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Student Loans for Living Expenses

By Mollie Allen

Updated on March 17, 2021

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 to cover 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 and it includes the total cost of attending school, typically presented as the total cost for one school year. COA factors in expenses such as 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?

Student loans can be used for a variety of education related expenses. These include:

Tuition
College fees
On-campus room and board
Off-campus housing
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

Student loans may be used for true “living expenses.” Here are some expenses that you may not use your student loan funds for.

Purchasing 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
Dining out
Financial investments

What Happens if I Use My Student Loans Funds Incorrectly?

If you misuse your 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 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.

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 of 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 (for example: 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 school 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 greatly reduce this cost, but reduce the amount you may need to borrow to cover your living expenses.

You could shave a lot off of 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. That’s a significant amount of money that you will not need to borrow. And remember, every dollar you do borrow will be charged interest.

What Not to Do

Do not borrow more money than you need to. Remember, all student loans accrue 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 while in school). Borrowing more than you actually need can put you deeper into student loan debt. We recommend itemizing all of you expected expenses, creating a budget, and borrowing only what you need to fill the funding gaps.

The Takeaway

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 your money lasts you all year and you don’t borrow more than what is necessary.

Always review your federal student loans first as these come with the generous periods of deferment and forbearance and pay qualify for Income-Driven Repayment 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.

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