How to Use Student Loans for College Living Expenses for 2025

Student Finance & Loan Expert

Managing college living expenses can be challenging, especially with the average public university student borrowing $32,637 to complete a bachelor's degree. This article addresses how to use student loans effectively to cover these costs without falling into financial trouble. With U.S. student loan debt totaling $1.727 trillion, it's crucial to budget wisely and avoid unnecessary expenses. I'll share practical tips and strategies to help you make the most of your student loans and ensure you can focus on your studies without added stress.

Key Things You Should Know About Using Student Loans for College Living Expenses

The average public university student borrows $32,637 to complete a bachelor's degree, indicating significant reliance on loans for education.
U.S. student loan debt totals $1.727 trillion, showcasing the extensive use of loans among students.
The average federal loan balance is $37,088, highlighting the importance of careful financial management.
Student loans can cover essential costs like rent, groceries, and utility bills after tuition and fees are paid.
Responsible borrowing is crucial, as misuse of loans can lead to long-term financial stress and higher debt.

How to Use Student Loans for Living Expenses?
What can student loans be used for?
What Student Loans Cannot Be Used For?
What are the consequences of misusing student loans?
What are the alternatives to using loans for living expenses?
What can I do with leftover student loan money?
How can I live off student loans?
How do I get financial aid for living expenses?
What should I consider when choosing between fixed and variable student loan rates?
How do grad plus loans differ from traditional student loans?
What repayment options are available for student loans?
How should I pay for monthly expenses?
What expenses can student loans cover beyond tuition fees?
Is it worth it to get a student loan?
How can I secure a student loan if I have bad credit?
What should parents consider before taking out student loans?
How can I optimize my budget to effectively manage student loans?
Can selecting a high-earning degree alleviate student loan burden?
What alternative career paths can help reduce student loan burden?
Will student loans affect my long-term financial health?
Is student loan forgiveness a viable option for reducing my debt?
How can choosing affordable institutions lower my student loan debt?
Other Things You Should Know About Using Student Loans for College Living Expenses

How to Use Student Loans for College Living Expenses?

Student loans can be used to cover college living expenses such as housing, food, and transportation. After tuition and fees are paid, leftover funds can help with other costs like rent, groceries, and utility bills. This can be especially important as the trends in student aid show that the average public university student borrows $32,637 to complete a bachelor's degree, according to the Education Data Initiative. Using loans for essentials ensures you can focus on your studies without financial stress.

It is important to manage these funds wisely. Avoid using loan money for non-essentials like vacations or luxury items. With U.S. student loan debt totaling $1.727 trillion (see chart below), responsible borrowing is crucial. The average federal loan balance is $37,088, which highlights the need for careful budgeting.

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

Using my student loans for living expenses was a game-changer. I could focus on my studies without worrying about rent or groceries. It made my college experience much smoother and less stressful. -Emily
Thanks to my student loans, I could afford both tuition and living costs while studying online. It gave me the flexibility to manage my expenses and complete my degree without financial strain. -Albert
Covering my living expenses with student loans allowed me to stay focused on my academics and enjoy campus life fully. Knowing my essentials were taken care of helped me excel in my studies. -Andrea

What can student loans be used for?

Student loans can be used for a variety of essential expenses, including the following:

tuition
fees
housing
food
transportation
textbooks
school supplies
other personal items needed for school.

This flexibility allows students to focus on their education without constantly worrying about their financial situation.

According to the Washington Post, roughly one in five Americans holds student debt, with most students graduating with around $30,000 in loans. Understanding how to use student loans effectively can help manage these expenses. Borrowers with smaller debts often find it harder to repay, especially those who don’t complete their degrees.

What Student Loans Cannot Be Used For

Student loans cannot be used for non-educational expenses such as

vacations,
new cars, or
entertainment.

They are strictly intended to cover educational costs and essential college living expenses like tuition, books, housing, and food. Misusing loan funds for non-essentials can lead to financial trouble and potential legal issues.

According to the Education Data Initiative, the outstanding federal loan balance is $1.602 trillion, with about 43.2 million borrowers. You must know how to use student loans properly to avoid falling into serious debt. Proper budgeting ensures that loans are spent on necessary expenses, helping students focus on their studies without the distraction of financial mismanagement.

What are the consequences of misusing student loans?

Misusing student loans can lead to significant financial and legal consequences. Loans intended for education and college living expenses should not be spent on non-essentials like vacations or luxury items. Misuse can result in financial stress and potential default. The Federal Student Aid reported that as of September 2023, 43 million U.S. borrowers collectively owe over $1.6 trillion in federal student loans, with more than one-third of the total debt held by just 7% of borrowers who owe more than $100,000.

What are the alternatives to using loans for living expenses?

