Can You Use a Student Loan for Living Expenses?

When it comes to student loans, there’s a lot of confusion about what you can and can’t do with them. For example, many people wonder if they can use their student loans for housing and living expenses.   

In this article, we’ll explore what types of student loans allow borrowers to use their funds for living expenses (like rent or groceries), how much it takes in order to qualify for this benefit, and whether or not it’s worth doing so!   

So, the short answer to this question is yes – you can use a student loan for living expenses, but there are limitations. If you want to use your student loan this way, be sure to check with your lender before doing so. You may not qualify if you have other resources available.   

However, if you do qualify for the loan and need it for living expenses (as opposed to something else), here’s what we recommend:   

• Make sure you have more than one month’s worth of expenses saved in an emergency fund first (between three months and six months should be more than enough).   

• Set up automatic payments from your bank account into a separate savings/checking account that is designated specifically for paying off your student loans each month. This way there will never be any question about whether or not these payments were made on time since they’ll all come out automatically through direct debit every month without fail. This makes it easier to track how much money is going toward paying down each individual loan rather than just lumping everything together into one big “Student Loans” category which could make budgeting difficult later on down the road.    

Student loans for living expenses can cover some extra costs as well, that you may encounter upon moving into your dorm.   

What Can Student Loans Be Used For?

These loans are designed to be used to cover tuition, books, and supplies. You may also be able to use student loans for living expenses such as rent or a meal plan on campus. These loans are fairly flexible but you should still be careful with these expenses. Look into both federal and private loans to find one that covers everything you need. 

You can also use student loans for living expenses off-campus but be careful not to overspend by making dumb financial choices here.   

What Student Loans Can’t Be Used For?

As the name suggests, these loans are meant for financing education and some other cost associated with it. But many people try to take them out and use them for other purposes that they are not meant for and therefore cannot be used for. You can’t use these loans for:    

• Car payments   
• Dorm room accessories   
• Credit card bills   
• Gambling debts   
• Other personal expenses   

How to Use Student Loans for Living Expenses

You may qualify for a student loan to help you pay rent and buy groceries, but it’s important to understand how much money you’re getting, how long it will take to pay off the balance, and how much interest you’ll have to pay at the end of the term.   

Tuition makes up just a small percentage of what you’ll pay for college. That’s why schools show their total cost of attendance (COA). This is an estimate of what students spend on tuition, fees, room and board, textbooks, supplies, transportation, and other essential living expenses. 

Many federal student loans for living expenses will cover all of this and match that COA number. If you for some reason can’t qualify for these federal loans, don’t get discouraged, there are also private student loans for living expenses that are not that hard to apply for, but may have slightly less favorable terms.   

But, just be careful not to overspend and cause some financial problems for yourself down the road. We recommend you avoid dining out and travel so you can stay within the budget.   

Student loans for living expenses can also be used for additional costs you may have overlooked.

Should You Use a Student Loan for Living Expenses?

In general, you should avoid using student loans for living expenses and save them for tuition and books (which can get really pricey). If you don’t have a job and your parents can’t help out, then it may be worth getting a student loan to cover your living expenses until you find a job. Just remember that the majority of graduate students who take out these types of loans end up with debt in excess of $20,000.    

If possible, try to get by on loans that are specifically designated as needing to be repaid after graduation (like Perkins Loans) instead of taking out unsubsidized Stafford or PLUS loans. And if you do need one or more unsubsidized Stafford or PLUS loans—or any other loan with an interest rate above 6%—make sure they’re manageable before accepting them.   

Look into student loan for living expenses only so you can get even a little bit of help until you fully adjust to your new surroundings.   

What Happens If You Misuse Your Student Loans?

In case you misuse your student loans, there are many ways that the government can penalize you. The most common penalties include:   

• Late fees – These are charged if you don’t pay your monthly payment on time. They’re typically around $12 per month and will increase with each month that your payment is late.   

• Collection charges – If the government needs to contact a third-party collection agency in order to get payments from you, they’ll charge a fee for this service. This fee varies depending on how much money is owed and which state the collections company is located in. For example, a Florida-based agency might cost $31 per hour while an Oregon-based one can go as high as $128 per hour.   

• Defaulting on federal student loans – If all of these penalties fail to convince someone to pay off their debt quickly enough then the loan goes into default status. Other actions may be taken against you such as wage garnishment or confiscation of assets like cars or property.  

As for private loans, the process is quite similar but the lender may take an even more radical approach and have bigger late fees and collection methods.  

To avoid these consequences, think before you borrow any money. It will surely sound tempting to take out a lot more than you need, especially when you won’t start repaying it until after graduation.  

After getting your financial aid letters, you will have the option to accept or reject all or a portion of the student loans offered so don’t feel pressured to take all or nothing.  

Final Thoughts

If you can manage a student loan for living expenses, great! But do so at your own risk. Student loans are not for everyone, and they should only be used to pay for education—not living expenses.   

If you decide that a student loan is right for you and your situation (and has been approved), it’s important that you understand what the terms of the loan are before signing up. Make sure that it’s worth your while to take this step toward higher education. Take into consideration whether will you be able to afford to pay back the money in full after graduation or leaving school.   

The best thing about student loans is that they are flexible in how you use them. So, do your research before committing to anything so you are sure you are getting the best student loans for living expenses that are well suited for your needs.