Can You Use Student Loans for Living Expenses?

Abigail Eun
Abigail Eun

Abigail Eun is a freelance writer and personal finance expert. Through diligent research and continuous learning, she has honed her knowledge in budgeting, saving, investing, and debt management. Abigail is passionate about helping people get their finances in order. She believes that everyone should have access to the information they need to make sound financial decisions. Her goal is to provide clear and concise information that is easy to understand.

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Daniel Kahn
Daniel Kahn
Daniel is the co-founder and COO at Sparrow. Daniel is responsible for the day-to-day operations of a company, working closely with other members of the executive team to develop and implement strategies to support the growth and success of the company.
Daniel was a 2023 Forbes 30 Under 30 lister in the Education category.  Daniel was born and raised in Raleigh, North Carolina and graduated from Duke University in 2020.
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Camden Ford
Camden Ford

Camden leads Sparrow’s business operations – everything from product management to business analytics. After graduating Cum Laude from Duke University where he studied Civil Engineering, Camden worked as a Consultant for A.T. Kearney where he worked in their Strategic Operations practice. With a strong background in analytics, Camden strives to deliver data-driven conclusions and insights.

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November 10, 2023

Both federal and private student loans can be used for educational expenses. While that typically means costs like tuition and fees, there’s a variety of items that fall under the umbrella. 

In fact, you can use your student loans for living expenses, child support, and even study-abroad programs.

Can I Get a Student Loan to Cover Living Expenses?

Yes, you can use student loans for living expenses. After your student loans are disbursed to your school, your school will usually return the remaining funds to you after tuition, room/board, and other costs have been paid for. 

These remaining funds can be used for a variety of expenses, such as institutional fees, transportation costs, and more.

What Counts as Living Expenses for Student Loans?

Any academically-related expense can be counted as a living expense for student loans. This doesn’t mean that you are strictly limited to purchasing school supplies or textbooks, however. 

Your student loans cover living expenses you have to pay as a student, such as rent, bills, groceries, and even furniture for your campus apartment. 

The following table outlines the most common expenses that student loans can be used for. 

Tuition and Fees + Room and BoardYour institution will usually take a portion of your student loans to cover costs such as tuition and fees, room and board, and your meal plan. You will not have to pay the university directly.
If you are opting for off-campus housing, your school will usually subsidize your rent up to the amount of housing costs you would have to pay if you lived on-campus. Your remaining student loans can be used to pay your bills.  
Institutional FeesIf your school has mandatory health insurance, parking fees, or other fees, you can spend a portion of your student loans to cover these costs. 
School-Related Living ExpensesStudent loans can cover personal expenses that are necessary for your educational career. This includes groceries, new bed sheets, furniture for your apartment or dorm, and other living expenses. 
Books and SuppliesYour student loans can cover anything from textbooks, notebooks, to a new book bag.
Transportation CostsWhether you commute or drive to school, you can use a portion of your student loans to cover transportation costs like gas, bus fares, and other expenses.
Child Care ExpensesIf you are supporting yourself in addition to a dependent, you can use your student loans to cover child care expenses, like daycare, baby food, and other child-specific necessities. 
Study Abroad ExpensesIf you decide to study abroad, you can use a portion of your student loans to cover any related expenses. Note that the study abroad must be either approved by or offered by your school to be a qualifying expense. 

What Doesn’t Count as Living Expenses for Student Loans?

Any personal costs that are not absolutely necessary as a student do not count as living expenses. The following table outlines what you can’t spend your student loans on.

EntertainmentMovie tickets, ice skating tickets, and other forms of entertainment do not count as a living expense.
ClothesUnfortunately, buying a new wardrobe does not count as a living expense that can be covered by your student loans.
Vacation/TravelWhile a spring break trip to Bali would be nice, you can’t use student loans to cover it.
Personal vacations and travel do not count as a valid living expense to use your student loans on.
However, your student loans can be used for study abroad programs that are approved by or administered by your school.
Down PaymentsYou cannot use your student loans as a down payment to buy a new car, house, or equivalent.
DebtWhile it might be tempting to knock out some credit card debt with your student loans, your personal expenses do not count as a living expense.
However, if you paid for academic or necessary living expenses with your credit card, an exception can be made.

Is It a Good Idea to Use Student Loans for Living Expenses?

Generally, it is okay to use student loans for living expenses. However, you should consider the cost of doing so before making the decision.

Likewise, you’ll want to make sure essential academic-related expenses are covered before covering potentially non-essential living expenses with loans.

Leftover amounts from your student loans should be saved for future, unforeseen academic expenses like books for next semester or sudden charges to your bursar account. 

You can consider other avenues for paying for your personal needs, such as picking up a new side hustle, tapping into your savings, or asking your parents for an allowance.

What Happens If You Use Student Loans for Something You Shouldn’t?

While no one is actively tracking what you spend your student loans on, you can face serious consequences if you’re caught for student loan misuse. 

Using your loan funds improperly is essentially breaking a contract, as you agreed to use your loans for academic expenses only in your promissory note. 

If you are caught for loan misuse, you may be reported to your school’s financial aid office and the federal Department of Education and have your loans taken away.

Best Student Loan Options to Cover Living Expenses

Here are some of Sparrow’s top picks for student loans that can cover living expenses. 

Arkansas Student Loan Authority: Best for Arkansas students or those attending institutions in the state.

Ascent: Best for borrowers without a cosigner, international or DACA students, or those with lower credit scores. 

Brazos: Best for borrowers who live in Texas.

College Ave: Best for borrowers seeking flexible repayment terms that match their budget.

Custom Choice: Best for borrowers seeking competitive interest rates, a flexible repayment plan, and strong borrower benefits.

Earnest: Best for borrowers looking for unique borrower perks and competitive interest rates.

Edly: Best for borrowers with no cosigner that are looking for an income-based repayment plan.

EDvestinU: Best for borrowers looking to work with a non-profit lender.

Funding U: Best for high-achieving undergraduate students, as Funding U assesses your ability to borrow based on non-traditional factors.

INvestEd: Best for residents of and students in Indiana.

MPOWER: Best for international, domestic, and DACA students, and those who don’t have a credit history or access to a qualified cosigner.

Nelnet Bank: Best for borrowers seeking competitive interest rates and a flexible forbearance policy.

Prodigy Finance: Best for graduate students.

Sallie Mae: Best for borrowers seeking a flexible repayment plan and competitive interest rates. 

SoFi: Best for borrowers with a strong credit score or a creditworthy cosigner.

Closing Thoughts From the Nest

While student loans can be used for living expenses, be careful what else you use them for. While it may be tempting to use the funds to treat yourself to a fancy dinner or splurge on a new wardrobe for the semester, it’s important to use your student loans wisely. After all, student loans are borrowed money that you will have to eventually pay back in the future.

Consider using the leftover amount from your loans to make your first loan payment, or saving it for an academic rainy-day fund.

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