Instead of relying on student loans for college living expenses, consider working part-time. Many students balance jobs with their studies, providing extra income to cover essentials like rent, food, and transportation. This can reduce the need for loans and help manage overall debt. Additionally, scholarships and grants are excellent options, as they do not need to be repaid and can significantly offset living costs.

Federal student loan debt decreased by $32.3 billion in 2023, showing a positive trend toward reduced borrowing. Exploring college majors with high earning potential can also help manage future financial stability. How to use student loans properly may not be that easy when expenses grow as you study, but seeking alternative funding methods can prevent long-term debt and financial stress, making your educational journey more manageable.

What can I do with leftover student loan money?

Leftover student loan money can be returned to the lender to reduce your overall debt. This is a smart option since it lowers the amount you have to repay with interest. As of 2023, the average total loan balance, including private debt, is $39,981, according to Education Data Initiative. Reducing your debt load can make future repayments more manageable, especially given that the balance per borrower rose 39% from 2008 to 2022, according to the Council on Foreign Relations.

Alternatively, leftover funds can be used to cover upcoming college living expenses, such as rent, groceries, or transportation. It is with how to use student loans effectively that students can ensure they make the most of the borrowed money. Just remember, using the funds wisely helps avoid unnecessary financial strain.

How can I live off student loans?

You can live off student loans by using the funds to cover essential college living expenses like rent, groceries, and utilities. Proper budgeting is crucial to ensure the loan covers all necessary costs without running out of funds mid-semester. In 2022, almost two-thirds of recent high school graduates took out student loans to help manage these expenses, reflecting their importance in maintaining financial stability during college.

It's important to understand how to use student loans effectively. With total student debt exceeding $1.7 trillion, careful planning can prevent unnecessary financial stress. Less than 2% of private student loans were in default as of Q4 2021, showing that responsible borrowing and spending can keep you on track.

How do I get financial aid for living expenses?

You can get financial aid for living expenses by applying for federal and private student loans, scholarships, and grants. To start, fill out the Free Application for Federal Student Aid (FAFSA) to access federal loans and grants. These funds can cover college living expenses like housing, food, and transportation.

About 7.2% of outstanding student debt is from private loans. To avoid being deep in debt, explore scholarships and grants that don't need to be repaid. Scholarships are often merit-based, while grants typically consider financial need. Workers with a bachelor's degree earn 1.8 times more than those with only a high school diploma, so investing in your education can pay off. Just know how to use student loans effectively and consider all available financial aid options to avoid worries while studying or even after you graduate.

What should I consider when choosing between fixed and variable student loan rates?

Choosing the right type of interest rate for a student loan is a critical decision that can significantly affect your financial future. Two primary options are fixed and variable interest rates. A fixed rate student loan offers consistency, as the interest rate remains unchanged throughout the life of the loan. This predictability allows borrowers to budget more easily, particularly in uncertain economic conditions where interest rates may fluctuate.

On the other hand, variable-rate loans typically start with lower interest rates that may rise or fall over time, depending on market conditions. While this could mean potential cost savings if rates decrease, the inherent uncertainty poses a financial risk if rates rise substantially. For students and parents evaluating fixed versus variable loans, it's important to consider factors like the loan term, economic trends, and financial stability.

For a comprehensive guide on which option might suit your needs, explore this detailed comparison of fixed and variable student loans to make an informed choice. Balancing these considerations can help you secure a loan structure that supports your educational goals without undue financial strain.

How do grad plus loans differ from traditional student loans?

Grad plus loans are federal financing options designed specifically for graduate and professional students, offering additional funds to cover both tuition and ancillary living expenses when traditional aid falls short. Unlike most undergraduate loans, these loans require a separate credit check and may present distinct repayment terms and interest rate structures. Understanding these differences is essential for managing your educational investment efficiently. For a deeper insight into the specifics and potential benefits, review the comprehensive guide on grad loans.

What repayment options are available for student loans?

Student loan repayment encompasses several structured options designed to align with varying financial circumstances. Borrowers can choose from a standard repayment plan with fixed monthly amounts over a set period, or opt for income-driven alternatives that adjust payments based on current earnings and household size. Graduated and extended repayment plans are available for those expecting income growth or who need a longer period to manage debt effectively. Additionally, options such as deferment or forbearance allow temporary postponement of payments during financial hardship while avoiding default. For more detailed comparisons and strategies on managing repayment alongside educational choices, explore resources from good online colleges.

How should I pay for monthly expenses?

You should pay for monthly expenses by using a combination of student loans, part-time work, and proper budgeting. Student loans can help cover college living expenses like rent, food, and utilities. However, be mindful that the average student loan debt is $38,787, a significant portion of the $17.5 trillion total household debt in the U.S. as of Q4 2023. To avoid excessive borrowing, it's crucial to manage these funds wisely and look for other income sources.

