As a student, figuring out the wisest way to use college loans is tricky. You want to borrow enough to pay for college and focus on your studies, but it can be hard to know where to draw the line.
Can you borrow to pay for a new computer? What about your internet bill? Some students even report using student loan funds to pay for alcohol (2.5%) or vacations (2.8%), according to our survey.
You don’t have to wonder, though, because there are clear rules about how students can (and can’t) use college loans. Alcohol and road trips don’t make the list, but you might be surprised by what does.
7 costs you can pay for with college loans
Usually, student loans can be used to pay for any expense that’s part of your cost of attendance. This is also the figure colleges and lenders use to determine your school expenses and how much you’re allowed to borrow.
In fact, student lenders contact your college to certify your cost of attendance and will let you borrow only up to that amount.
Lenders will disburse these funds to your college, and they’ll be applied to any outstanding charges on your student account. The remaining funds are then given to you, and you can use them for any number of costs related to your education.
Some uses for these loan funds are obvious, such as tuition and fees. But others aren’t. Here are some other things you might not know you could pay for with college loans.
1. Room and board
Full-time students can use student loans to pay for basic living expenses, including rent, utilities, and food. Most colleges set their cost of attendance to include “reasonable expenses” for your specific living arrangements and your area’s cost of living, according to the Office of Federal Student Aid.
For students living on campus, these estimates are based on the college’s own pricing for campus dorms and college meal plans. For students living off campus, these estimates should reflect market rates on groceries, rent, and utilities.
College loans also can be used for transportation costs related to commuting to and from classes. For example, you can use student loan funds to cover expenses such as gas, car insurance, on-campus parking permits, or fare for public transportation.
3. School computer or other equipment
You probably already know you can use student loans to pay for textbooks. But you also can use student loan funds to pay for other necessary educational equipment and supplies, including a personal laptop or computer to use for your studies.
Other items on the list include study aids and supplies specific to a class, such as paint for an art class or a graphing calculator for a calculus course. This list could even include computer software or apps you use, from word processing to advanced coding and computing.
4. Travel costs for study abroad
Want to use college loans to travel? You won’t be allowed to borrow for an epic spring break, but you could use student loans for an eligible study abroad program.
If you enroll in a credit-granting study abroad program approved by your college, all the costs related to that program can be covered with student loans. Those costs include the tuition for your credits earned, of course, but also the lodging and transportation expenses related to your trip.
5. Child or dependent care
For caregivers and parents headed back to school, one of the biggest challenges can be finding time to devote to your studies.
Student loans can help cover the costs of child care or other dependent care, including any care provided so you can attend class, commute to campus, study, work on assignments, and complete internships. Your college will estimate what you can borrow for child care based on reasonable expenses for your area.
6. Accommodations for student disabilities
Students with disabilities can use their student loan funds to cover the costs of the accommodations and support they need to attend and succeed in college.
These costs can include specialized equipment, a personal aide or tutor, transportation, and other services and supplies that are “reasonably incurred.” Note that you can’t borrow to cover any expenses already paid for by another agency.
7. College loan fees
Lastly, there’s the cost of borrowing itself. All federal student loans and many private student loans charge a student loan origination fee.
This fee is usually a percentage of the loan amount, and it’s withheld from funds before they’re disbursed. A 2% fee on a $5,000 loan, for example, would be $100, and the remaining $4,900 would be paid out to you.
Of course, since the fee is automatically withheld, you have to pay for it with college loans. The good news is your cost of attendance will be adjusted accordingly.
What if I have leftover student loan funds?
Did you accidentally borrow too much? Perhaps you took out a loan before a scholarship went through. Or maybe your costs ended up being lower than you expected. That’s great news, but you might be wondering what to do with any leftover loan funds.
You can use the funds for your next enrollment period, and that might be the easiest way to manage the money. But you also can return unused student loan funds to cancel out that portion of your debt.
If you decide to return the funds within 120 days, you might be able to get that portion of the loan canceled outright. If it’s been more than 120 days, you can repay the funds to the lender to lower your balance. Talk to your financial aid office for help returning student loan funds.
Whether you’re borrowing federal or private college loans, most of the same rules for how you’re permitted to use the funds will apply. Knowing what you can use your student loans for can help you more effectively manage costs.
Need a student loan?Here are our top student loan lenders of 2019!
|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 2/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.23% – 13.23%1||Undergraduate and Graduate|
|4.20% – 11.44%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.50% – 10.11%*,4||Undergraduate and Graduate|
|4.25% – 13.25%5||Undergraduate and Graduate|
|5.85% – 6.99%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.45% – 12.42%8||Undergraduate, Graduate, and Parents|