Student loans 14 February 2023

Can You Use Student Loans for Living Expenses?

After deducting tuition and room and board from the student loan, you may use the leftover amount on eligible living expenses as they are generally a part of your total certified cost of attendance. Some of the expenses included are housing, rent, books and supplies, transportation, and groceries.

Student loans for living expenses

You can use student loans to cover all college costs including tuition and related living expenses.

Every college calculates the cost of attendance (COA) or different types of students yearly and is the maximum that students can borrow in loans that year. The total cost of attendance generally includes tuition cost, housing, rent, room and board, books and supplies, and transportation. Necessary personal expenses like groceries and toiletries are also generally accounted for and are all covered by most student loans.

When you apply for any student loan, the amount is disbursed directly to your college which deducts your tuition costs, and room and board for on-campus students. The remaining funds are then generally distributed to the student who may use them to cover their school-certified living expenses.

What Can Student Loans Be Used For?

You may use student loans on:

  • Tuition and fees
  • Room and board
  • Books and supplies for college
  • College-related equipment
  • Housing and rent
  • Housing supplies and utilities
  • Transportation – including trains, busses, tolls, and gas
  • Groceries
  • Child care
  • Professional certifications or licenses
  • Study abroad program costs
  • Personal miscellaneous expenses like toiletries and medication

What You Shouldn’t Spend Student Loans On?

It is best to avoid paying for the following expenses using student loans:

  • Expensive clothes
  • Vacations
  • Restaurants and expensive meals
  • New car
  • Home or vehicle repairs
  • Down payment or home mortgage
  • Paying off a car loan or other debt
  • Expensive electronics
  • Business expenses
  • Entertainment
  • Paying off other’s educational expenses
  • Any other luxuries

What Expenses are Eligible for Federal Student Loans?

The federal aid that a student is eligible for is equal to their financial need which is the college’s Cost of Attendance (COA) minus their Expected Family Contribution (EFC). The government also considers a student’s living expenses when calculating the financial need.

Along with tuition, the living expenses included in calculating the total COA of a student are room and board, housing and rent for off-campus students, commuting, books and supplies, child care, and miscellaneous personal expenses. From the total, your EFC is deducted which may include factors like your income, your parent’s income, family size, and related demographic factors.

However, the aid you receive may be less than the financial need that was calculated and may not be enough to cover all of the certified living expenses included in calculating the COA. In such a case you can take the help of grants and scholarships to close the gap in funding. After fully exhausting all your federal options and other opportunities, if you need to you can get a private student loan to pay for any school-certified expense you were not able to cover with the aid previously received.

How are student loans disbursed?

So you’ve applied for and had your student loans approved, now what? The loan amount does not come directly to your bank account, instead, it’s sent to the financial office of your school. They will then apply the funds to pay for your tuition, fees, room and board, and other school-related expenses. If there is any money left over, this will then be sent to your bank account and you can use it for living expenses. Make sure that you’re aware of what you may and may not use the funds for – you could be penalized if you misuse them for unnecessary expenses. Also, don’t go over budget!

What Happens If You Misuse Student Loan Funds?

It’s unlikely that your lender will look into what you’re using the money for, but if they should, and they find you’re misusing your funds, your loan could be canceled. You may also have to repay immediately everything that you have already used. Moreover, the lender might disqualify you from borrowing in the future too.

Even if the lender does not find out, you can face other consequences for misusing your federal and private student loan funds. If you do not use your loan wisely, you might run out of money and need to borrow more which will increase your debt and make it harder to repay. It might lead you to miss payments or default on your loan completely which will affect your whole financial future and may have legal consequences too.

Best Student Loans That Cover Living Expenses

The following student loans can help cover the full cost of attendance including tuition and the school-certified living expenses.

