The Right Way to Use Student Loans for Living Expenses

student loans for living expenses

There’s a very good reason you get a student loan refund after all of your direct costs are covered, and it has nothing to do with making sure you have free money to play with.

Unfortunately, that’s how many college students treat the student loan disbursement they receive after tuition and other direct costs are covered. Instead of using student loans for living expenses related to school, they spend it on things they don’t need.

What’s worse, they pay dearly for it later when it comes time to make payments on student loan debt. Don’t make that mistake.

How to use student loans for living expenses

Cheap housing

If you live in the dorm, you don’t have to worry about this expense. It’s considered a direct cost and is covered by your student loan before you receive your disbursement.

But if you’re living off-campus, it’s your responsibility to find and pay for housing yourself. Use your student loan refund for this, but keep it simple. You don’t need to live in an expensive apartment to live in a decent neighborhood. Cut the cost even more by getting yourself a roommate or two.

Minimal food allowance

If you’re living off-campus, you don’t have cafeteria meals to rely on. In that case, the best way to eat on the cheap is to cook for yourself. If you don’t know how, learn.

There’s no shortage of cheap and easy recipes for college students online. Use your student loan for living expenses at the grocery store, not at restaurants.


Unless you live on campus or within walking or biking distance, you’re going to need a way to pay for transportation. At a minimum, take the bus or subway. If you have a car, keep gas in it and cover the cost of car maintenance and repairs.

Books and supplies

The only way you want to cut corners when it comes to books and supplies is shopping around for the best deal, which you won’t find at the campus bookstore. The better bet is to look for used books online. Amazon is always a good place to start; they even do textbook rentals.


There’s not much point to student loan debt if you can’t pass your classes. If you’re struggling, paying for a tutor is absolutely worth the expense.

Additional expenses

If you were approved for additional money to cover special expenses — like child care, disability-related costs, a computer, or software — by all means, use it accordingly.

How not to use student loans for living expenses

Buying new things

You have your entire life to build up an impressive collection of things. So when you’re a student, live like a student.

  • Furniture
    If you’re living off-campus in an unfurnished apartment, you’re going to need some things. Bring what you can from home. Whatever else you need, buy it used. You’ll find plenty of cheap, gently used items on Craigslist, at yard sales, or in thrift stores.
  • Clothes
    Make your current wardrobe work. If there’s something you just can’t live without, look for it in the local thrift store, check online sites like ThredUp or Poshmark, or get together with friends for a clothing swap.
  • A car
    One of the worst mistakes you can make with your student loan disbursement is to spend it on a new car. Drive the one you have until it won’t drive anymore. If you don’t have a car, learn to make college life work without it. If you live on campus, it’s easy. If not, take public transportation or invest in a used bicycle.


It’s a waste of money and, if you’re not careful, can be costly to your health, studies, and relationships.


Whether it’s a weekend getaway or a spring break vacation, travel is a luxury that should not be funded by student loan money. There are plenty of ways to have free fun in a college town, or visit friends where you can stay and eat for free.

What to do with leftover funds

Save it

If you have more student loan money than you really need, this is the perfect time to learn an essential life lesson — how to save for an emergency. You never know what might come up. If you do have leftover funds, sock them away for a rainy day.

Give it back

There is no rule that says you have to keep all of the student loan disbursement you receive. You may decide not to use all of your loan disbursement, and in fact, you can return part of your loan interest-free within the first 120 days.

If that 120-day window has closed, you can still pay a portion of your loan back. Take whatever you have left and make a student loan payment while still in school. You’ll put a dent in the debt and free yourself from the interest you would otherwise be paying on that amount when you graduate.

Bottom line, spend as little as possible

One purchasing decision might seem like a drop in the bucket, but you’re going to be making hundreds of purchasing decisions over the course of your four years in college. Make sure you use your student loan for living expenses wisely.

From housing to food to entertainment, that could add up to thousands of dollars in savings over the course of your college career. Do you need every penny of your student loans for living expenses? Then aim for breaking even — you’ll learn to live within your means, which is something to be proud of, too.

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