Having a car can make college life easier, especially if you’re balancing classes, work, and off-campus living. It’s natural to wonder whether student loans can help cover this major expense. After all, they can pay for tuition, housing, and other college-related costs.
However, student loans come with strict rules about how the money can be used — and buying a car isn’t one of them. That said, you can use student loans for certain car-related expenses, such as gas, maintenance, and parking. You can also use student loans to cover other transportation costs like bus, train, or subway passes.
Here’s a closer look at what expenses student loans can and can’t cover, plus some alternative ways to afford a car while you’re in college.
Key Points
• Student loans are designed for education-related expenses, not for purchasing cars.
• Acceptable uses include tuition, room/board, books, and transportation costs (including car maintenance).
• Misusing student loans can lead to penalties and harm financial aid eligibility.
• Alternatives for car financing include saving and taking out a separate car loan.
• Existing student loans affect car loan eligibility through their impact on debt-to-income ratio and credit history.
What Student Loans Can Be Used For
Both federal student loans (which are funded by the U.S. government) and private student loans (which are funded by banks, credit unions, and other private lenders) are meant to be used for expenses essential to your education.
Generally, you can use your student loans to pay for:
• Tuition: Your loan can be used to cover the cost of attending classes.
• Books, supplies, and fees: This includes course materials, required supplies (like notebooks and pens), and lab and other fees not covered by tuition.
• On-campus room and board: You can use your loan to cover your dorm expenses and meal plan.
• Off-campus housing and food: If you live off-campus, eligible expenses include rent, utilities, and groceries.
• Transportation: You can use loan funds for transportation expenses such as gas, car maintenance, and public transportation to get to and from school.
• Study abroad: If you choose to spend a semester or year abroad, you can use your loan to cover those costs.
• Technology and equipment: This includes a laptop, software, or any other equipment needed for your classes.
• Professional expenses: You can use your loan to pay for professional certification tests and licenses related to your career field.
• Disability needs: Loans can be used to pay for specialty services, equipment, and necessary supplies.
• Child care: If you’re a parent, you may be able to use your loan to cover child care necessary for you to study and attend classes.
The list of qualifying expenses is relatively broad. Essentially, if the expense is essential to your educational success (meaning it supports your living arrangements, basic daily needs, or attendance at school), then it is likely an acceptable use of student loan funds.
Why Student Loans Generally Can’t Be Used to Buy a Car
While transportation is considered a legitimate educational expense, buying a car itself is not. In fact, federal regulations specifically exclude the purchase of vehicles as an allowable use of student loan funds.
If you want to purchase a new or used car, that money has to come from another source, such as savings or a car loan. The same goes for buying a motorcycle or e-scooter, since these are also considered personal purchases not necessary to your education.
Here are some other purchases student loans should not be used for:
• Clothing and accessories
• Grooming items
• Nonessential household goods (like a TV, video gaming device, decor)
• Restaurants and entertainment (e.g., eating out, takeout, concerts, sports tickets)
• Nonessential travel (such as vacations or nonschool related trips)
• Purchasing a home (such as down payment)
Though lenders and financial aid offices generally don’t actively monitor your use of student loan funds, you could potentially face consequences for misusing the money. Though rare, a lender could terminate your loan agreement and require you to pay back the full amount right away. Misuse of federal student loans could make you ineligible for future federal student aid, making it harder to pay for college moving forward.
Transportation Costs That May Be Covered by Student Loans
While you can’t buy a car with student loans, you can use these funds for transportation costs related to car ownership. For example, if you use a family car or buy a car with other funds, you can use your student loan to cover the cost of gas, oil, essential repairs, general maintenance, and insurance payments.
Student loans can also be used for parking costs and tolls, as well as other forms of transportation, such as buses, trains, subways, and bike-sharing programs.
Recommended: How Do Student Loans Work?
Alternatives to Using Student Loans to Buy a Car
While you can’t use student loan money to buy a car, there are other ways to finance a car purchase while you’re in college. You might also consider some alternative (less costly) ways to get around. Some ideas:
• Save up and pay cash: The best way to avoid debt is to choose a car you can afford to pay for upfront. Consider working part-time during the school year or over the summer to help stash money away so you can buy an inexpensive but reliable used car. Websites like Kelley Blue Book and Edmunds can help you find affordable, fuel-efficient options for students.