LenderScholaroo ratingFixed rates starting (APR)Variable rates starting (APR)

Sallie Mae

Best for students enrolled less than half-time

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5/54.50%6.37%

College Ave

Best repayment terms

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4.8/54.59%5.49%

Earnest

Best for a rate match

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4/5 4.42%5.32%

Ascent

Best for international students

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4.8/54.48%6.03%

SoFi

Best for reward points

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4.5/54.44%5.99%

Citizens Bank

Best for multi-year approval

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3.9/54.43%5.80%

Mefa

Best for an instant decision

Visit website
3.5/55.35%n/a
Lender

Sallie Mae

Best for students enrolled less than half-time

Scholaroo rating
5/5
Fixed rates starting (APR)
4.50%
Variable rates starting (APR)
6.37%
Visit website
Lender

College Ave

Best repayment terms

Scholaroo rating
4.8/5
Fixed rates starting (APR)
4.59%
Variable rates starting (APR)
5.49%
Visit website
Lender

Earnest

Best for a rate match

Scholaroo rating
4/5
Fixed rates starting (APR)
4.42%
Variable rates starting (APR)
5.32%
Visit website
Lender

Ascent

Best for international students

Scholaroo rating
4.8/5
Fixed rates starting (APR)
4.48%
Variable rates starting (APR)
6.03%
Visit website
Lender

SoFi

Best for reward points

Scholaroo rating
4.5/5
Fixed rates starting (APR)
4.44%
Variable rates starting (APR)
5.99%
Visit website
Lender

Citizens Bank

Best for multi-year approval

Scholaroo rating
3.9/5
Fixed rates starting (APR)
4.43%
Variable rates starting (APR)
5.80%
Visit website
Lender

Mefa

Best for an instant decision

Scholaroo rating
3.5/5
Fixed rates starting (APR)
5.35%
Variable rates starting (APR)
n/a
Visit website

#1 Sallie Mae

Best for students enrolled less than half-time

Apply now

Sallie Mae

5
Scholaroo Rating
Fixed Rates Starting (APR)4.50%
Variable Rates Starting (APR) 6.37%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Where a lot of the student loan lenders only provide loans to students who are enrolled at least half-time, Sallie Mae also caters to students who are enrolled for less. Sallie Mae not only lends to degree-seeking students but to other students too. It is, therefore, the best loan to cover the full cost of attendance, including school-certified living expenses, for students who are doing career training, short certificates, and diplomas. Your total cost of attendance may include expenses like books, meals, housing, and transportation along with the tuition fees.

Sallie Mae loans do not have any origination or prepayment penalty fees attached and they also provide an autopay discount that can help lower the interest rates you can get. Moreover, its multiple repayment options can help people choose the suitable one and pay back conveniently. They do have a minimum credit requirement on their loans which is why many students may need to cosign the loan with a creditworthy cosigner. After 12 continuous and on-time payments, students can apply for a cosigner release.

Pros

  • Students enrolled less than half-time are eligible
  • Trade school students are eligible
  • Can cover 100% of your school's cost of attendance
  • No prepayment penalty and no origination fees
  • Multiple repayment options

Cons

  • Only credit-based loans
  • No multi-year approval
  • A strong credit score in the mid-600s
  • Employment history
  • Must be a U.S citizen or permanent resident
  • Have a permanent U.S. address
  • Have a Social Security Number
  • Must have no open bankruptcies

Sallie Mae offers three repayment options for their private student loans while you’re in school:

  • Deferred payments while in school (and during the grace period)
  • Fixed monthly payments of $25 while in school (and during the grace period)
  • Interest-only payment while in school (and during the grace period)

There are also some repayment programs available if you’re struggling financially:

  • In-School Payment Assistance – temporarily postpone payments while in school
  • The Graduated Repayment Period (GRP) – make interest-only payments for 12 months after school

#2 College Ave

College Ave has the best repayment terms

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College Ave

4.8
Scholaroo Rating
Fixed Rates Starting (APR)4.59%
Variable Rates Starting (APR)5.49%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

College Avenue claims to cover 100% of your cost of attendance which includes tuition fees, books and supplies, housing, transportation, and other college-related living expenditures. Since they offer tailored private student loans and refinancing options to their borrowers, you can even just borrow the amount needed to cover the gap between tuition costs and other education-related expenses if you do not require the full funding. However, the expenses will need to be school-certified for loan approval. They also allow loans for summer school that can help you graduate earlier.

They have multiple flexible repayment options that borrowers can choose from including Full Principal & Interest Payment while in school, Interest Only Payment in school, Flat Payment in school, and Deferred Payment. Moreover, they have flexible repayment terms of up to 15 years.

Moreover, College Ave offers multi-year approval, summer school loans, and loans to international students with an eligible cosigner. Students can apply for a cosigner release upon meeting the conditions necessary. Students are, however, required to maintain a Satisfactory Academic Progress (SAP) for the loan.

