Can I Use Student Loans to Pay Rent?

Danika McClure  | 

When students receive their financial aid package, many have a number of questions regarding what their financial aid disbursement legally can and responsibly should be used for. Regardless of whether you choose to live in on-campus housing or off-campus housing, legally your living situation is covered by your student loan package. Still, it’s important to be pragmatic about how you spend your student loan money.

Using Student Loans to Pay Rent

Generally speaking, federal student loans and private loans are offered based on the information present in your FAFSA application and the cost of attendance at the school you choose to attend. When you accept your student loan package, funds are disbursed to your college. Your college will then take out money for tuition, fees, room and board — should you choose to live on campus. Any remaining loan money will be refunded to you to cover other educational needs.

If you choose to live off campus, the money you would typically spend on campus-based housing will be reimbursed to you, meaning that those funds are available to help you cover living expenses off campus.

These funds can be used however you see fit. You can use as much or as little as you’d like to help you cover for the actual cost of housing. You can also use these funds to pay for internet, electricity, and any other utilities.

On-Campus vs. Off-Campus Housing

One of the more important questions students will grapple with during their college career is whether to live on campus, or whether it’s more sound to live off campus. The answer varies depending on your particular situation, your age, the city you live in and more.

After all, this decision has the potential to drastically impact your college experience. Staying on campus allows you to be closer to your classes, and keeps you in the loop for extracurricular activities. Typically, off-campus housing is cheaper, and comes with its own set of unique perks. Given the option, which should you choose?

If you’re looking to cut down on your student loan borrowing, it may be worth it to consider renting off campus. Dormitories and other student housing options are notoriously expensive and it’s likely that you’ll be able to find other housing situations that are cheaper — even if you still rely on student loan disbursements to pay for them. Renting apartments off campus might also help boost your credit score, if you make your payments on time.

Remember that if money is a consideration for you or your parents, living with roommates is generally cheaper than living solo. A roommate may even be necessary depending on the apartment and credit score requirements for tenants.

For those who are attending college as non-traditional students, living on campus may be a less attractive option. Typically, students over the age of 25 don’t respond well to living in dormitories because of strict rules and guidelines. Knowing this, many colleges offer options for older students, allowing them to live with graduate students of a similar age, or housing them with faculty who also require on-campus living situations.

Regardless of your particular situation, be sure to do your due diligence when researching rent prices in your area in order to determine whether the cost of convenience of living on campus is worth paying a little extra.

Prioritizing Your Loan Money

While student loans can be spent on housing, there are other priorities that may come first for students. Part of the responsibility of accepting student loans is determining how they should be spent, and how using that money will serve you best in the long term.

When you receive your financial aid refund from your particular college, you can expect that that money has already covered any tuition and fees required by your college. Depending on your individual circumstances, you may choose to use any remaining funds to cover books, transportation costs, childcare expenses, and any other living expenses one typically needs covered when attending school. Cost of housing is one of many things that can also be covered by your financial aid.

Determining how much of that financial aid disbursement goes to cost of living is up to you. Be sure to think about the long term effects of student loans. Spend only what is absolutely necessary. After all–the money isn’t a free. Most students who take out loans for their bachelor’s degree take 21 years to pay off their student loan debt. There’s nothing wrong with choosing to use your student loan reimbursement to pay for housing, but be sure to put in the hours researching ahead of time.


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This post was updated November 28, 2018. It was originally published November 28, 2018.