How to Get Student Loans for Living Expenses
Unlock how student loans extend beyond tuition, helping you manage living costs effectively from application to disbursement.
Student loans serve as a financial resource for higher education, covering tuition and daily living expenses. Understanding how these funds are allocated and accessed is an important part of managing educational finances.
Understanding How Student Loans Cover Living Expenses
Educational institutions determine a “Cost of Attendance” (COA) for each academic year, representing the estimated total cost for a student. This figure includes direct costs, such as tuition and fees, and indirect expenses. Indirect costs encompass housing, food, transportation, books, supplies, and personal expenses, which student loans can help cover.
Federal student loans are a primary option for funding education and living expenses, offering borrower protections and fixed interest rates. These include Direct Subsidized Loans for undergraduates with financial need, and Direct Unsubsidized Loans for both undergraduate and graduate students regardless of need. Direct PLUS Loans are also available for graduate or professional students and parents of dependent undergraduates, which require a credit check.
Private student loans can also cover the COA, including living expenses. These loans serve as supplementary funding when federal aid does not fully meet a student’s financial requirements. Private lenders assess an applicant’s creditworthiness and may require a co-signer, particularly for students with limited credit history.
Gathering Information for Loan Applications
The student loan application process requires collecting specific personal and financial documents. For federal student aid, the Free Application for Federal Student Aid (FAFSA) is a foundational document. Before beginning the FAFSA, the student and any required contributors, such as parents for dependent students, must create an FSA ID. This FSA ID serves as a legal signature for federal student aid online systems.
To create an FSA ID, individuals need their Social Security number, full legal name, and date of birth, along with a valid email address or mobile phone number. For dependent students, one parent will also need an FSA ID to sign the FAFSA. It is important that the name and Social Security number match official records precisely to avoid delays.
Completing the FAFSA requires gathering financial records for the student and, if applicable, their parents. These include federal tax returns and W-2 forms from the prior-prior tax year, records of untaxed income like child support, and current balances of cash, savings, and checking accounts. Information regarding the net worth of investments, businesses, and farms may also be required. Applicants should also list the schools they are considering on the FAFSA to receive financial aid information.
For private student loan applications, lenders request similar personal and financial details as for the FAFSA. This includes the student’s Social Security number, driver’s license number, and information about gross monthly income and employment, if applicable. Housing expenses, such as monthly rent or mortgage payments, are also commonly requested. Private lenders evaluate credit history, so a co-signer with a strong credit profile may be necessary to meet eligibility criteria or secure more favorable loan terms.
The Student Loan Application Process
Once all necessary information and documents are assembled, the student loan application process begins. For federal student aid, the FAFSA is submitted online via StudentAid.gov. The student and any required contributors log in using their FSA IDs to complete their sections. Applicants provide consent to have their federal tax information directly transferred from the IRS, which is a requirement for federal student aid eligibility.
After FAFSA submission, listed educational institutions receive the information to determine financial aid eligibility. Schools then issue a financial aid offer, outlining the types and amounts of aid, including federal student loans. This offer details the aid package, allowing students to compare options across different schools.
Applying for private student loans involves a separate process directly with individual lenders. Students research various lenders and complete their online application forms. This involves providing the gathered personal and financial documentation. Lenders perform a credit check on the applicant and any co-signer. The processing time for private student loans can vary, usually ranging from two to ten weeks from application to approval.
Disbursement of Student Loan Funds
Once student loans are approved, funds are disbursed directly to the educational institution, not the student. This initial disbursement occurs in installments, typically once per semester or academic term. The school’s financial aid office plays a central role, receiving the funds and applying them first to the student’s direct educational costs.
These direct costs include tuition and fees, and any on-campus room and board charges. After tuition and other institutional charges are covered, any remaining loan balance is released to the student. This remaining portion, often referred to as a refund, is intended to cover other approved living expenses such as off-campus housing, food, books, and transportation.
The method for receiving these leftover funds from the school can vary, but commonly includes direct deposit to a personal bank account or a physical check. The timing of these refunds is generally tied to the start of each academic term, often within the first 10 to 30 days of classes. First-time federal student loan borrowers may experience a waiting period, such as 30 days into the first term, before their funds are disbursed. Additionally, federal loan borrowers often need to complete entrance counseling and sign a Master Promissory Note before funds are released.