Pros

  • Offers multi-year approval
  • Offer summer school loans
  • Can borrow up to the total cost of expenses including college-related living expenses
  • Part-time college students are eligible
  • International students are eligible with a U.S. cosigner
  • Cosigner release available

Cons

  • Requires a cosigner if the borrower has bad credit
  • Students need to maintain a Satisfactory Academic Progress (SAP)
  • Should be a U.S. citizen or permanent resident
  • Must be at least 16 years old (18 years for refinancing loans)
  • Must be attending at least part-time an accredited college or university
  • Must have a social security number
  • Must meet the satisfactory academic progress (SAP)
  • International students may apply with a U.S. citizen or permanent resident cosigner

CollegeAve has four repayment options available while in school:

  • Deferred payments while in school and up to six months after graduation
  • Flat $25 monthly payments during school and up to six months after graduation
  • Interest-only payments while in school and up to six months after graduation
  • Repay the full amount during school

Deferred payments will lead to a higher overall cost while full repayments in school lead to the lowest total cost.

#3 Earnest

Best for a rate match

Apply now

Earnest

4
Scholaroo Rating
Fixed Rates Starting (APR)4.42%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Earnest, founded in 2013, is one the leading student loan lenders providing great customer service and the best rates. They have a 100% Rate Match Guarantee under which they will match rates from any competitor and upon finalization, also give you a $100 Amazon gift card.

Earnest loans can cover up to the full cost of attendance for undergraduates and graduate students. They also have degree-specific loans including MBA loans, medical loans, and loans for students studying Law.

Their simple and transparent application process helps borrowers to know exactly what they are eligible for and apply for the loan in minutes. You can also prequalify for the loan without a hard credit inquiry. In case there is confusion while applying, you can apply over the phone and the representative can guide you through the process for the best experience.

Earnest loans to only degree-seeking students and requires the borrower to have a good credit score. Most students do not have good credit and, therefore, they have to apply with a credit-worthy cosigner. Moreover, Earnest does not lend to Nevada students.

Pros

  • Offers 100% Rate Match Guarantee
  • Great customer service
  • Quick online eligibility check without a hard credit check
  • Nine-month grace period
  • No fees
  • Multiple repayment options and flexible terms

Cons

  • Only available to students pursuing a Bachelor’s or Graduate degree
  • Nevada students are not eligible
  • Requires a minimum credit score of 650
  • A minimum credit score of 650
  • Student or cosigner must earn at least $35,000 per year
  • Three years’ worth of credit history
  • Full-time enrollment at an accredited college or university

Earnest offers a number of repayment options, including an extended-term program. Here are the options:

  • Deferred payment while in school with a nine-month grace period after graduation
  • Interest-only payments while in school with full payments after graduation
  • Fixed $25 monthly payments while in school with full payments after graduation
  • Full payments while in school
  • An extended-term option where you pay reduced principal and interest payments over a longer period (maximum term of 30 years)

#4 Ascent

Ascent is best for international students

Apply now

Ascent

4.8
Scholaroo Rating
Fixed Rates Starting (APR)4.48%
Variable Rates Starting (APR)6.03%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Founded in 2015, Ascent is an online lender that offers private student loans to undergraduate and graduate students. The loans they provide are primarily to cover the tuition costs, but you can use the surplus to pay for college-related living expenses like room and board, housing, rent, transportation, etc.

They have loans for everybody that include non-cosigned credit-based loans, cosigned credit-based loans, non-cosigned outcome-based loans, and cosigned student loans for international students. Ascent is actually one of the very few lenders that lend to international students in the U.S.

High-performing students who are unable to find a cosigner can also benefit from borrowing from Ascent as their outcome-based loans do not require a minimum credit but are based on merit. It requires the borrower to meet their school’s Satisfactory Academic Performance (SAP) and maintain a GPA of 3.0 at the minimum.

Pros

  • International students are eligible
  • Allows 9 months grace period
  • They offer non-cosigned loans based on academic performance
  • Two years of financial hardship forbearance
  • Earn $525 upon referring a friend
  • 1% cash back graduation reward
  • No application, origination, or disbursement fees

Cons

  • Not all schools are eligible
  • Be a U.S. citizen, permanent resident, Deferred Action for Childhood Arrivals (DACA), or international student
  • Must be at least 18 years old
  • Must be at least a part-time student
  • Student or cosigner must have at least two years of employment history
  • Student or cosigner must earn at least $24,000 per year

Ascent offers three repayment terms for their private student loans:

  • Deferred payment while in school with a nine-month grace period after graduation
  • Fixed $25 monthly payments while in school and during the nine-month grace period
  • Interest-only payments while in school and during the nine-month grace period

#5 SoFi

Best for reward points

Apply now

SoFi

4.5
Scholaroo Rating
Fixed Rates Starting (APR)4.44%
Variable Rates Starting (APR)5.99%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

SoFi launched its private student loans program in 2019. Their loans can cover all of the school’s certified costs and education-related personal expenses.

