Even though student loans are intended to be used to pay for the cost of college, college costs often include living expenses. Meaning, student loans can be used for living expenses. But it’s important to know that your school cannot award you financial aid in excess of your cost of attendance (COA).
Can You Take Out Student Loans for Living Expenses?
Yes. You may take out student loans for living expenses associated with college. The amount you will be able to borrow to cover living expenses will be determined by your school’s certified cost of attendance, or COA, and may differ from school to school.
Room and board costs can include one of four allowances, depending on where you live.
- On-campus in housing that is owned or operated by the college
- At home with parents (only applies to students without dependents)
- In housing on a military base or for which a basic housing allowance (BAH) is provided (allowance restricted to board; room is excluded because it is already paid for)
- Off-campus housing
If you are enrolled less than half-time, your room and board allowances may be limited.
What is Cost of Attendance?
Essentially, COA is what it will cost to attend college. Your school will determine your COA. It includes the total cost of attending school, typically presented as the total cost for one school year. COA factors in expenses like tuition and fees, living expenses, transportation costs, books, supplies, and more. How much you are eligible to receive in student loans is determined by your school’s cost of attendance. Cost of attendance differs by school. You may also see that your COA is referred to as your student budget.
What Can Student Loans Be Used For?
You can use student loans for a variety of education related expenses. Examples of expenses student loans can be used for include:
- Tuition
- College fees
- On-campus room and board
- Off-campus housing costs like rent
- Books and supplies
- Transportation costs (bus fare, fuel, etc, but not the purchase of a new vehicle)
- Cost for renting or purchasing required equipment, materials, and supplies
- Personal computer (if enrolled at least half-time)
- Dependent care expenses such as child care
- Disability-related expenses
- Loan fees
- Licensing or certification required for your program
- Reasonable costs associated with a study abroad program approved for credit at the student’s home institution
- Expenses associated with a cooperative education program
- Miscellaneous personal expenses
What You Should Not Use Student Loans For
Whether from the U.S. Department of Education or private student loan lenders, you cannot use student loans for true “living expenses.” Here are some expenses that you may not use your student loan funds for:
- Purchasing a car or repair costs for a car you do not need for school
- Down payment on a home
- Entertainment costs such as cot and movie tickets as well as streaming services
- Travel and vacation related expenses
- Home entertainment equipment such as television, surround sound, etc.
- Other debt such as credit cards
- Expensive clothing
- Unnecessary supplies
- Restaurants and take-out food
- Financial investments
What Happens if I Use My Student Loans Funds Incorrectly?
If you misuse your student loan funds, you may not have enough money to cover your living expenses and other expenses throughout the semester. Remember, student loan limits are based on your cost of attendance. The money you borrow is intended to last you throughout the semester. If you spend it on non-qualifying expenses, you may come up short.
Note: If your lender does discover you are using student loan funds inappropriately, they may terminate the relationship, and you could be required to pay back the money immediately.
How Student Loans are Disbursed
Both federal and private student loans are disbursed to the school. The loan funds will be applied to any outstanding balances and the student loan money that remains, if any, will be refunded to you by the school. Remember, this is still student loan money and should be reserved for college related expenses. It is wise to set up a checking or savings account to set aside your refund for expenses that arise later in the year.
You may also choose to give any overpayment back to your lender to reduce your student loan debt.
How to Increase Your Expense Allowance
Your school determines how much to allow for each expense. However, if you can document higher costs than specified in the allowances, you can appeal to your school for a possible professional judgement adjustment to the cost of attendance.
For example, you should keep receipts for all your textbooks and supplies. If your actual costs are higher than what your school estimated, ask the financial aid office to increase the textbook and supplies allowance.
Some colleges don’t include certain allowances in the cost of attendance but will add them if you document the expenses and make a formal request.
Expenses that may fall into this category include:
- Dependent care
- Disability-related expenses
- Computer and software related expenses
Software and Computer Limits
Some colleges may limit the purchase of a computer to just once during your educational program unless there are extenuating circumstances (theft, destroyed in a natural disaster, etc.). Many colleges will want to see a paid invoice for the purchase of a computer before they will add the expense to your cost of attendance. Colleges may increase the cost of attendance to cover the cost of required software, including operating system updates.
Health Fees
Your school might include a required health fee in the cost of attendance. It may not be clear if health insurance can be included in the cost of attendance. The cost of attendance for some colleges will include the cost of student health insurance if it’s required by the school, others do not. You should also ask your campus financial aid office if the cost of attendance can include ongoing medical expenses, such as expensive prescriptions.
Special Circumstances
If you have special circumstances, you should appeal to the college for an adjustment to your cost of attendance.
How to Minimize Living Expenses
The average cost of room and board at a four year institution is more than $10,000 per year. Living at home can not only eliminate room and board costs, but reduces the amount of student loan money you may need to borrow to cover your living expenses.
You could shave a lot off your student loans by living at home. It may seem like a sacrifice to some, but with a potential savings of more than $40,000 in student loans over the course of four years it is definitely worth considering. That’s a significant amount of money that you will not need to spend. And remember, every dollar you do borrow will be charged interest.
What Not to Do
Do not borrow more student loan funds than you need. Remember, all student loan debt accrues interest, and other than subsidized loans, your student loans will start accruing interest from the time of disbursement (that means you’ll be accruing interest before you graduate). Borrowing more than you actually need can put you deeper into student loan debt. We recommend itemizing all of your expected expenses, creating a budget, and borrowing only what you need to fill the funding gaps.
