Can you use student loans to cover living expenses?

Learn how to use your student loans to pay for education-related living expenses like transportation and off-campus housing. (Shutterstock)

Student loans aren’t just for tuition or textbooks. You can actually use them to cover other college-related costs, too — things like food, housing, and other general living expenses.

While lenders don’t make specific student living expense loans, traditional student loans can help pay for non-tuition college costs. Here’s what to know about using student loans to pay for education-related living expenses. 

If federal student loans won’t be sufficient to cover all your costs, you might consider a private student loan. With Credible, you can easily compare private student loan rates from multiple lenders.

• How to use student loans for living expenses
• What expenses can you pay for with student loans?
• What expenses can’t be paid for with student loans?
• What happens if you use student loans for non-education costs?
• Alternatives to student loans for living expenses
• Only borrow what you need

How to use student loans for living expenses

You should always pursue grants and scholarships first before turning to student loans. Federal student loans, issued by the U.S. Department of Education, should be your first choice for borrowing. These loans offer lower interest rates, flexible repayment options, don’t require a cosigner, and aren’t based on credit history or score.  

To apply for federal student loans, as well as federal grants and work-study programs, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA) and provide your tax returns, W-2s, and other financial documentation. If your parents list you on their tax return as a dependent, you’ll need to provide their information too.

Once the Department of Education processes your application, it will send a letter that shows your Expected Family Contribution, which helps determine your eligibility for federal financial aid. Next, you’ll get a letter from your school with details on the type and amount of federal aid you qualify for. If you need more than you’re awarded, private student loans — which private lenders make — can fill in the gaps. Just keep in mind that you may need a cosigner to qualify for these since eligibility is based on credit history.

For both federal and private student loans, the lender will disburse the funds directly to your school to pay for tuition, room, board, and other authorized fees. If any funds remain after these are paid, your school may pay you the excess amount directly.

You can use this extra money to pay for living expenses, as long as those costs are related to your education.

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What expenses can you pay for with student loans?

The Federal Student Aid office says student loan funds can be used for "authorized educational expenses" — and only ones that arise while you attend the school where you were deemed eligible for financial aid. 

Authorized educational expenses can, of course, include tuition and room and board (on- or off-campus housing). But it can also include:

• Books and other supplies
• Equipment, like a camera for your photography class
• Dependent care expenses, if your child needs to attend daycare while you attend classes
• Transportation and commuting expenses
• Desktop computers or laptops
• Study abroad or co-op study expenses
• Licensing or certification costs
• Disability expenses

Since "board" is an authorized expense, you can also use your student loan funds for food — but only within reason. For example, a $100 dinner at a steakhouse wouldn’t qualify, but lunch in the campus cafeteria would.

If you need a private student loan because your federal aid doesn’t cover all your costs, you can easily compare private student loan rates from multiple lenders with Credible.

What expenses can’t be paid for with student loans ?

You shouldn’t use student loan funds for anything not related to your education. Misusing your loans could lead to legal problems, or you may even need to pay the money back if your lender finds out (more on this later). 

While there’s no official list of what student loans can’t be used for, you can generally expect your lender to consider the following expenses off-limits:

• Personal travel — Using your loans to cover a train pass to get to and from class would be fine, but buying spring break plane tickets for you and your roommate almost certainly would not.
• Entertainment — You generally couldn’t use your loans to pay for concert tickets or a night at the bowling alley. An exception might be if it were required for a course or school function — like if you had to review a concert for your school radio station or you were attending a field trip for biology class.
• Personal care — Gym memberships, hair salon appointments, pedicures, and other similar services aren’t eligible for student loan use. These would need to come out of your own pocket.
• Other debts — Using your leftover funds to start paying off your student loan is a great idea. But you generally can’t use them to pay down your credit card, car loan, or some other debt.

If you’re ever unsure about whether or not an expense qualifies, contact your student loan servicer or your school’s financial aid department. They’ll be able to tell you with certainty what is and isn’t eligible for loan coverage.

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What happens if you use student loans for non-education costs?

When you take out a student loan, you’re required to sign a promissory note — essentially a contract that outlines the terms of your agreement. Using your loan funds for unapproved expenses would put you in violation of those terms, and your lender can act accordingly.

With federal student loans, for example, you’d be required to repay the full amount of your loan immediately if the Department of Education learns about your misuse of funds. With private student loans, the repercussions will depend on your lender, but you could face legal action. 

Alternatives to student loans for living expenses

Student loans aren’t your only option if you need help covering living expenses. Before turning to loans, consider one of the following alternatives. 

Scholarships 

Scholarships can be a great way to offset some of the costs of college without taking on more debt. Schools, government agencies, nonprofit organizations, and private companies offer scholarships. 

Your college’s financial aid office is a good place to start when searching for scholarships, or if you’re still in high school, your guidance counselor can help too. You can also use the Department of Labor’s scholarship search tool.

Work-study

You can also apply for work-study positions, which are on- and off-campus jobs designed to cover — at least partially — your educational expenses. 

Federal work-study programs are a type of federal aid that may be available to you. Your school may have other options too. Sometimes, colleges partner with local companies to create work-study programs just for specific areas of study. Again, your financial aid office is a good place to start your search. 

Part-time job

You can also apply for a part-time job at restaurants, stores, and businesses near your school. Just make sure the hours work with your class schedule and that you’d still have time for studying. You’ll also need to ensure you have the proper transportation to get to and from your job, or find something within walking distance.

Cut costs

Minimizing your costs is key if you’re having a hard time covering general living expenses. Try to find areas where you can reduce spending to help. This might mean renting your textbooks instead of buying them, forgoing music or TV subscription services for a while, or taking the bus rather than buying gas. 

Only borrow what you need

Student loans can help you pay for school-related costs, but they’re still a debt — and they do come with interest. To ensure you’re minimizing these extra costs, it’s important that you only borrow what you absolutely need. 

If you end up with leftover money you can’t or don’t need to use, then consider using it to make an extra payment toward your loan. This will reduce your principal balance and your interest costs over time. It might also help you pay off your student loans sooner. 

If you decide a private student loan is right for you, Credible makes it easy to compare options from multiple lenders. It’s 100% free to use and won’t affect your credit.