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Can You Take Out a Student Loan for Living Expenses
Some higher education students have a really hard time managing their expenses. The ever-growing tuition fees, living expenses, and other bills can drain the money out of them. This is likely the reason why more and more students are increasingly turning to loans—both federal and private.
While student loans to pay tuition fees are common, what about student loans for living expenses? Does such a thing even exist? The short answer is… yes. This article will inform students about loans for living expenses.
Can You Take Out Student Loans for Living Expenses?
As opposed to the common belief that student loans are intended exclusively for educational purposes, you can use them for personal use as well. You need to understand that educational costs do not include tuition fees alone. There are additional expenses directly related to pursuing your education in a college or university. As a student, you will incur those costs at one point or another in your schooling career. That’s where student loans can be used.
What Can Student Loans Be Used For?
Student loans were introduced as a way for students to afford their college tuition. But things have changed since then. The U.S. Department of Education allows students to use their loan amount outside of direct education costs. The most acceptable area is housing and accommodation. Moreover, private lenders are opening up their options as well.
Every college is different and sets its own cost of attendance, which covers the cost of one academic year. This is revised every year. When calculating the cost, colleges take into account both on-campus and off-campus expenses. The one-year cost is also different for in-state and out-of-state candidates. Therefore, the loan amount varies and gets disbursed accordingly.
When taking out student loans, you’re literally borrowing money to pay for attendance fees, which does not just cover tuition fees. It covers a combination of fees which include room and board, books, supplies, transportation, and other personal expenses.
Here’s a list of what a student loan can be used for:
- Education-related fees
- Room and board
- Housing utilities and supplies
- Meals, groceries, on and off-campus snacks
- Books, copies, equipment
- PC or laptop for college use
- Transportation charges
- Childcare expenses (if any)
- Other personal costs associated with college
What Shouldn’t Student Loans Be Used For
Now that you know student loans can be used for paying off your additional expenses, it’s important to not get carried away with that freedom. Always remember that these are loans you will be required to pay back.
You need to understand what’s included in the additional expenses bracket. Housing, lodging, and utilities are things of utmost importance. But clubbing, Netflix, and hiking trips are not. Allowed or not allowed aside, if you invest in these activities, then you’re certainly draining the money you’ve borrowed. And it doesn’t do any good to you (or the lender or institution) and might land you in trouble later.
Here is a list of things and activities you shouldn’t fund with your student loans:
- Vacation trips
- Vehicle purchase or upgrades
- Wardrobe upgrade
- Down payments
- Clubbing, partying, and other entertainment
- Small business expenses (either on operations or growth)
- Other debts
- Other expenses completely unrelated to your current education
While not explicitly mentioned, it’s better if you stay away from the above expenses. When you run short paying for items like books and supplies, an investigation will take place. And depending upon the severity of the student loan abuse, you may face prosecution.
Not every student on the campus leads the same personal life and enjoys the same benefits. Some may have it better, while others may be leading a difficult, challenging life while attending college. The federal government understands this and considers personal circumstances that could or will affect your ability to attend college and earn a degree.
For example, if you’re a physically-challenged person, your cost of attendance will be increased to include any special service you may require like transportation charges, wheelchairs, and personal assistance to attend college.
The loan amount will also depend on whether you’re living on-campus, at your home, or any other rental location. Off-campus students typically require a higher amount.
How to Use Federal Student Loans for Living Costs?
If you’re considering borrowing money for your college education from the government for covering your living expenses, then you’ll need to do some pre-planning. This can be a bit more complicated than borrowing money to pay solely for your tuition fees in which case you just need to borrow the amount that’s in the college brochure.
First, you need to figure out what your expenses will actually be and what amount you need to ask for. You would also need to understand what type of loan you’ll be applying for and how you’ll receive the funds.
There are two types of loans you can take out from the government.
Subsidized student loans are the safest loan you can get for your living expenses. These are sponsored by the government and help you defer some of the interest payments. Moreover, they offer flexibility in repayment terms.
To get this type of loan, you need to first meet the required criteria and make yourself eligible.
Unsubsidized loans are almost similar to subsidized federal loans but are less student-friendly. These types of loans are generally less flexible and have more rigid repayment terms.
