Can You Use Student Loans For Living Expenses for 2025?

by Alex Hillsberg , MA

Student Finance & Loan Expert

Share

Budgeting and managing your student loans can be a struggle when you consider living expenses. As a student, you must juggle tuition fees, books, rent, groceries, and more. It’s no wonder that many students wonder if they can use their student loans to cover living expenses. I’ve spent over ten years helping students with career planning, and I’ve used that expertise to research data from credible sources to create this guide.

From January 2023 to January 2024, the Consumer Price Index (CPI) for all urban consumers increased by 3.1%. This rise in costs makes it even more crucial for students to understand how to use their loans effectively. This article will discuss whether you can use student loans for living expenses in 2024 and how to budget it. By reading this, you’ll gain valuable insights to help you manage your finances and make informed decisions about your student loans.

Key Things You Should Know About Student Loans for Living Expenses for 2025

• Student loans can be used for various educational purposes, including tuition, books and supplies, room and board, transportation, and personal expenses.
• The average cost of attendance includes $20,727 for tuition and fees, $1,212 for books and supplies, and $12,917 for on-campus room and board.
• Average federal student loan debt stands at $20,700 for public 4-year institutions.
• The District of Columbia has the highest personal consumption expenditure at $85,732.
• The average amount received in grant aid is $15,750.

Table of Contents

1. What types of student loans cover living expenses?
2. What are the authorized uses of student loans?
3. Are there restrictions on how student loans are spent?
4. How should you budget your student loan money for living expenses?
5. What costs can you avoid paying for with student loans?
6. What happens if you misuse student loan funds?
7. How do lenders check how you spend student loan money?
8. Can you request more student loan money for higher living costs?
9. What are some alternatives to using student loans for living expenses?
10. Are there grants available for covering living costs?
11. How to maximize the timing of your student loan disbursement?
12. Can Accelerated Online Degree Programs Reduce Living Expenses?
13. How to Choose the Right Loan Type for Managing Living Expenses
14. Will borrowing for living expenses impact my future financial aid eligibility?
15. How can you identify student loans with favorable interest rates for living expenses?
16. Is enrolling in an affordable online college a viable strategy to reduce living expenses?
17. What are the long-term financial impacts of using student loans for living expenses?
18. How can additional certifications help cover living expenses?
19. How can digital budgeting tools and smart financial habits optimize your student loan usage for living expenses?
20. What are the tax considerations when using student loans for living expenses?
21. How can advanced online education boost your income and reduce reliance on student loans for living expenses?
22. Other Things You Should Know About Using Student Loans for Living Expenses

What types of student loans cover living expenses?

Several types of student loans can cover living expenses, including federal and private loans. Understanding these options helps students decide how to finance their living costs while in college using student loans for living expenses.

• Federal Direct Loans: The government provides these loans, including Direct Subsidized and Unsubsidized Loans. They can pay for rent, food, and transportation. Subsidized loans are based on financial need and have lower interest rates. Unsubsidized loans are available regardless of need but accrue interest from the start.
• Federal PLUS Loans: Graduate or professional students and parents of dependent undergraduates can get these loans. They cover remaining costs after other aid, including living expenses. You need a credit check for PLUS Loans, but they offer flexible repayment options.
• Private Student Loans: Private lenders offer these loans if federal aid isn't enough. They usually have higher interest rates and may need a co-signer if you lack credit history or income.
• State-Sponsored Loans: Some states offer loans to residents at in-state schools to cover living expenses. Terms and rates vary by state.
• Institutional Loans: Some institutions offer their own loans to cover the average cost of college, including living expenses. These may have better terms than private loans but are specific to the school.

What are the authorized uses of student loans?

Student loans for living expenses can be used for several authorized purposes like books and personal expenses. Here's what you can pay for with your student loans:

• Tuition and Fees: These loans cover tuition costs required for course enrollment.
• Books and Supplies: Funds can be used to buy textbooks, supplies, and necessary equipment for academic purposes.
• Room and Board: Student loans can pay housing expenses, including rent, utilities, and maintenance fees for living on or off campus.
• Transportation: Loans cover commuting costs to and from school, including public transportation expenses or vehicle maintenance.
• Personal Expenses: They also cover personal costs like groceries, healthcare, and other essential living expenses needed for a student's well-being during their education.

Are there restrictions on how student loans are spent?

There are generally no strict restrictions on using student loans for living expenses. Once you get this money, you can use it for your education and related expenses. That said, using student loans for things unrelated to your education, expensive living, or things you don't need is not a good idea. Unlike specific grants or scholarships with strict usage criteria, student loans provide broader financial support tailored to the overall cost of attending college. It's important to use these funds responsibly to ensure they cover your essential educational and living expenses throughout college.