• Apply for a car loan: This type of financing is offered through banks, credit unions, private lenders, and car dealerships. Some lenders and dealerships offer special deals on car loans for college students, such as a rate discount or more flexible qualification requirements (such as using grades in lieu of a credit score).
• Apply with a cosigner: As a student, you may have limited or no credit history. A creditworthy cosigner (like a parent) can significantly improve your chances of loan approval and help you secure a better interest rate.
• Use public or campus transportation: If your school is in an area with solid public transit, a monthly bus or train pass might be cheaper and more practical than owning a car. Some campuses also offer free shuttles or student discounts for local transportation.
• Car sharing/ridesharing: Services like Zipcar or use of Uber/Lyft can be cost-effective for occasional trips, allowing you to avoid car maintenance, insurance, and monthly parking costs.
• Biking or walking: If you live close to campus or work, human-powered transport can be a free and healthy alternative to buying a car.
How Having Student Loans Can Affect Getting a Car Loan
If you feel you really need a car and want to pursue separate financing, it’s important to understand how your existing student debt can influence your ability to get approved for a car loan. Two key factors to keep in mind:
• Your debt-to-income (DTI) ratio: Lenders look at your DTI ratio — the percentage of your monthly income that goes toward debt payments — to determine how much additional debt you can handle. If you have high student loan payments, your DTI may be too high to qualify for another loan.
• Student loans can impact your credit: Having student loans can help you build credit if you make on-time payments. This can make it easier to qualify for a car loan with attractive rates and terms. On the flip side, however, missed or late payments can hurt your score and make qualifying for a car loan more difficult.
If you’re still in school and relying heavily on federal or private student loans, it might be smarter to wait until after graduation, when your income is more stable and you’ve established a stronger credit profile, to take on an auto loan.
The Takeaway
Using student loan funds to purchase a car is generally prohibited by both federal and private student loan rules, as a vehicle is considered a nonessential personal asset.
While these loans can cover transportation costs related to your education, such as gas, insurance, and maintenance for a car you already own, or public transit fares, they cannot be used for the vehicle purchase itself.
Misusing student loan money can lead to severe penalties, including the potential loss of future financial aid or immediate repayment of the loan. If you need a car for college, consider alternatives like saving up to pay cash or applying for a separate auto loan.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
FAQ
Can I use leftover student loan money to buy a car?
No. Although student loan funds can be used to cover transportation costs associated with your education, buying a car itself is not considered an allowable or qualified education expense. Student loan funds are meant for essential costs like tuition, books, fees, and housing. The purchase of a personal asset like a car is generally viewed as a nonessential expense by both federal and private student loan lenders.
Are cars considered a qualified education expense?
No, a car purchase is explicitly not considered a qualified education expense by federal student loan regulations, and private student lenders typically have similar guidelines. While transportation costs (like gas, car maintenance, and public transit) that are essential for attending school may be covered, purchasing the vehicle itself is considered a personal, nonessential asset acquisition.
What happens if I use student loans for noneducational expenses?
Though lenders generally do not actively monitor your spending, misusing student loan funds can lead to negative consequences. If the misuse is discovered, the lender may terminate your loan agreement and require you to pay back the full loan amount right away. Misusing federal student aid can also result in losing your eligibility for all future federal financial aid, making it significantly harder to afford the remainder of your education.
Can I get an auto loan while repaying student loans?
Yes, you can get an auto loan while repaying student loans. Lenders will assess your overall financial situation, including your student loan debt, to determine your eligibility and interest rate. Key factors include your credit score and your debt-to-income (DTI) ratio. If your student loan payments are high relative to your income, that could make it harder to qualify for an auto loan or result in a higher interest rate. However, making consistent, on-time payments on your student loans can help build a positive credit history, which can improve your chances of securing a favorable auto loan.
Are there student transportation assistance programs?
Yes, many colleges offer student transportation assistance programs, including free or reduced-fare public transit passes, campus shuttle services, and emergency grants for transportation. Some schools offer transportation assistance programs targeted to specific student populations, such as low-income students, students with disabilities, or students experiencing homelessness or housing insecurity.
Photo credit: iStock/yuki-ramen1025
SoFi Private Student Loans
Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).
SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
SOISL-Q425-006