What Can Student Loans Be Used For?

When you take out a student loan, you don't have to use all of it to cover tuition and other college fees. Both federal and private student loan lenders allow loan proceeds to pay for other types of living expenses for each school year. And while student loans are quite flexible, there are also several restrictions to keep in mind. Here's your handy guide to what student loans can and can't be used for.

How Student Loans Work

Student loans help you pay for the cost of higher education. As with other loans, you'll pay back a student loan over time with interest. Depending on the type of student loan you take out, interest may start to accumulate right away or after you graduate (or when you no longer meet certain enrollment requirements). In most cases, you'll have several repayment options, including a grace period before payments kick in.

What Student Loans Can Be Used For

Whichever type of loan you take out, the Office of Federal Student Aid indicates you can use your student loans for several purposes.

1. Tuition and Fees

Tuition will most likely be the primary reason you take out a loan. It's also bound to be the largest expense you'll tackle with student loans. Tuition includes the basic costs of enrolling in your program and classes. If you have mandated fees like lab or parking fees, fees for professional tests, licensing, and/or certificates, you can use your loan proceeds to cover those too.

2. Room and Board

Whether you're living on campus for the first time away from home or attending school as a non-traditional student, you can use your student loan proceeds to pay for your dorm or off-campus housing. This also includes any related housing expenses such as utilities. Since housing is always going to be one of your top expenses in life, a little extra help can go a long way.

3. Textbooks and Supplies

Another expense you can use student loans to pay for: required textbooks for your classes. Same goes for school supplies like a personal computer, software, or lab equipment. You won't need to pony up receipts or proof of requirement to pay for these school supplies, but you should still exercise caution when it comes to spending any amount of loan money. Only borrow and pay for what you need.

4. Meals

Yes, your student loan can be used to cover meals, whether that's your dorm's meal plans, commuter meal plans, or groceries you purchase yourself to cook at your off-campus apartment. Since there are plenty of options, make sure to budget for something that works with what you can afford and any dietary needs or preferences.

5. Transportation

If you live on campus, commuting may not be a huge deal. For those who do though, the costs can add up. Luckily, you can use your student loans to pay for gas, parking passes, or bus and train passes.

6. Dependent Care Expenses

College students who have children can use student loan money to pay for expenses like daycare, a nanny, or a babysitter while they're attending school. That's great news for non-traditional college students who may need to cut down their work hours to study.

7. Study Abroad Fees

Whether you're studying for the entire year or only a semester, related study abroad fees are fine to pay for using your student loan proceeds. Expenses can include your program, housing costs, and other fees.

What Student Loans Cannot Be Used For

When you sign your loan agreement or promissory note you agree that you're only using your loan for education-related expenses. Here's a list of what not to pay for with student loans.  

1. Entertainment

It's tempting to use your student loans to dine out every evening, pay for movie tickets or the local amusement park, but your student loans aren't meant for these types of expenses. Instead, try adding a small amount of part-time income to your "going out fund" each week, then treat yourself when you've built up enough money to do something fun.

2. Decorating

It's understandable to want your dorm room or apartment to be a comfortable zone as conducive to studying as it is to decompressing after a long day in classes. However, using your student loans to pay for sheets, towels, area rugs, accent lighting, photo frames and other home furnishings is frowned upon. If you need to make a large purchase like a mattress (or even a hotel booking) consider using a student credit card so you can build credit by paying off the purchase.

3. Vacations

Trips (even flights abroad) for educational reasons or to go home for the summer are acceptable uses of student loan money. However, if you want to use your student loans to go to the beach for spring break or a quick weekend getaway, rethink those plans or pay for the trip using other methods.

4. Clothes

Back to school clothes — your inner child can't help but squeal at the thought of a sharp new wardrobe to take the edge off transitioning from summer fun to back-to-back lectures. But unless it's clothing specifically for a class (like welding-appropriate clothes for your sculpture class), you can't use your student loans to finance a shopping spree.

The Takeaway

Borrowing only what you need means you're paying as little as possible in interest charges once you graduate. Instead of splurging by using your student loans, budget carefully and understand that you may have to sacrifice a little bit while you're putting yourself through college. That way, you'll graduate on the right financial footing.