What makes SoFi loans unique is the reward points they offer to their member borrowers. Upon carrying out various activities like checking your credit score or using their app, SoFi awards you with points. These points can go directly towards your student loan to help pay it down or can be redeemed as cash too. Borrowers are also eligible for a 0.25% reduction in rates when they sign up for automatic payments.

Returning borrowers for second and subsequent private student loans with the same cosigner can get an additional 0.125% discount on the rates, and getting a rate quote takes as little as 3 minutes. This lender has a No Fees policy that makes the loan much cheaper than many of its alternatives. Students can apply with a cosigner if they are unable to meet the credit requirements and after 24 consecutive on-time payments, they can apply for a cosigner release.

Pros

  • Part-time students are eligible
  • Career coaching through the member benefits program
  • Loans available for summer semesters
  • No origination or late payment fees
  • Returning borrowers’ discount of 0.125%
  • Cosigner release available after 24 consecutive on-time payments

Cons

  • Credit-based loans
  • Requires a higher credit score for loan refinancing
  • Must have U.S citizenship, be a permanent resident, or visa holder
  • Must be enrolled in a degree program
  • A minimum credit score of 650

With SoFi there are four repayment options on private student loans, including a deferred option where you only start paying six months after you leave school:

  • Monthly minimum payment of $25 while in school
  • Interest-only payment option while in school
  • Full principal and interest payments while in school
  • Deferred payments while in school (including the first six months after graduation)

#6 Citizens Bank

Best for multi-year approval

Apply now

Citizens Bank

3.9
Scholaroo Rating
Fixed Rates Starting (APR)4.43%
Variable Rates Starting (APR)5.80%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

Citizens Bank is one of the largest and most experienced lenders in the U.S. They offer private loans and refinance loans to undergraduates, graduates, and parents.

The best thing about Citizens Bank loans is that they offer multi-year approvals that enable students to fund their four-year stay in college with only one application. This saves quite a lot of time and stress of applying over and over again.

Moreover, they allow prequalification with a soft credit check and you can borrow up to the total cost of attendance that does not only include the tuition costs but can also cover books, supplies, room and board, and any other education-related living expenses. You can also get a 0.25% rate discount by signing up for auto-pay and an additional 0.25% rate reduction as a loyalty discount. Citizens Bank charges no origination fees, application fees, or prepayment penalty.

Pros

  • Multiyear approvals
  • Loyalty and autopay discounts on interest rates
  • Cosigners are optional
  • Can borrow up to the total cost of attendance
  • Multiple repayment options
  • Flexible co-signer release terms

Cons

  • Students enrolled in two-year schools, community colleges, and for-profit schools are ineligible
  • A 5% late payment fee applies
  • Must have a minimum annual income of $12,000 ($24,000 for refinancing loans)
  • Must have a reasonably strong credit score (typical approvals are done for borrowers with a score of at least 740)
  • Must be at least 18 years old
  • Must be a U.S. citizen, permanent resident, or international student

Citizens Bank offers three repayment options:

  • Immediate option, repayment starts as soon as the funds are disbursed
  • Interest-only payments while in school (including the first six months after graduation)
  • Deferred payments while in school (including the first six months after graduation)

There are some perks and discounts, including a loyalty discount of 0.25% on your interest rate if you or a co-signer is a Citizens Bank customer (note that this only applies to borrowers in some states). You can also get a 0.25% discount on your interest rate if you set up AutoPay.

#7 MEFA

Best for an instant decision

Apply now

MEFA

3.5
Scholaroo Rating
Fixed Rates Starting (APR) 5.35%
Why We Like ItPros and ConsEligibility RequirementsRepayment Terms

MEFA, or Massachusetts Educational Financing Authority, has been around since 1982 and is quite experienced in providing some of the best and affordable financial products to individuals. They specifically mention on their website that you can use their loans to pay for living expenses such as off-campus housing, as long as it is a part of the school’s certified cost of attendance. This makes them a great choice for students looking for loans to cover tuition and as well as other living expenses while in college.

