Can You Take a Student Loan Out for Living Expenses?
Uncover how student loans extend beyond tuition to cover essential living costs. Get practical insights into qualifying, accessing, and managing these funds.
Student loans can cover tuition, fees, and various daily living expenses associated with pursuing an education. These loans help students meet the costs of attendance, allowing them to focus on their studies. Understanding how these funds are allocated and accessed is important for managing educational finances.
What Qualifies as Living Expenses
Eligible living expenses include necessary costs incurred while enrolled in an academic program. These include housing, covering on-campus dormitory charges or off-campus rent and utilities like electricity, gas, and internet. Food expenses, such as meal plans or groceries, are also covered.
Transportation costs for commuting or travel are included. Personal expenses, like toiletries, laundry, and other essential supplies, are also factored in. These categories are not discretionary spending; they are integrated into a student’s official Cost of Attendance (COA) by their educational institution.
How Student Loan Amounts Are Calculated
The maximum amount a student can borrow is determined by the educational institution’s Cost of Attendance (COA). The COA is an estimate provided by each school, representing the total cost for an academic year. This figure includes direct costs like tuition and fees, plus indirect costs such as living expenses, books, supplies, transportation, and personal expenses.
The school’s financial aid office applies grants and scholarships, which do not need repayment, to the COA first. Student loans then cover any remaining balance up to the COA limit. The amount a student can borrow is the COA minus any other financial aid received, ensuring the loan amount does not exceed recognized educational expenses.
Accessing Your Loan Funds
Once approved, loan funds are not disbursed directly to the student in a lump sum. Instead, the loan proceeds go first to the educational institution. The school applies these funds to cover outstanding institutional charges, such as tuition, fees, and on-campus housing costs.
Any remaining balance, after institutional charges are settled, is issued as a refund directly to the student. This refund covers other eligible living expenses, including off-campus rent, food, transportation, and personal costs. Students commonly receive these refunds via direct deposit or physical check. Federal student loans are typically disbursed in at least two installments over the academic year, often at the beginning of each semester. Private loan disbursement schedules vary based on lender policies and school agreements.