Can you use your student loans for living expenses?


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There are a few certainties in life: death, taxes and the fact that the cost of education continues to rise.

Data The National Center for Education Statistics states that in 2019-2020, the average total cost of school attendance for full-time undergraduate students living on-campus in private four-year institutions was $ 53,200; in private non-profit institutions it was $ 35,100 and for public institutions the cost was $ 25,500.

As a result, the country’s student loan debt is huge: 43.2 million student borrowers are in debt on average of $ 39,351 each. Statistics show that nationally, 43% of students report having student debt and 65% graduates with student debt. Reports. The same report states that 52% of students who had taken on student debt did not think it was worth it.

With so many Americans taking on huge debt and regretting it, it’s worth taking the time to consider if there is a more affordable way to pay for your education. And what exactly do student loans cover? It is understood that students use them to pay for tuition, textbooks and other school materials. But can you use student loans for living expenses and other non-study costs? And should you?

Select spoke with financial experts to find out more.

How student loans are allocated

When applying for student loans, you can choose to apply for federal loans or private loans. When you apply for either type of loan and are approved, there is a repayment process. Typically, your lender will disperse the funds to cover your tuition and school fees (usually through the financial aid office). Once your college expenses are met, the financial aid office will send you the remaining balance to spend on things like living expenses, food, books, or personal expenses.

Typically, student loans are disbursed twice, in two annual installments, one per semester.

“Once the money arrives in your account, you are responsible for how you use it,” explains Leslie Tayne, a lawyer specializing in student loan debt.

What can you use your student loan funds for?

Here are the typical expenses that university students have to cover and that you can pay with student loans:

1. Tuition and fees

According to, for the 2020-21 academic year, the average course prices and fees is:

  • $ 37,650 in private colleges
  • $ 10,560 at public colleges (state residents)
  • $ 27,020 at public colleges (out-of-state residents)

2. Room and board

Prices vary by school and city, but indicates that for the 2020-21 school year, the average room and board costs are

  • $ 13,120 in private colleges
  • $ 11,620 in public colleges

3. Books, laptop and supplies

The board says the annual cost of books and supplies for a four-year public college is about $ 1,300. The costs are probably a little higher at private colleges.

4. Personal expenses

These can include your cell phone bill, tutoring services, laundry, club fees, internet, transportation, streaming fees, and all other entertainment.

Should you use the funds for living expenses?

Students can certainly use student loan funds to cover living expenses, says John Li, co-founder of Fig loansbecause they are part of the school attendance equation. “You need to be able to get to school while living nearby, pay essential bills and have transportation available,” he says.

To maximize use for tuition, textbooks, and other school uses, Li recommends that students find the cheapest possible living options while they are in school to minimize the need to maximize their loans. . “Having a few roommates can save you thousands of dollars a year. And while budgeting may seem foreign to young people in the real world for the first time, it becomes all too real once you work full time and try to make some money. your monthly loan payments, ”he adds.

Just because you can use student loan funds to cover living expenses doesn’t mean you should, says Tayne. “The cost of attending your classes is inherently high, so when you add funding for your living expenses on top of that, debt can add up quickly,” she says.

However, using student loan money to pay for your daily expenses may be better than using a credit card, she argues, because the interest rate is often lower. “If you can cover at least some of these costs in cash, you’ll be in better financial shape when you graduate,” Tayne continues.

Consider working part-time or taking a freelance job here and there to reduce the amount you have to borrow, she says. “Remember, every dollar you borrow now has to be paid back in the future,” says Tayne.

What should you not be spending the funds on?

“You shouldn’t use your student loans to pay for travel, nightlife, or concert tickets,” Li said. “That said, most lenders won’t monitor your spending. However, I would like to warn students of think very carefully about whether the money spent for fun is now worth paying it back in full plus interest for the next few years after graduation. “

Consider a 0% APR credit card for a laptop, textbooks, and more

Some students might benefit from using a 0% introductory APR credit card to pay for expensive purchases like a laptop or textbooks.