Besides student loans, consider working part-time or applying for scholarships and grants to reduce the need for borrowing. Some students may have other debts, such as auto loans and credit card balances (see table below). Understanding how to use student loans effectively and balancing other financial obligations can help maintain financial stability.

What expenses can student loans cover beyond tuition fees?

Student loans are not limited to covering tuition and fees. They can also be used to address various living and educational expenses, making it possible for students to manage the financial demands of college life. Below is a breakdown of the types of expenses that student loans can cover:

Housing and Utilities: Whether you live on-campus in a dorm or off-campus in an apartment, student loans can cover rent, utilities, and related housing costs.
Food and Groceries: Loans can help pay for meal plans or grocery expenses, ensuring students have access to adequate nutrition.
Transportation: Commuting costs, such as gas, public transportation, or even car maintenance, can be financed through student loans.
Books and Supplies: From textbooks to lab equipment and other necessary supplies, loans can fund essential academic materials.
Technology Needs: Laptops, software, and other technology required for coursework are eligible expenses.
Childcare: For student-parents, loans can cover childcare expenses, making it easier to balance academic and family responsibilities.
Personal Expenses: Items like clothing, hygiene products, and health insurance premiums may also be included in your budget.

If you’re unsure how to budget your loan funds effectively, explore our guide on additional student loans for living expenses. It provides actionable insights to help students optimize their loan usage.

Understanding what student loans can cover is crucial for maximizing their value and reducing financial stress while pursuing your education.

Is it worth it to get a student loan?

Yes, getting a student loan can be worth it for many students. Workers with a bachelor's degree earn 1.8 times more than those with only a high school diploma, making higher education a valuable investment. However, it's crucial to manage loans wisely to cover college living expenses and minimize debt. As of 2023, the average student loan debt per borrower is $38,787, highlighting the importance of careful financial planning.

Understanding how to use student loans effectively can help manage expenses and avoid long-term financial strain. While total student loan debt in the U.S. exceeds $1.7 trillion, as student loan statistics show, proper budgeting and exploring other financial aid options like scholarships can reduce reliance on loans.

How can I secure a student loan if I have bad credit?

For borrowers with less-than-optimal credit, lenders may consider factors beyond standard credit scores—such as consistent income and the presence of a qualified cosigner—to mitigate risk. Comparing specialized financing options, including getting a student loan with bad credit, can help identify loans tailored to your financial circumstances. Analyzing these alternatives may lead to more favorable terms and a clearer path toward managing overall educational debt.

What should parents consider before taking out student loans?

Parents often play a significant role in supporting their children’s education, sometimes considering student loans to bridge financial gaps. However, borrowing as a parent comes with its own set of considerations.

First, assess your financial situation to determine if taking on additional debt is feasible. Calculate your ability to repay the loan without jeopardizing your future financial well-being, such as retirement savings or other financial obligations. Federal Parent PLUS loans and private loans are commonly available options, but eligibility criteria, interest rates, and repayment terms can vary significantly.

Second, understand the implications of cosigning private student loans. Cosigning can help students secure better terms, but it also makes you legally responsible for repayment if the student cannot fulfill their obligations. This can impact your credit and financial stability.

For parents with credit challenges, exploring student loans for parents with bad credit is essential. Specialized loan options may exist, allowing parents to secure money for educational expenses even with less-than-perfect credit scores.

Finally, consider whether the loan aligns with long-term financial goals. Balancing monthly expenses, loan repayments, and future savings is key to avoiding financial stress. Open communication with your child about budgeting and financial responsibility can also ease the shared burden of student debt.

How can I optimize my budget to effectively manage student loans?

Effective budgeting is critical to ensure that student loan funds are allocated solely for essential expenses. Analyze your monthly income and break down fixed costs such as rent, utilities, and groceries, then designate a specific portion for emergency savings. Utilize digital budgeting tools to track spending in real time and adjust allocations based on fluctuating needs, preventing unnecessary reliance on loans for non-essential costs. Additionally, for working adults seeking flexible learning options that complement a tight budget, consider exploring "What are the best online universities for working adults?" to further support financial stability during your academic journey.

Can selecting a high-earning degree alleviate student loan burden?

Choosing a degree with strong earning potential is a strategic way to manage long-term loan obligations. Aligning your field of study with careers that offer robust salary prospects can accelerate loan repayment and enhance overall financial stability. For instance, evaluating professions such as high paying medical bachelor degree jobs may provide insight into opportunities where higher incomes can offset the financial weight of student debt. Analyzing the future earnings relative to the total debt incurred is essential for building a sustainable financial strategy.

What alternative career paths can help reduce student loan burden?

