What can you use student loans for? (2024)

FAQs

Can you use your student loan for anything? ›

No, student loans aren't a free-for-all spending spree. The U.S. Department of Education and almost all private student lenders list acceptable purchases and expenses, typically tuition, room and board, books and supplies, study abroad expenses, transportation and child care costs.

Debt: Don't use your loan to pay off credit cards, a car note, or other debt. You also can't use it to pay for a down payment on a new house or condo. Non-school services: You can't use your loan for hiring cleaners, paying gym fees, or any other non-education services.

“This allowance may also include costs for operating and maintaining a vehicle that is used to transport the student to and from school, but not for the purchase of a vehicle.” That means unfortunately you can't use student loans to buy a car., no matter what type of student loan you have.

Student loans can be used for any education-related expenses, which include living expenses during college. So if you have any of those funds left over after paying costs such as tuition and fees, you may be able to use that money to directly pay for what you need.

The school determines the final tuition amount due, taking grants and scholarships into account. If your student loan covers more than that amount, you will receive a refund from your school. Use the excess funds only for education-related expenses. These are expenses that directly or indirectly support your studies.

Even though there isn't likely to be a legal prosecution for someone who misuses their student loans, one can be reported to the Department of Education's fraud hotline, run by the Office of Inspector General.

After your school deducts what's needed to pay for expenses such as tuition and room and board, it will disburse any remaining money to you for education-related expenses. But these expenses aren't just books and class fees. Student loan funds can be used to pay for rent, groceries and more.

If you have a child that needs care while you're in school, your loans can pay for childcare. Transportation: You may be able to use your loans to pay for commuter costs, like a car, gas, or car insurance. Or, you can use your loans to pay for a bus or train pass.

Can I use student loans to pay for health insurance? ›

In some cases, you can use student loans to help pay for health insurance. Many schools require that students have healthcare coverage in order to enroll. Often, colleges and universities offer an on-campus healthcare plan that you can enroll in if you don't have outside health insurance.

The loan funds are usually sent to the school using the “school-channel” method. However, in some cases, proceeds can be sent to the student using the “direct-to-consumer” method.

Books and supplies: Student loans also cover supplies you need for class, including textbooks, pens, notebooks and backpacks. Transportation: While you can use private loans to pay for the costs of getting to class — like gasoline, parking passes, bus passes and highway tolls — you can't buy a car with your loan funds.

Federal student loans are meant to cover educational expenses, which means you're not supposed to use the money for other personal expenses, such as travel, clothing, video games, business expenses, a down payment on a home or expensive meals and drinks.

So the short answer is, yes, students can use money from federal or private student loans to pay their monthly rent or any other living costs. 1 However, the type of housing that a student chooses will dramatically affect the size of the debt that must be repaid later.

Federal student loans are meant to cover educational expenses, which means you're not supposed to use the money for other personal expenses, such as travel, clothing, video games, business expenses, a down payment on a home or expensive meals and drinks.

Your loans can cover a lot of things, but not everything. Don't spend more than you need because you'll have to pay back anything you borrow. You can apply for scholarships and grants to access free money for school that doesn't have strings attached.

Typically, the school first applies your grant or loan money toward your tuition, fees, and (if you live on campus) room and board. Any money left over is paid to you directly for other education expenses.

You could keep the leftover student loan money for the next academic term or school year instead of sending the money back. But, it is better to return the money if it is an unsubsidized federal loan or a private student loan. Returning the money will reduce the amount of interest you will be charged on the debt.