to computers, tablets, and software programs, you’ll need all kinds of supplies over the course of your education. Fortunately, loans can help here, too. You can use your loan funds toward any supply or technology you may need to be successful in your coursework.

5. Transportation

If you have your own car, you might use your student loan funds to pay for your parking pass or for gas to and from classes. If you’re sans vehicle, public transit costs can also be covered, as long as you’re using the transportation for some education-related purpose.

What you can’t use your loans for

Your student loans are designated for education costs. Though your lender won’t require you to offer up receipts or provide proof of your purchases, spending your loans on non-school-related expenses will just end up costing you more in the long run (due to interest costs).

For this reason, you shouldn’t use your loans on:

1. Home decor

Don’t get too loose with what you consider “housing expenses.” Your loans can help cover your rent or dorm payment, but using them for a new down comforter or a $200 rug probably isn’t the best move.

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2. Clothes or accessories

You certainly need to be clothed to go to school, but your wardrobe doesn’t quite qualify as a college-related expense. If you’ve found yourself in need of new clothes, tap a savings account or consider getting an on-campus job to help pay for it.

3. Social expenses

Throwing a party, going out for the night, or need cash for a fraternity or sorority event? If you don’t have the money in the bank to cover it, you’re better off steering clear.

4. Travel

You can use your loans to cover gas to and from school, but putting them toward, say, a 500-mile trip home? That likely doesn’t qualify. You probably shouldn’t use your loan funds toward a spring break trip or any other personal travel you’re planning either.

5. Pet supplies

Having a furry friend can be great when you’re in school. They can reduce your stress, provide companionship, and give you a good excuse to take that much-needed walk once in a while. Still, benefits aside, the costs of a pet don’t really fall into student loan territory. You’ll need to pay for these expenses out-of-pocket.

Applying for a student loan? Do this first

Before you apply for your loan, tally up what you’ll need for the expenses, and use a student loan calculator to estimate your monthly payments. Once you have an idea of what you need, use a tool like Credible to shop around for your loan. Interest rates vary widely from one lender to the next, and shopping around can save you significantly in the long run.