Exploring nontraditional educational routes can offer financial advantages by reducing overall borrowing needs. Vocational programs and short-term training opportunities may lead to competitive salaries, often with lower upfront costs compared to traditional four-year degrees. This approach not only minimizes long-term debt but can also accelerate career entry and earnings growth. For instance, researching options such as the best trades to get into 2025 can provide valuable insights into professions that balance affordable education with strong income potential.

Will student loans affect my long-term financial health?

Student loans can influence long-term financial stability by affecting credit scores and future borrowing opportunities, such as securing a mortgage or building retirement savings. Evaluating how debt repayment strategies and interest accumulation may impact overall financial resilience is essential. Consider measures like refinancing or adjusting repayment plans to mitigate long-term costs. For those looking to enhance future earning potential, exploring advanced education through online masters cheap programs can be a strategic option to improve financial outcomes over time.

Is student loan forgiveness a viable option for reducing my debt?

Research available student loan forgiveness programs to determine if you meet eligibility criteria, which often include requirements such as working in specific public service sectors or consistently making qualifying payments over a set period. Evaluate whether programs applicable to federal loans address your financial needs and consider that alternative financing options, like private student loans with cosigner, may complement your strategy if forgiveness benefits are limited. Analyze the latest policy updates and lender terms to ensure your repayment plan aligns with long-term financial goals.

How can choosing affordable institutions lower my student loan debt?

Evaluating educational institutions with lower overall costs can significantly decrease the amount you need to borrow. By carefully comparing tuition fees, campus-related expenses, and available financial aid, you can identify options that align with both educational quality and financial prudence. For example, considering regionally accredited non-profit online schools may offer flexible learning environments with reduced overhead, lessening your dependency on student loans and contributing to sustainable long-term financial health.

Key Facts

U.S. student loan debt exceeds $1.7 trillion, making it the second-highest consumer debt category after mortgages (Council on Foreign Relations).
The default rate for students who do not complete their degrees is three times higher than for those who graduate (Council on Foreign Relations).
The outstanding federal loan balance is $1.602 trillion, with about 43.2 million borrowers (Education Data Initiative).
The average student loan debt per borrower is $38,787 (Business Insider).
Rising student debt significantly affects the U.S. economy, influencing consumer spending and homeownership rates (Washington Post).

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

Can student loans be used for spending money?

Yes, student loans can be used for spending money, but it's important to spend wisely. Student loans are intended to cover educational expenses, including tuition, college living expenses, books, and supplies. However, once these primary costs are covered, any leftover funds can be used for other necessary expenses like groceries, transportation, and personal items.

It’s essential to budget these funds carefully because using loans for non-essential items can lead to higher debt. Remember, you will need to repay this money with interest, so avoiding unnecessary spending helps you manage your debt more effectively.

What is an unsubsidized loan?

An unsubsidized loan is a type of federal student loan where the borrower is responsible for all the interest that accrues from the time the loan is disbursed. Unlike subsidized loans, where the government pays the interest while you’re in school, interest on unsubsidized loans starts accumulating immediately.

These loans are available to both undergraduate and graduate students, regardless of financial need. Although they offer more flexibility in terms of borrowing limits, it's crucial to understand that interest builds up, which can increase the total amount you owe if not managed properly.

Can I use student loans for a laptop?

Yes, you can use student loans to buy a laptop if it is necessary for your studies. Laptops are considered educational expenses, so you can allocate part of your loan funds for this purchase. This can be especially helpful for online classes or courses that require specific software.

When budgeting your loan money, ensure you prioritize essential expenses like tuition, college living expenses, and books first. Once these are covered, you can use any remaining funds to buy a laptop or other necessary equipment for your education.

Can I use my student loan to pay off credit cards?

No, student loans should not be used to pay off credit card debt. Student loans are intended to cover educational expenses and related living costs, not existing personal debts. Using loan money for this purpose can lead to financial trouble and is generally not allowed by lenders.

Instead, focus on budgeting and managing your finances separately. If credit card debt is a significant issue, consider speaking with a financial advisor or exploring other debt relief options that don't involve your student loans.

References:

CFR.org Editors. (2024, April 16). Is rising student debt harming the U.S. economy? Council on Foreign Relations.
Federal Student Aid. (n.d.). Federal Student Loan Portfolio.
Federal Student Aid. (n.d.). When it comes to paying for college, career school, or graduate school, federal student loans can offer several advantages over private student loans.
Fowers, A., & Douglas-Gabriel, D. (2024, January 19). Who has student loan debt in America? Washington Post.
Hanson, M. (2024b, March 3). Student Loan Debt Statistics [2024]: Average + total debt. Education Data Initiative.
Streaks, J. (2024, June 11). Average American debt in 2024: Household debt statistics. Business Insider.