For many college students, student loans are a lifeline when it comes to covering the cost of education. With rising tuition costs and the cost of living increasing in most areas, it can be difficult to make ends meet with just a part-time job or financial aid package. But is it possible to use student loans for living expenses? And if so, what does this mean for your financial situation once you graduate?  

Most college students don’t have a lot of money to spare and that’s why it’s important to know what your options are when it comes to financing your education.   

A student loan for living expenses is a type of loan that can be used to cover the costs of housing, food, and other necessary expenses while you’re in school. This type of loan is different from a traditional student loan, which can only be used for educational expenses like books and tuition. As the cost of living is on the rise these additional student loans for covering living expenses are gaining popularity.  

It is also important to keep in mind that interest rates on student loans for housing and living expenses are typically higher than on traditional student loans. This is why we always advise you to shop around and compare rates before taking on this type of financial obligation. Repayment terms can also vary but most loans require repayment within 10 years.   

Can Student Loans Be Used to Finance Living Expenses?

Student loans can be used to finance living expenses while in school. However, there are a few things to keep in mind when doing so. First, remember that your loans will need to be repaid with interest after you graduate or leave school and this can trigger you to borrow more than you actually need. So, make sure you budget carefully so that you do not overspend and end up with more debt than you can handle. Second, consider other financial aid options such as grants or scholarships which do not need to be repaid.  

You can choose between a student loan for living expenses only or a more traditional student loan which can cover your books and tuition as well.  

If you are careful and budget wisely, using student loans to finance your living expenses can be a great way to pay for school. Just make sure you will be able to afford the payments after graduation.  

How to Use Student loans for Living Expenses

Student loans can be used for a variety of expenses, including room and board, transportation, and other miscellaneous costs. When it comes to living expenses, there are a few things you should know.  

First, your loan funds will be disbursed directly to your school. This means that you will need to contact your school’s financial aid office to determine how the funds will be applied to your account. Typically, the money will be applied to your tuition and fees first and then any remaining funds will be credited to your student account which you can use for other expenses. This of course applies to the loan that covers both.  

Second, you can get a living expense estimate and COA from your school. COA stands for cost of attending and it’s typically presented as the total cost for one school year. It factors in expenses like tuition and fees, living expenses, transportation costs, books, supplies, and more. 

How much you are eligible to receive in student loans is determined by your school’s cost of attendance which differs by school. You may also see that your COA is referred to as your student budget. This of course doesn’t mean that you need to max this out and borrow everything you can.  

Make sure you understand the terms of your loan and only borrow what you need as you will be responsible for repaying your student loans even if you do not complete your degree or are unable to find a job after graduation.  

And finally, don’t forget about scholarships and grants. This can be looked at as sort of a free money available to help pay for college but you have to search for it and apply early. Students who use loans responsibly and also take advantage of these opportunities typically have less debt when they graduate.  

Expenses for Which You Can Use Student Loans

As we already mentioned, you can use student loans to cover a variety of expenses, including tuition, room and board, books and supplies, and transportation.   

You can also use student loans for living expenses if you want to be off-campus or cover other costs such as child care, disability-related expenses, groceries, a laptop or computer, or to even study abroad.  

Technically, you’re supposed to only use student loan funds on qualified educational expenses, however, lenders rarely track how you spend the money, allowing some flexibility especially if you took out one of the private student loans for living expenses.  

Federal student loans for living expenses can have more strict guidelines for what you can use the money for, but they also have more favorable repayment terms. 

Expenses for Which You Can’t Use Student Loans

There are also some expenses for which you can’t use student loans or just shouldn’t. As a general rule, it’s best to avoid using student loan funds for anything unrelated to your education, such as:  

  • Vacations  
  • Cars  
  • Clothes  
  • Eating out  
  • Entertainment  

As tempting as all of these expenses probably are, they can make your spending significantly higher, and it’ll be hard to repay all the debt you accumulated. 

What Happens If You Don’t Use Your Student Loans Properly?

These loans are intended for educational expenses so using them for any extra costs that are just for pleasure can mean you are not using these funds properly.   

So, before you make a purchase using student loan money, ask yourself whether you truly need it to graduate. You definitely need a place to live, food to eat, and a way to get to school, but you might not need to spend huge amounts of money on entertainment, restaurant meals, or trips with friends.  

Even though financial aid offices don’t actively monitor your use of student loan funds, you could still get caught for misusing loan money. Although rare, a lender could terminate your loan agreement and demand the money back.  

Alternatives to Student Loans for Living Expenses

There are a few alternatives to student loans that can be used for living expenses. One option is to get a part-time job while you are in school. This can help you cover some of your costs and also give you some extra spending money.   

Another option is to look for scholarships and grants that can help with your expenses. You may also be able to get a loan from your parents or other family members to help with your living expenses.   

Finally, you can try to save up money before you start school so that you have some funds to cover the costs as you probably overlooked many of them while budgeting.  

Bottom Line

If you’re thinking of obtaining the best student loans for living expenses, it’s important to understand the risks and consequences they can have as well.   

Taking out loans to cover your cost of living can lead to higher overall borrowing costs and may put you at risk of default if you can’t keep up with your payments once you graduate.  

We advise you that you look into other financial options before taking out any student loans. And if you do need to take out loans, only borrow what is absolutely necessary. Be sure to carefully consider your repayment options before signing on the dotted line.  


But I must explain to you how all this mistaken idea of denouncing pleasure and praising pain was born and I will give you a complete account of the system, and expound the actual teachings of the great explorer of the truth, the master-builder of human happiness. No one rejects, dislikes, or avoids pleasure itself, because it is pleasure, but because those who do not know how to pursue pleasure rationally encounter consequences that are extremely painful.

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