Here’s What Graduates Have to Say About Using Their Student Loans for Living Expenses

"Using student loans for living expenses eased my financial worries, letting me focus fully on my studies. It provided the stability I needed to succeed academically and pursue valuable internship opportunities." - Eleanor

"Student loans for living expenses gave me the flexibility to participate in extracurricular activities and professional events essential for my career growth. It was instrumental in shaping my college experience." - Jillian

"With student loans for living expenses, I could afford essential tools like a reliable laptop, enhancing my coursework and collaboration with peers. It was a practical investment in my education and future career." - Donald

How should you budget your student loan money for living expenses?

Budgeting your student loan money for living expenses effectively is crucial for managing finances in school. This guide provides practical steps to help you allocate and utilize your student loans for living expenses.

• Calculate Essential Costs: College planning starts by identifying necessary expenses like rent, utilities, groceries, and transportation. Allocate a portion of your loan to cover these essentials, ensuring you prioritize needs over wants.
• Create a Monthly Budget: Outline a detailed budget that divides your loan disbursement across the entire academic term. Factor in recurring expenses and estimate variable costs like entertainment or dining out.
• Monitor Spending Closely: Track how you spend each dollar to avoid overspending. Use budgeting apps or spreadsheets to track expenses and ensure you stay within your allocated funds.
• Plan for Emergencies: Set aside a small portion of your loan for unexpected expenses like medical bills or car repairs. Having an emergency fund can prevent financial stress during challenging times.
• Seek Cost-Saving Opportunities: Look for student discounts, utilize public transportation, and compare prices to stretch your budget further. Being frugal can help you maximize your student loan while minimizing unnecessary expenses.

The chart below illustrates the average costs of attendance for undergraduates in 4-year institutions, according to data published by the NCES in 2024.

What costs can you avoid paying for with student loans?

You should not use student loans to cover certain non-educational expenses. While student loans for living expenses cover various costs, there are several expenses they typically should not cover:

• Non-Educational Expenses: Student loans should only be used for educational expenses. This means you should refrain from using your student loans to pay for vacations or non-essential shopping.
• Credit Card Debt: Using student loan funds to pay off existing credit card debt is generally not allowed, as it can lead to financial instability and increased debt burden.
• Investments: Student loans should not be used for investment purposes like buying stocks or starting a business, as they are meant to support your studies.
• Illegal Activities: Using student loans for unlawful activities or purchases is strictly prohibited and can lead to severe consequences.
• Personal Gifts: Do not use money from student loans to buy expensive gifts or luxury items, either for yourself or for others.
• Travel Expenses: Student loans should not be used for travel expenses, such as vacations or non-essential trips, unless they relate to educational purposes.
• Entertainment and Leisure: Student loans should not be used to fund expenses for entertainment, hobbies, or leisure activities that are not essential to your education.

What happens if you misuse student loan funds?

Misusing student loans for living expenses can lead to severe consequences like increased debt and repayment challenges. Understanding what can happen if you don’t use these funds properly may help you budget properly. Here are some consequences to keep in mind:

• Loan Revocation: Your lender can revoke your student loan if they discover you’ve misused the funds. This means you’ll have to repay the loan immediately, even if you’re still in school.
• Increased Debt: Misusing funds can lead to unnecessary debt. If you spend loan money on non-essential items, you might run out of money for necessary expenses, leading to more borrowing.
• Loss of Financial Aid Eligibility: Misusing student loans can make you ineligible for future financial aid. Schools and lenders can deny additional funds if they discover misuse.
• Academic Consequences: Schools might impose academic penalties. These can include suspension or expulsion if you misuse student loans and violate school policies.
• Legal Issues: Using loan funds for illegal activities can have legal consequences, including fines, penalties, or even criminal charges.
• Credit Damage: Defaulting on a loan due to misuse can harm your credit score. This makes it harder to get loans, credit cards, or even rent an apartment in the future.
• Repayment Difficulties: Misusing loans can lead to repayment struggles after graduation. You might face higher monthly payments if you’ve used funds irresponsibly.

How do lenders check how you spend student loan money?

