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Student loans are meant to be used to pay for your education and related expenses so that you can earn a college degree. Even if you end up with more student loan money than you need, it doesn’t mean you should use student loans to cover living expenses that are nonessential.
Read on to learn what student loans can be used for to make wise use of your money and potentially end up in a stable financial situation after graduation.
Key Points
• Student loans are designed to be used for expenses related to a borrower’s education, such as tuition and fees, housing, and books and supplies.
• For students who live off campus, student loans can be used to cover rent and utilities.
• Transportation expenses to and from school are considered an eligible expense for student loans.
• Student loans cannot be used for nonessential expenses, such as vacations, movie or concert tickets, or gym memberships.
• Borrowers who receive a student loan refund may want to send it back to their loan servicer, rather than spending it, to save money on what they’ll owe after graduation.
What Can You Use Student Loans For? (8 Eligible Expenses)
Here are eight things you can use your student loan funds for to help pay for college.
1. Tuition and Fees
The first thing your student loans are intended to cover is your college tuition and fees. The average college tuition and fees for a private institution in the U.S. is $39,406 per year, according to the Education Data Initiative, while the average for a public, out-of-state school is $29,247 per year, and a public, in-state school is $9,872 per year.
2. Books and Supplies
Beyond tuition and fees, student loans can be used to purchase textbooks and supplies, such as notebooks and pens, and a backpack. You may be able to save money by purchasing used textbooks online or by renting textbooks instead of purchasing them.
3. Housing Costs
Your student loans can also be used to pay for housing costs, whether you live in a dormitory or off-campus. If you choose to live off-campus, you can put your loans toward your rent as well as related expenses, such as your utility bills.
Compare the costs of on-campus vs. off-campus housing, and consider getting a roommate to help cover the costs of living off-campus.
4. Transportation
If you have a car on campus or you need to take public transportation to get to school or an internship, you can use your student loans to pay for those costs. If you have a car, you may want to consider leaving it at home when you go away to school. Gas, maintenance, and a parking pass could end up costing much more than using public transportation and your school’s shuttle, which should be free.
5. Food
When it comes to using student loans for living expenses, food qualifies as a valid expense. That includes meals you cook yourself or your school’s meal plan. Instead of eating out or getting takeout frequently, you could save money by cooking at home, splitting food costs with a roommate, and asking if local establishments have discounts for college students.
6. Learning Technology
If you need to buy a laptop, personal computer, or software or your classes, or equipment like a camera if you’re studying photography, you can use student loans to purchase these items. You can also use your student loans to pay for Internet access.
7. Dependent Care
Are you a parent who’s going to school? Single and working parents may be able to use their student loans to cover child-care expenses when they’re in class. Not every school may allow this, however. You can only use student loans to pay for child care when it is considered an approved expense in your school’s cost of attendance budget. Check with your school’s financial aid office to find out for sure.
8. Professional Certification Fees
You may be able to use student loan funds to cover the costs of things like professional tests you might need to take, or licensing or certification you may need in your field for your program or degree.
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What Not to Use Student Loans For (7 Ineligible Expenses)
Now that you know what student loans can be used for, you’re likely wondering what they should not be used for. While your lender is probably not tracking your expenses, it’s not wise to use student loans for non-school related expenses. Remember, you will eventually have to pay this money back, with interest.
Here are seven expenses that should not be covered with funds from your student loans.
1. Entertainment
Going to movies and concerts are part of the college experience, but you should not use your student loans to pay for your entertainment. Your campus likely offers plenty of free and low-cost entertainment events, such as sports games and campus movie nights. You can also consider getting a job on campus to help pay for entertainment and fun.
2. Vacations
College can be a lot of work, and you deserve a vacation from the stress every once in a while. However, if you can’t afford to pay to go away for spring break or another type of trip out of your own pocket, then you should put it off. It’s never a good idea to use your student loans to cover these expenses.
3. Gym Membership
You may have belonged to a gym at home before you went to college and want to keep up your membership there. You can, as long as you don’t use your student loans to cover the cost. Many colleges and universities have a gym or fitness center on campus that is available to students and included in the price of tuition.
4. A New Car
Even if you need a new car, student loans cannot be used to buy a new vehicle. Consider taking public transportation instead.
5. Extra Food Costs
While you and your roommates may love pizza, it’s not a good idea to use your student loan money to cover the cost. You also shouldn’t dine out too much with your loan money. Stick to eating at home or in the dining hall, and only going out to eat occasionally with your own money.
6. Financial Speculation
Using your student loan money for financial activities like investing or starting a business is not a wise idea. These are not approved education expenses for one thing. For another, the investment or business might end up performing poorly and/or you could end up losing the money.