Should I Use Credit Cards or Personal Loans to Pay for Living Expenses?
If using student loans for living expenses isn’t an option for you, credit cards or personal loans can be used as an alternative, albeit not a very good one. Both options typically come with the same downside—a high interest rate.
Personal Loans
These loans were not made with students in mind, so you won’t see some of the competitive rates and terms offered with federal or private student loans. Most lenders will not let you pay for education-related expenses, such as tuition fees, with a personal loan, but you can use them to pay for living expenses. Keep in mind that monthly payments begin immediately rather than after you graduate and, unlike most federal student loans, the interest rate on a personal loan is dependent on your credit score. The loan repayment term is also generally shorter. Always review loan terms carefully.
Credit Cards
If you opt to use credit cards to pay for your living expenses, try to find a card with an interest-free introductory period to avoid the need for interest payments. While you may not be able to pay for things like rent with a credit card, you could pay for other expenses, such as food, tuition, books, and supplies; freeing up money to cover rent or room and board. For large purchases, a credit card with an introductory bonus offer can also be useful. But be cautious when using credit cards, carrying a balance on your card can become very expensive—especially after those introductory or special rate offer periods end.
Only consider using credit cards or personal loan money to pay for college if you’ve exhausted all other student aid and funding sources. Taking on credit card or personal loan debt will negatively affect your credit score. Likewise, always have a plan to pay back the money.
While you can use student loans for living expenses, you should do your best to minimize all student loan borrowing. Create a budget to stay on track and make sure your money lasts you all year so you do not have borrow more student loan money than necessary.
It's best to visit your financial student aid office to sign up for student aid and apply for federal student loans before considering options from private student loan lenders. Federal student loans come with generous deferment and forbearance periods and qualify for Income-Driven Loan Repayment plans or Public Service Loan forgiveness.
If you still have gaps in your funding, private student loans are available to make ends meet. Check out our top private student loans lenders.
Best Private Parent Loans for College
- Competitive fixed and variable APRs starting at 2.49%1
- Multiple repayment options including: full principal and interest, interest-only, deferred, and flat payment
- Flexible payment terms ranging from 5, 8, 10, and 15 years2
- Coverage up to 100% of your school-certified cost of attendance ($1,000 minimum)3
- No origination, application and processing fees, no fees for early repayment
- Apply online in 3 minutes and get an instant credit decision
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
2This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
3As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 9/15/2022. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
- AFFORDABLE variable rates starting at 3.04% APR with Automatic Debit Discount*
- 1% CASH BACK Graduation Reward*
- NON-COSIGNED option may be available for undergraduate juniors and seniors.
- PAY AFTER LEAVING SCHOOL – Customize your loan with flexible repayment options – start payments after graduation.
- FORGET FEES – No application, origination or disbursement fees. No prepayment penalty if you choose to pay your loan off early.
- COVER UP TO 100% of your tuition and eligible living expenses.
* Ascent loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs
Rates are effective as of 10/01/2022 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: www.AscentFunding.com/Rates
1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.
Up to four repayment types (including no payments while in school) and multiple repayment terms help you find the loan that fits your budget
- Variable Rates: Starting variable rates range from 2.99% APR - 12.13% APR (with autopay)*, and will never exceed 13.95% (sometimes lower in certain states as required by law)
- Fixed Rates: Fixed rates range from 3.75% APR to 13.60% APR (with autopay)*
- Easy online application!
- No origination fees, late fees, and no insufficient fund fees. Period
- Up to four repayment types (including no payments while in school) and multiple repayment terms help you find the loan that fits your budget
- 0.25% discount when you set up autopay*
*UNDERGRADUATE LOANS: Fixed rates from 3.75% to 13.35% annual percentage rate ("APR") (with autopay), variable rates from 2.99% to 12.13% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.50% to 13.35% APR (with autopay), variable rates from 3.69% to 12.13% APR (with autopay). PARENT LOANS: Fixed rates from 4.23% to 13.60% APR (with autopay), variable rates from 3.09% to 12.13% APR (with autopay). For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 09/02/2022.
Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, years of professional experience, income, and a variety of other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Financial Protection and Innovation under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
- Check your eligibility in just 2 minutes
- Flexible repayment options you can choose from
- No fees for origination, disbursement, prepayment, or late payment3
- Skip a payment once per year (once repayment period restarted)4
- Will cover up to 100% of the school's certified cost of attendance
- 9-month grace period (3 months more than most lenders)2
This information is for graduate and undergraduate students attending participating degree-granting schools. Borrowers must be U.S. citizens or U.S. permanent residents if the school is located outside of the United States. Non-U.S. citizen borrowers who reside in the U.S. are eligible with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident) and are required to provide an unexpired government-issued photo ID to verify identity. Applications are subject to a requested minimum loan amount of $1,000. Current credit and other eligibility criteria apply.
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.47% APR to 13.03% APR (excludes 0.25% Auto Pay discount). Variable rates range from 2.95% APR to 12.04% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.
1You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
2Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.
3Earnest does not charge fees for origination, late payments, or prepayments. Florida Stamp Tax: For Florida
residents, Florida documentary stamp tax is required by law, calculated as $0.35 for each $100 (or portion thereof) of the principal loan amount, the amount of which is provided in the Final Disclosure. Lender will add the stamp tax to the principal loan amount. The full amount will be paid directly to the Florida Department of Revenue. Certificate of Registration No. 78-8016373916-1.
4Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.
The information provided on this page is updated as of 9/30/2022. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information.