Lenders typically don't monitor how you spend student loans for living expenses. However, they ensure proper use of funds through the disbursement process to the audits and reviews. These efforts can prevent you from using your loan for non-educational purposes. Here's how:

• Disbursement Process: Lenders often disburse funds directly to your school. The school first applies the funds to tuition, fees, and other institutional charges. Any remaining amount is then given to you for living expenses.
• Cost of Attendance (COA): Schools calculate the COA, which includes tuition, fees, and estimated living expenses. Lenders base loan amounts on this calculation, ensuring you receive only what you need for education-related costs.
• Financial Aid Office Oversight: Your school's financial aid office monitors the distribution of loan funds. They ensure the total aid does not exceed the COA and address discrepancies or misuse.
• Loan Agreements: When you sign a loan agreement, you agree to use the funds for educational purposes. This includes a commitment to spend the money on tuition, books, and living expenses related to your studies.
• Audits and Reviews: In some cases, lenders or schools may conduct audits or reviews of how financial aid funds are used. While rare, it ensures compliance with federal regulations and loan agreements.

Can you request more student loan money for higher living costs?

Yes, you can request more student loan money for higher living costs. Knowing how to do this can help when your current loans can't cover some expenses. Here's what you can do:

• Contact Your Financial Aid Office: Start by contacting your school's financial aid office. Explain your situation and provide details about your higher living costs. They can guide you through the next steps.
• Submit a Budget Increase Appeal: Many schools allow you to submit a budget increase appeal. This process involves providing documentation of your expenses, such as rent receipts or utility bills, to justify your need for additional funds.
• Federal Loan Adjustment: If you haven't maxed out your federal loan limits, you may be eligible for an increase. The financial aid office can adjust your federal loan amounts to cover additional living expenses.
• Parent PLUS or Graduate PLUS Loans: If you're a dependent undergraduate student, your parents can apply for a Parent PLUS Loan. Graduate and professional students can apply for Graduate PLUS Loans. These loans can cover the remaining cost of attendance, including higher living costs.
• Private Loans: If federal options are insufficient, consider private student loans. Private lenders might offer more flexibility in borrowing limits, allowing you to cover higher living costs. Be mindful of the terms and interest rates.
• Scholarships and Grants: Look for additional scholarships and grants to help cover living expenses. These do not need to be repaid and can reduce your reliance on loans.

The chart below lists the states with the highest total personal consumption expenditure in 2023.

What are some alternatives to using student loans for living expenses?

There are several alternatives to using student loans for living expenses, including work-study programs and family support. These options can help you reduce reliance on loans and manage your finances more effectively. Here are some you should explore:

• Part-Time Jobs: Working part-time while studying can provide a steady income to cover living expenses. Look for flexible jobs on or near campus that fit your schedule.
• Work-Study Programs: Many schools offer federal work-study programs that provide part-time jobs for students with financial need. These jobs often relate to your field of study and help reduce reliance on student loans.
• Roommates: Sharing housing costs with roommates can significantly reduce your living expenses. Splitting rent and utilities can make a big difference in your budget.
• Family Support: If possible, seek financial support from family members. This can be in the form of gifts, loans, or allowing you to live at home rent-free while studying.
• Crowdfunding: Platforms like GoFundMe can help you raise money for living expenses. Share your story and goals with friends, family, and the broader community to gather financial support.
• Campus Resources: Utilize resources available on campus, such as free food programs, clothing swaps, and transportation services. These can help you save money on essential expenses.
• Freelancing or Gig Economy Jobs: Take advantage of freelance opportunities or gig economy jobs that offer flexible hours. Websites like Upwork or apps like Uber can help you earn extra income.
• Budgeting and Cutting Costs: Carefully budgeting and finding ways to cut unnecessary expenses can free up more money for essentials. Track your spending and identify areas where you can save.

Are there grants available for covering living costs?

Yes, there are grants available that can help cover living costs. These grants provide financial assistance that does not need to be repaid, making them an excellent alternative to using student loans for living expenses.

• Federal Pell Grant: This grant is available to undergraduate students with significant financial need. The amount awarded depends on your financial need, attendance cost, and enrollment status. Pell Grants can be used for tuition, fees, and living expenses.
• Federal Supplemental Educational Opportunity Grant (FSEOG): This grant is awarded to undergraduate students with exceptional financial need. Funds are limited, so not all schools participate. If you qualify, you can use the grant for various educational expenses, including living costs.
• Teacher Education Assistance for College and Higher Education (TEACH) Grant: This grant is available to students who plan to become teachers in high-need fields and low-income areas. It can be used for tuition and living expenses, but it comes with a service obligation that must be fulfilled to avoid conversion to a loan.
• State Grants: Many states offer grants to residents attending in-state colleges or universities. For example, the California Cal Grant program provides financial aid to eligible students, which can be used for tuition and living expenses. Check with your state's higher education agency for specific programs.
• Institutional Grants: Some colleges and universities offer grants to students based on financial need or academic merit. These institutional grants can help cover tuition and living costs. Check with your school's financial aid office for available programs.
• Specialized Grants: Various organizations offer grants for specific student groups. For example, the Soroptimist Live Your Dream Award provides financial assistance to women who provide the primary financial support for their families. This grant can be used for living expenses, among other costs.