7. Non-Essential Shopping
Buying purchases for fun, like a trendy jacket or a new piece of tech like the latest smartwatch, are not necessary for your education and not considered school expenses. It’s not a good idea to use your student loans to cover a shopping spree
Student Loan Spending Rules
The amount of financial aid a student receives is based largely on each academic institution’s calculated cost of attendance, which may include factors like your financial need and your Student Aid Index, or SAI. Your cost of attendance minus your SAI generally helps determine how much need-based aid you’re eligible for. To determine how much non-need-based aid you may get (such as federal Direct Unsubsidized Loans, for instance), the school subtracts the financial aid you’ve already been awarded from the cost of attendance.
When you take out student loans, you sign a promissory note outlining what you’re supposed to be spending your loan money on. Those restrictions may vary depending on what kind of loan you received — federal or private, federal subsidized or unsubsidized. If the restrictions aren’t clear, it’s a good idea to ask your lender, “What can you use student loans for?”
Sometimes, students may end up with a student loan refund, which is what’s left after scholarships, grants, and loans are applied toward tuition, campus housing, fees, and other necessary charges. If you don’t need the refund for education-related expenses, it’s a good idea to send it back to your loan servicer. Just contact them and they’ll give you instructions for how to return the money. That way, you’ll have less to repay later, after you graduate.
Alternatives to Using Student Loans
Student loans help make college affordable, but you may not need to cover all of your tuition and living expenses with loans. Here are some alternative ideas to help fund your college education:
Work Part-time While in School
While working and attending college is not easy, it’s possible. According to one recent survey, almost 70% of students maintain a job while in school. Working is a way to pay for additional living expenses and potentially reduce your student loan debt and.
Apply for Scholarships
There are thousands of scholarships available for many different types of students — it’s just a matter of locating them. Putting in the time to find a scholarship, apply, and hopefully, get awarded, may save you thousands of dollars in tuition over the course of your college years.
Attend a Community College
One of the best ways to cut down on the cost of college and reduce your student loan debt is to choose a less expensive route, such as a community college or in-state institution. The average cost of community college is $3,973 per year for in-state students. You might consider taking the prerequisites you need at a local community college and then transferring to an in-state public university.
Refinancing Student Loans
If you’re interested in adjusting the terms of your student loans or securing a new interest rate, you may want to explore the option to refinance student loans. With refinancing, you trade your existing loans for a new loan from a private lender.
Refinancing may allow qualifying borrowers to secure a lower student loan refinancing rate or more favorable loan terms, which could potentially save them money over the long run.
A student loan refinancing calculator can help you determine if refinancing makes sense for you financially.
Some borrowers might be interested in combining refinancing with saving. With a flexible method like SmartStart refinancing for recent grads from SoFi, for instance, borrowers pay only the interest on their student loans for the first nine months, and they can put their extra money into a savings account or toward other expenses like rent.
There are different types of refinancing available, such as Parent Plus refinancing. Just be aware that whatever type of refinancing it may be, refinancing federal loans makes them ineligible for federal borrower benefits and protections, including federal deferment options and income-driven repayment plans. If you think you might need these benefits, refinancing probably isn’t the right choice for you.
The Takeaway
Student loans are meant to be used to pay for qualifying educational expenses such as tuition and fees, room and board, supplies, and transportation. Expenses like entertainment, vacations, and cars are not meant to be paid for with student loans.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
Can you use student loans for rent?
Yes, you can use student loans for rent while attending college. Student loans can be used to pay for your housing costs, including living off-campus in an apartment. In addition to rent, you can also use your student loans to pay for utilities.
Can I use my student loan for living expenses?
You can use your student loans for basic living expenses related to your education. This includes housing on-campus and off-campus; food such as your college meal plan or groceries; and transportation to and from school. You cannot use student loans for expenses like movie tickets, streaming services, vacations, or gym memberships.
What can student loans be used for?
Student loans can be used to pay for expenses related to your education, including tuition and fees, books and supplies such pens and notebook and backpack, technology such as a laptop, housing on-campus or off-campus, food such as a college meal plan or groceries for cooking at home, transportation to and from college or an internship program, and professional certification needed for a degree. Student loans may also be used to pay for child care while a working parent attends classes, if the school considers it an approved expense.
Are there restrictions on how student loans are spent?
Yes. When you take out student loans, you sign a promissory note outlining the terms and conditions of the loan, including what you can and can’t spend your loan money on. Student loans are meant to be used for essential education-related expenses, such as tuition and fees, room and board, and transportation to and from school. They are not meant to be used for things like entertainment, vacations and items that are not essential to your education.
Can I use student loans for off-campus housing or utilities?
Yes, you can use student loans to pay for off-campus housing costs like rent and utilities. These are considered housing expenses essential to your education.
About the author
Kylie Ora Lobell
Kylie Ora Lobell is a personal finance writer who covers topics such as credit cards, loans, investing, and budgeting. She has worked for major brands such as Mastercard and Visa, and her work has been featured by MoneyGeek, Slickdeals, TaxAct, and LegalZoom. Read full bio.
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