They provide private student loans to both undergraduate and graduate students along with an option to refinance existing loans. MEFA has a convenient and easy online application process and you get an instant decision after submitting a complete application on their website. Moreover, MEFA offers 5 different repayment options, which is higher than what most competitors offer. For their deferred loan repayment option, borrowers can enjoy a stress-free deferral period of up to 60 months.

However, international students are not eligible for this loan and there is no multi-year approval available.

Pros

  • No origination or application fees
  • No prepayment penalties
  • Instant application decision
  • Offers 5 different repayment options
  • Deferred loans can have a deferral period of up to 60 months
  • Cosigner release is available

Cons

  • Student have to reapply for a loan every year
  • International students are ineligible
  • No interest rate or automatic payment discounts
  • Must be a U.S. citizen or permanent resident
  • Must maintain a good academic process
  • Must be enrolled at a not-for-profit college or university

MEFA offers repayment terms of up to 15 years, which include the following:

  • Interest-only payments while in school, starting 28 days after loan disbursement 
  • Immediate payment starting 28 days after loan disbursement
  • Deferred option while in school, with a six-month grace period after graduation

How to minimize your expenses

On top of your college expenses and student loans, living expenses are another financial burden. They are unavoidable but there are steps you can take to minimize your living expenses. Here are a few tips for students:

  • Set up a monthly budget so you know how much you can have to spend every month. Include all your expenses including things like entertainment and eating out. While it’s advisable to avoid eating out nad going out too often, you don’t want to just stay home all the time. Just stick to your budget and be reasonable about how often you go out.
  • Look for less-expensive alternatives – in other words, shop around. You may need something for school, such as a textbook, but that doesn’t mean you have to take the first and most expensive offer. Shop for second-hand items, or find it on sale – just make sure you’re taking the time to get a more affordable option.
  • If you need to live off-campus, look for the more affordable option. Run the numbers and make sure wherever you stay you won’t break the bank renting.
  • You don’t have to spend everything you have. You may be approved or a large loan amount, and while you likely do need most of it, there’s a good chance that you don’t need to spend all of it. The more you spend, the more you’ll need to repay so try and keep the overall loan amount as low as you can.

Other Ways to Pay for Living Expenses

After deducting your tuition, and room and board, you can use the leftover loan amount on eligible living expenses; however, you can also return it or part of it and fund your expenses using other available options.  This is because the alternatives to a loan generally include options that do not need to be repaid and won’t increase your debt more than it already is. The following are a few options to consider:

  • Scholarships and Grants: Students can apply for multiple scholarships and grants that can help pay for their school-related living expenses. Unlike loans, these are financial gifts or awards that are not required to be paid back. Therefore, if you are able to get a scholarship, it’s best to use that money to pay for the eligible living expenses rather than using loans to keep the overall debt lower.
  • Part-time job: Working on weekends, during school breaks, or in between classes can help generate some income that students can use to cover their living expenses instead of student loans. Unlike student loans, there would be no limitation on where you spend the money you earn also. However. It would be best to budget and spend first on the expenses necessary.
  • Ask your parents: Ask your parents if they can help you with some of the living expenses related to college like related equipment and supplies. You can also tap into your own savings if you have any to avoid taking on further debt in the form of loans. The less you borrow in loans, the easier it would be to pay it off later.

FAQS

Can I get a student loan to cover living expenses?

Yes, excess funds from your student loan can be used for living expenses. Generally, they can pay for school-related expenses such as books, supplies, and room and board. They can also be used to cover living costs such as housing, food, and transportation while in school.

What expenses can student loans be put towards?

You can use student loans on college-related living expenses like room and board, books and supplies, housing and rent, supplies and utilities, groceries, transportation, and personal miscellaneous expenses like toiletries.

What are the best student loans to use for living expenses?

Although federal student loans generally offer the most competitive interest rates, there are many private student loans that you may use for living expenses. Top lenders with the best rates and repayment terms include Sallie Mae, College Ave, and Earnest.

Do federal loans cover student living expenses?

Federal student loans cover both tuition and living expenses, including rent, housing utilities, groceries, and personal hygiene items. Living expenses are part of your school’s cost of attention, which FAFSA uses to determine how much aid you should receive.