How to maximize the timing of your student loan disbursement?

Properly timing your student loan disbursement can make a significant difference in managing living expenses, especially as education and housing costs rise. Once your loan is approved, funds are typically disbursed directly to your school to cover tuition and fees before the remainder is refunded for your personal use—such as rent, groceries, or utilities. Planning ahead is essential to optimize this process.

Start with your school’s financial aid office to confirm the disbursement schedule. This allows you to synchronize your budget around these dates. Also, if you’re wondering "how long does it take to get a student loan," understanding the typical timeline—including loan application, approval, and fund release—can help you anticipate when you’ll receive the funds.

Consider setting up a dedicated bank account for your student loan refunds. This practice not only ensures easy tracking but also encourages disciplined spending. By budgeting based on when you’ll have access to funds, you can avoid unnecessary financial strain and minimize reliance on credit during gap periods between disbursements.

Can Accelerated Online Degree Programs Reduce Living Expenses?

Pursuing an accelerated online degree program can shorten your time in college and limit the overall costs associated with prolonged living expenses. This strategy may reduce both the total tuition borrowed and the extended period of managing high living costs while studying. Evaluating tailored online programs that offer fast-track credentials can help align your educational goals with the need for efficient financial planning. Explore options and assess how a condensed academic timeline might contribute to a more sustainable financial future by reducing dependency on student loans for living expenses. For further insights on accelerated pathways, consider What degree can I get online in 6 months?.

How to Choose the Right Loan Type for Managing Living Expenses

Selecting the most suitable type of loan to cover your living expenses can significantly influence your financial health during and after college. Federal loans, for instance, often provide lower interest rates and more flexible repayment options compared to private loans. However, federal loan limits may not always meet your full financial needs. This is where private small student loans can supplement your funding. These loans are designed to cover specific gaps in your budget, ensuring you can manage essential living expenses without over-borrowing.

Before applying, assess your estimated living expenses and compare both federal and private loan terms, such as interest rates, repayment flexibility, and any potential fees. Always focus on borrowing only what you need to minimize long-term repayment challenges. Remember to consider other financial strategies, such as work-study programs or grants, before relying solely on loans.

Proper evaluation of your options enables you to make informed decisions that align with your academic and financial goals, creating a balanced approach to managing costs without incurring unnecessary debt.

Will borrowing for living expenses impact my future financial aid eligibility?

Excessive reliance on student loans for living expenses may influence future financial aid packages. Financial aid offices assess your borrowing history along with your overall debt-to-income situation, which can affect eligibility for need-based grants and scholarships in subsequent academic years. It is recommended to evaluate your borrowing strategy and explore alternative funding options when necessary. For additional insights on the boundaries of borrowing, please refer to our article Can you take out student loans for living expenses?

How can you identify student loans with favorable interest rates for living expenses?

When evaluating student loans relative to managing living expenses, it is essential to compare not only interest rates but also the associated fees, repayment terms, and borrower eligibility. Begin by researching both federal and private loan offers, focusing on how slight differences in rates can accumulate over time. Utilize online comparison tools to assess multiple options under varying economic scenarios. In addition, always verify details with up-to-date resources such as what student loans have the lowest interest rate to secure a financially viable solution.

Is enrolling in an affordable online college a viable strategy to reduce living expenses?

Choosing an affordable online college can reduce ancillary expenses such as commuting, relocation, and on-campus fees, potentially easing the financial burden on student loan budgets. This approach may allow for greater flexibility to work part-time while studying, thereby supplementing income and limiting excessive borrowing. In addition, online education often provides access to innovative financial aid opportunities, including the best online colleges with financial aid, helping students further align their educational investments with manageable living costs.

What are the long-term financial impacts of using student loans for living expenses?

Using student loans for living expenses may offer immediate support, but it can also influence your long-term financial stability. Assess how borrowing for living costs, rather than solely educational expenses, affects overall debt accumulation, interest payments, and future creditworthiness. Consider strategies such as refinancing or consolidating loans if necessary, and evaluate repayment plans that can accommodate variable financial circumstances. Compare these implications with other specialized education costs, for instance, how much does vet school cost, to build a comprehensive approach towards sustainable financial planning.

