College students can pay living expenses with both federal and private student loans. This is a relief for many, since the cost of attendance includes much more than just tuition alone. Student loans can pay for rent, food, health care and even a computer, but it’s still important to borrow wisely. 

How paying for living expenses with student loans works

Colleges each have a Cost of Attendance (COA), where the financial aid office gives an estimate of what it will cost a student for the academic year. How much you are allowed to borrow will depend on your college’s cost of attendance and your expected family contribution (EFC).  

Your financial aid package is based on financial need, which is the difference between COA and EFC. Some types of loans, called need-based loans, are included in the financial aid package. Other types of loans, which are not based on financial need, are intended to help you pay for the EFC.  

What a college is going to cost you depends on whether you are enrolled full-time or part-time (number of credit hours), area of study and of course, the college you choose. For example, the cost of an in-state public college is often about a quarter to a third the cost of a private college.

Financial aid funds, including student loans, are paid to the college. That money is applied first to whatever you owe on tuition, fees and, if you’re living on campus, housing costs. 

If a credit balance remains, it will be “refunded” to you within two weeks. Depending on the college, the refund will be paid to you through a debit card, a check or a direct deposit to your bank account. You can then use the refund to pay for living expenses. 

Which expenses can I pay for with student loans?

It’s important to keep anything you’re paying for with student loans to a minimum. Live like a student while you are in school, so you don’t have to live like a student after you graduate. These are examples of essential items: 

  • Tuition, fees, textbooks, school supplies and course materials 
  • Rent
  • Utilities 
  • Insurance
  • Housing supplies 
  • Food 
  • Transportation 
  • Health care
  • Toiletries 
  • Professional testing, licensing and certifications
  • Study abroad costs 
  • Daycare for dependents 

Which expenses should I not pay for with student loans: 

Don’t pay for anything you don’t really need, including: 

  • Entertainment (Netflix, concert tickets, nights out with friends)
  • Clothes 
  • Vacations
  • Restaurants and bars 
  • Gifts for friends and family 
  • Overpaying on expensive rent or expensive furniture 
  • New electronics (other than a computer for college purposes)

Keeping your purchases to a minimum will prevent student loans from getting out of control

What to do now: 

Fill out the FAFSA to apply for financial aid and to reduce the amount of student loans you’ll need to borrow. 

Focus on free money first. Grants and scholarships are better than student loans since they don’t need to be repaid. Learn the secrets to winning a college scholarship to keep college costs low. 

Borrow federal student loans first, because federal student loans have low fixed interest rates and have flexible repayment plans. 

If you need to borrow private student loans, compare lenders to see which is the best for you. You want to consider loan terms and the interest rate. But also consider other loan features, such as College Ave, which offers flexible repayment terms, a cosigner release and controlled spending for parent loans. LendKey offers an opportunity to put student loans in forbearance during an economic hardship.

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