“Taking advantage of introductory offers, such as 0% interest rates, is one way to use credit as a financial tool,” says Rod Griffin, senior director of consumer education and advocacy at Experian.

But as with any credit decision, it’s important to understand the terms you agree to. These so-called “teaser rates” typically expire after a specified period of time, Griffin explains.

“When using an introductory rate offer, it’s critical that you have a plan to pay off the card before you have to pay interest,” he explains.

With the right plan in place, using a credit card to cover expenses you know you can pay off can be a useful way to build up credit and lower your student loan bill when you get your loan. diploma, Griffin explains.

Another benefit of responsible use of credit cards is that it can help students build their credit history for future purchases like a car or mortgage.

There are a number of student credit cards that offer an introductory 0% APR, including the Discover it® Cash Back for Students and Bank of America® Travel Rewards for Students. If you need a longer introductory period, consider the American Bank Visa Platinum Card.

Discover it® Cash Back for Students

On the secure Discover site

  • Awards

    Earn 5% cash back on your daily purchases at various locations each quarter like, grocery stores, restaurants, gas stations and when you pay with PayPal, up to the quarterly maximum when you activate. Plus, get unlimited 1% cash back on all other purchases – automatically.

  • Welcome bonus

    Discover will match all of the cash back rewards you’ve earned at the end of your first year

  • Annual subscription

  • Intro APR

    0% for 6 months on purchases

  • Regular APR

  • Balance transfer fees

    3% introductory balance transfer fee, up to 5% fee on future balance transfers (see conditions) *

  • Foreign transaction fees

  • Credit needed

Bank of America® Travel Rewards for Students

  • Awards

    1.5 unlimited points for every $ 1 spent on all purchases

  • Welcome bonus

    25,000 bonus points after spending at least $ 1,000 on purchases within the first 90 days of account opening, which can be redeemed for a $ 250 credit on the statement for qualifying travel purchases

  • Annual subscription

  • Intro APR

    0% APR for the first 12 billing cycles on purchases

  • Regular APR

    13.99% to 23.99% variable

  • Balance transfer fees

    Either $ 10 or 3%, whichever is greater

  • Foreign transaction fees

  • Credit needed

American bank Visa® Platinum card

On the secure site of US Bank

  • Awards

  • Welcome bonus

  • Annual subscription

  • Intro APR

    0% for the first 20 billing cycles on balance transfers and purchases

  • Regular APR

  • Balance transfer fees

    Either 3% of the amount of each transfer or $ 5 minimum, whichever is greater

  • Foreign transaction fees

  • Credit needed

Many students like a pro or con checklist to help make decisions

If you’re struggling to decide whether you want to take out more loans to cover your living expenses, Tayne recommends that you make a list of pros and cons.

The benefits of using student loans to cover living expenses include:

  • Likely cheaper than using a credit card due to lower interest rates
  • Financing is easy to get, even with bad credit
  • One-off funding for school and personal costs

The disadvantages of using student loans to cover living expenses include:

  • Increase in student loan balance that will increase due to compound interest
  • The temptation to blow up your budget and spend on non-essentials

At the end of the line

When you take out student loans, the money is yours to meet your educational needs. Once your tuition, room, and board are covered, it’s up to you to decide how to spend them. However, since you have to repay these funds with interest, experts recommend that you be careful with your spending choices.

They suggest you live with a roommate, find a part-time job, and research other ways to pay your expenses, like a 0% APR credit card. The consensus of the experts is to be judicious in your spending decisions so that you don’t get overwhelmed with paying a lot of debt once you finish college.

For prices and fees for Discover it® Student Cash Back, click here

Bank of America® Student Travel Rewards information was independently collected by Select and was not reviewed or provided by the card issuer prior to posting.

Editorial note: Any opinions, analysis, criticism or recommendations expressed in this article are the sole responsibility of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.


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