What Can You Use Student Loans For?

By Kylie Ora Lobell · June 23, 2023 · 7 minute read

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What Can You Use Student Loans For?

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 have access to additional student loan money, it doesn’t mean you should use it on nonessential living expenses.

By learning the answer to, “What can you use a student loan for?” you will make better use of your money and ensure you’re in a more stable financial situation post-graduation.

5 Things You Can Use Your Student Loans to Pay For

Here are five things you can spend your student loan funds on.

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 is $37,641 per year, while the average for a public, out-of-state school is $27,279 per year, and a public, in-state school is $9,377 per year.

2. Books and Supplies

Beyond tuition and fees, student loans can be used to purchase textbooks and supplies, such as a laptop, 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 be used to pay for your housing costs, whether you live in a dormitory or off-campus. If you live off-campus, you can put your loans toward paying for related expenses, such as your utility bill. 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, work, or your internships, 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

What else can you use student loans for? Food would qualify as a valid expense, whether you’re cooking meals at home or you’ve signed up for a meal plan. This doesn’t mean you should eat out at fancy restaurants all the time just because the money is there. Instead, you could save by cooking at home, splitting food costs with a roommate, and asking if local establishments have discounts for college students.

Recommended: 23 Tips on Saving Money Daily

5 Things Your Student Loans Should Not Cover

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 not tracking your expenses, it’s not wise to use student loans for non-school related expenses. You will eventually have to pay this money back, with interest.

Here are five expenses that should not be covered with funds from your student loans.

1. Entertainment

Going to the movies, concerts, and bowling are all 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, such as sports games and movie nights, to pursue instead. You can also consider getting a job on campus to help pay for entertainment and fun.

2. Vacations

College is draining, and you deserve a vacation from the stress every once in a while. However, if you can’t afford to go on spring break or another type of trip out of your own pocket, then you should put it off at this time. 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 you still want to keep up your membership there. You can, as long as you don’t use your student loans to cover it. Many colleges and universities have a gym or fitness center on campus that is available to students and included in the cost of tuition.

4. A New Car

Even if you need a new car, student loans cannot be used to buy a new set of wheels. Consider taking public transportation instead or buying a modest used car when you save up enough money.

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 that cost. You also shouldn’t take your family out to eat or dine out too much with that borrowed money. Stick to eating at home or in the dining hall, and only going out to eat every once in a while with your own money.

Student Loan Spending Rules

Your student loan refund — what’s left after your scholarships, grants, and loans are applied toward tuition, campus housing, fees, and other direct charges — isn’t money that’s meant to be spent willy-nilly. It’s meant for education-related expenses. If you don’t need the refund, it’s best to send it back to the loan servicer.

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 (formerly called the Expected Family Contribution, or EFC). Your cost of attendance minus your SAI generally helps determine how much need-based aid you’re eligible for. Eligibility for non-need-based financial aid is determined by subtracting all of the aid you’ve already received from your cost of attendance.

Recommended: What Is the Student Aid Index (SAI)?

Additionally, when you took out a student loan, you probably signed a promissory note that outlined 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, subsidized or unsubsidized. If the restrictions weren’t clear, it’s not a bad idea to ask your lender, “What can I use my student loan for?”

Alternatives to Using Student Loans

If you can’t pay for college on your own or you don’t have the luxury of someone paying for it for you, oftentimes you’ll have no choice but to rely on student loans to get you through. There’s nothing wrong with that; that’s what they’re there for! However, 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. Roughly 40% of full-time undergraduate students maintain a job while in school, with 10% of those students working full-time hours in addition to a full class load. Working is a great way to reduce your student loan debt and pay for additional living expenses.

Recommended: Am I Eligible for Work-Study?

Apply for Scholarships

There are thousands of scholarships available for many different types of students, it’s just a matter of finding them. Putting in the time to find a scholarship, apply, and get awarded can save you thousands in tuition over the course of your college experience.

Attend a Community College

The best way 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 $5,155 per year for in-state students. Consider taking your prerequisites at your community college and then transferring to your in-state public university.

Refinancing Student Loans

If you’re interested in adjusting loan terms or securing a new interest rate, you could consider refinancing your student loans. Refinancing can allow qualifying borrowers to secure a lower interest rate or more preferable terms, which could potentially save them money over the long run. Refinancing federal loans eliminates them from all federal borrower benefits and protections, including deferment options and the ability to pursue Public Service Loan Forgiveness, so it’s not the right choice for all borrowers.

The Takeaway

Student loans are intended to be used to pay for qualifying educational expenses such as tuition and fees, room and board, supplies, transportation, and food. Expenses like entertainment, vacations, cars, and fancy dinners cannot generally be paid for using student loans.

If you already have student loans and are looking to lower your monthly 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. And 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.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

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Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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