Can I Get a Student Loan for Living Expenses?

Student loans can provide financial support for living expenses, extending beyond just tuition and fees. These loans are designed to cover the full “Cost of Attendance” (COA) at an educational institution, which encompasses various expenses a student typically incurs during their academic year. Understanding how these funds are allocated and disbursed is important for effective financial planning during higher education.

Defining Eligible Living Expenses

Living expenses are a recognized component of the Cost of Attendance (COA) determined by each educational institution. The COA represents an estimate of a student’s total educational costs for an academic period. It includes direct charges like tuition and fees, along with indirect costs such as living expenses.

Common examples of eligible living expenses include:

• Housing (on-campus room and board or off-campus rent and utilities)
• Food and groceries
• Transportation costs (gas, public transit, or travel to/from campus)
• Books, course materials, supplies, and equipment
• Miscellaneous personal expenses (toiletries and clothing)
• Childcare costs or expenses related to a disability

Sources of Student Loans for Living Expenses

Students access funds for living expenses through federal and private student loans. Federal student loans are provided by the U.S. Department of Education and offer distinct advantages.

These include Direct Subsidized Loans for undergraduates with demonstrated financial need, where the government may pay interest during certain periods. Direct Unsubsidized Loans are available to both undergraduate and graduate students, with interest accruing from disbursement. Graduate or professional students, and parents of dependent undergraduates, can also access Direct PLUS Loans, which generally require a credit check. Federal loans typically feature fixed interest rates and offer flexible repayment plans, such as income-driven options, along with potential deferment or forbearance benefits.

Private student loans are offered by banks, credit unions, and other financial institutions. These loans often require a credit check, and many students, particularly those with limited credit history, may need a co-signer to qualify. Private loans can have either fixed or variable interest rates. While private loans can help cover remaining costs after federal options are exhausted, they generally provide fewer borrower protections and repayment flexibilities compared to federal loans.

Determining Loan Amounts

The maximum amount a student can borrow, including funds for living expenses, is tied to the institution’s Cost of Attendance (COA). Each school calculates its COA, which is a comprehensive estimate of a student’s total educational and living costs for an academic year. This figure incorporates tuition, fees, housing, food, books, transportation, and personal expenses. Student loans, whether federal or private, cannot exceed this determined COA.

Any grants or scholarships a student receives will reduce the remaining COA that can be covered by loans. Once loan funds are disbursed to the school and tuition and other direct institutional charges are paid, any remaining balance is then provided directly to the student to cover their living expenses.

The Application and Disbursement Process

For federal student loans, the first step is completing the Free Application for Federal Student Aid (FAFSA). This form provides information used by the school’s financial aid office to determine eligibility for federal aid programs, including loans. After submitting the FAFSA, students receive a financial aid offer from their school and must accept the offered aid through the school’s portal.

For private student loans, apply directly to specific banks, credit unions, or other private lenders. These applications typically require a credit check, and many lenders may ask for a co-signer.

Once approved, funds are usually disbursed directly to the school first. The school then applies the funds to cover tuition, fees, and any on-campus room and board charges. Any remaining loan funds, often referred to as a refund, are then released to the student to cover their off-campus living expenses and other indirect educational costs. Disbursements usually occur at the beginning of each academic term, such as per semester.