What Can Student Loans Be Used For?
BIG Ideas:
- Federal and private loans can be used to pay for the cost of attending college.
- The cost of attendance can include tuition, room and board (on and off campus), transportation, academic and other fees, electronics and other equipment, and more.
- Student loan proceeds should NOT be used for personal expenses like vacations and entertainment.
Imagine this … you’ve made it to Final Jeopardy. You’ve placed your wager and are set to provide your final answer (in the form of a question, of course) that can make you a winner.
The category is: What student loans can be used for?
Your answer won’t be simple because there’s a lot involved with financing the cost of college. It’s also a very important answer to know if you’re thinking about paying for school.
Sure, you may know that you can use student loans for tuition and room and board (likely the biggest expenses), but is that all? The answer is No, or in Jeopardy speak, “What is No?”
What Can Student Loans Be Used For?
The federal government and private student lenders allow you to use proceeds from student loans to finance up to the cost of attendance. The cost of attendance involves a lot more than just tuition and may include:
- Fees, including lab and other on-campus fees
- Books, supplies, and equipment, such as a computer or other electronics, or materials needed for school
- Room and board and other living expenses – including rent and utilities if you live off campus
- Meals, including the meal plan or groceries, if you live off campus and don’t have a meal plan
- Transportation costs, such as airfare if you live far away from school
- Costs related to a disability, including adaptive equipment
- Costs for study-abroad programs within reason
- Fees for required certifications
What Student Loans Can’t Be Used For
It’s also important to understand what student loans can’t be used for, including:
- A car purchase
- Entertainment
- Spring break or other road trips
The dangers of using student loans for non-qualified expenses include:
- Using up the money you may need to pay for education-related costs
- Running up debt that you’ll have to pay back later
- Breaking the agreement with the lender who extended the loan to you for education expenses
- Reaching the total borrowing limit on federal student loans
How Student Loan Proceeds Are Disbursed
Funds from your student loans are sent directly to the school and applied to tuition, fees, and on-campus housing or meal plans. If your loan amount is greater than the school’s charges, any remaining funds will be returned.
Each school handles this process differently, so it’s best to check with the school’s financial aid office to understand how, when and where any excess funds will be sent.
Ways to Reduce Your Cost of Attendance
If you’re looking to lower college expenses, the first step is to apply for financial aid. Applying for financial aid could help you get lower-interest student loans and possibly scholarships and grants – money you don’t have to repay.
After you’ve exhausted federal aid, you can apply for a private student loan to help bridge the cost of attendance gap where your financial aid and savings leave off.
Wondering how to reduce the cost of attendance? Read this article on how to lower college costs.
Brazos is Here to Help You Win at Education Financing
For more than 40 years, Brazos Higher Education has been helping make education more affordable for students and parents. As a Texas non-profit, we offer great rates and no fees on private student loans. Contact us to learn more.