However, there are no limitations on how much and where you can spend the money.
How to Apply
To get either subsidized or unsubsidized loans, as a student, you would need to complete and submit the Free Application for Federal Student Aid or FAFSA form. Your college will use the FAFSA information to calculate your family contribution towards your education.
The family contribution amount will then be subtracted from your cost of attendance and you’ll be left with the loan amount you’re eligible for.
After completing the necessary paperwork, the loan amount will be disbursed not to you but to your school’s financial aid office. After taking out the tuition fees, you’ll be given the surplus which you can then use for your living expenses.
How to Use Private Student Loans for Living Costs?
If you’re deemed ineligible for a federal loan, you have the option of taking out a private loan from a private institution. For this, you must fill out an application request for a student loan from a private lender. This is usually processed within 24 hours after which you’ll receive a verification call from the lender.
Based on the information collected, you’ll receive a personalized offer stating the amount you’re eligible for, interest rates, repayment terms, as well as other information. After signing the agreement, the amount will be transferred to your bank account for you to use. All of this is typically done in less than a week’s time. The repayment will be automatically initiated based on the agreement. But keep in mind that these loans are usually less flexible and more stringent.
5 Best Private Student Loans for Living Expenses
Embarking on the academic journey in higher education is an exciting phase, but it’s also accompanied by the inevitable expenses that go beyond just tuition fees. Whether it’s rent, groceries, transportation, or textbooks, these costs add up, and for many, managing them alongside tuition can be a heavy burden. To assist students in navigating this financial maze, numerous private lenders offer specialized student loans designed not just for tuition, but also for personal and living expenses during the academic years. In this section, we dive deep into some top lenders in this space, categorized based on creditworthiness, ensuring there’s an option for everyone, irrespective of their credit background. Let’s explore these lenders and what they offer.
AmOne (Best for Okay to Good Credit)
Navigating through student life can be challenging, especially when it comes to managing living expenses. AmOne presents a viable solution for students with okay to good credit standings. While tuition is often the primary focus for student loans, AmOne recognizes the significance of covering living costs, ensuring a holistic college experience without undue stress. With its expansive network of lenders, AmOne offers varied options tailored to those with a decent credit background, making the pursuit of higher education a bit more comfortable.
Spring Loans (Best for Bad and No Credit)
For students with limited credit history or past financial missteps, the journey to securing funds for living expenses can seem daunting. Spring Loans provides a beacon of hope in such situations. Their belief is that everyone deserves a fair shot at education, irrespective of their credit background. With a comprehensive approach to evaluating financial needs and situations, Spring Loans offers solutions that consider more than just a credit score. This way, students can focus on their studies while being assured of their day-to-day living requirements.
First Premier Lending (Best for Bad Credit)
Living expenses during college can accumulate, and for those with a tarnished credit history, finding a financial solution can be challenging. First Premier Lending extends its support to such students, looking beyond traditional credit scores. The lender understands that financial mistakes can happen, and rather than penalizing students for past errors, they offer tailored loan solutions. Students can thus manage their living expenses and concentrate on their educational journey.
College Ave (Best for Good Credit)
Aiming to support students who have demonstrated financial responsibility, College Ave offers student loans for those with good credit, especially tailored for living expenses. Recognizing that a comprehensive college experience extends beyond just tuition fees, College Ave provides competitive interest rates and flexible repayment options. Students can thus secure their living arrangements, be it accommodation, food, or other daily necessities, with ease and peace of mind.
Sallie Mae (Best for Very Good Credit)
Sallie Mae stands out as a premium choice for students with an excellent credit track record. They understand that to truly thrive in an academic setting, students need more than just tuition coverage; they need to cover their living expenses without constant financial worry. Offering some of the most competitive rates in the industry, Sallie Mae ensures that students with very good credit get the best possible terms. With transparent conditions and a legacy of trust, students can focus on their education, knowing their living costs are well-managed.
Student loans can be used to pay for living expenses and other things. While federal loans are always better, you should consider private loans too. After disbursement, make sure you use the private or federal student loan exclusively for educational purposes. Minimize your borrowing as much as possible and avoid excessive spending.