How can additional certifications help cover living expenses?

Acquiring additional credentials through targeted, short-term programs provides a practical avenue to supplement your income and mitigate reliance on student loans. By pursuing quick certifications that pay well, you can gain specialized skills that are attractive to employers, enabling part-time or freelance opportunities alongside academic commitments. This approach not only enhances your employability but also contributes to a diversified financial strategy for managing living expenses.

How can digital budgeting tools and smart financial habits optimize your student loan usage for living expenses?

Leveraging digital budgeting tools and disciplined financial habits can help ensure precise allocation of student loan funds. Utilizing expense-tracking apps and forecasting tools enables real-time monitoring and adjustment of your spending on living expenses. Regular budget reviews combined with access to financial literacy resources help prevent overspending and misallocation. Additionally, career planning tools can provide valuable insights into future earnings potential—for instance, exploring the best paying medical jobs with bachelor's degree can guide your long-term financial strategy and educational investments.

What are the tax considerations when using student loans for living expenses?

Student loans are not considered taxable income, yet paying attention to interest deductions is crucial. In most cases, only the interest on the loan may be deductible if you meet specific income requirements and other IRS criteria. Allocating funds to essential living expenses does not yield additional tax benefits, so prudent budgeting should not be conflated with tax planning. Regularly reviewing IRS guidelines and consulting a tax professional helps ensure compliance with the latest regulations. Additionally, exploring specialized career training, such as an online trade school, can offer strategic advantages that contribute indirectly to long-term financial health.

How can advanced online education boost your income and reduce reliance on student loans for living expenses?

Investing in advanced online education offers a strategic pathway to enhance earning potential and improve financial resilience. By enrolling in programs that provide accelerated career outcomes and flexible learning schedules, students can balance part-time work with study commitments, thereby mitigating the pressure to borrow excessively for living expenses. Consider reviewing our guide to easy online master's degree programs to identify cost-effective options that align with long-term career objectives and help offset the financial burdens associated with student loans.

Key Findings

• From January 2023 to January 2024, there was a 3.1% increase in prices for all commodities.
• Budgeting student loan money involves calculating essential costs, creating a monthly budget, and monitoring spending closely.
• Misusing student loan funds can lead to serious consequences such as loan revocation, increased debt, and loss of financial aid eligibility.
• The typical federal student loan debt amounts to $20,700 for students attending public 4-year institutions.
• On average, students receive $15,750 in grant aid to support their educational expenses.

Other Things You Should Know About Using Student Loans for Living Expenses

What will student loan interest rates be in 2024?

Student loan interest rates are set to rise in 2024. For the 2024-25 academic year, federal direct undergraduate loans will have an interest rate of 6.53%. Graduate students will see their rates climb to 8.08%. PLUS loans for both graduate students and parents will rise to 9.08%.

Can I use student loans for a laptop?

Yes, you can use student loans for a laptop. Student loans for living expenses can cover necessary educational supplies; a laptop falls under this category. Many courses require access to a computer for assignments, research, and online classes, making it an essential tool for your studies. Just prioritize your spending to include other crucial costs like tuition, books, and housing.

Are there forgiveness programs for loans spent on living costs?

Currently, there are no forgiveness programs specifically for student loans used for living expenses. Forgiveness programs typically focus on loans used for tuition and related educational expenses, especially for specific professions like teaching, nursing, or public service.

References:

1. Bureau of Economic Analysis (BEA). (2023). Personal Consumption Expenditures by State, 2022. BEA.
2. Bureau of Labor Statistics (BLS). (2024). Consumer prices up 3.1 percent from January 2023 to January 2024. TED: The Economics Daily. BLS.
3. Luthi, B., Pentis, A., & Lowrey, K. (2024). What is the average student loan debt in 2024 — and what are the impacts? Student Loans. CNN.
4. National Center for Education Statistics (NCES). (2023). Average amount of grant and scholarship aid and average net price of attendance for first-time, full-time degree/certificate-seeking undergraduate students awarded Title IV aid in degree-granting postsecondary institutions, by control and level of institution and income level: Selected academic years, 2009-10 through 2021-22. Digest of Education Statistics. NCES.
5. National Center for Education Statistics (NCES). (2024). Average total cost of attendance for first-time, full-time degree/certificate-seeking undergraduate students in degree-granting postsecondary institutions, by control and level of institution, living arrangement, and component of student costs: Selected academic years, 2010-11 through 2022-23. Digest of Education Statistics. NCES.