What can student loans be used for?

Yes, use your student loans for these items

Whether you’ve got federal or private student loans (or a combination of both), here are acceptable education expenses that you can use your loan money for:

• Tuition: This is the cost of attending your classes in college; your school will automatically deduct it from your loan.
• Books, supplies, and fees: These include any lab fees, required books, and other supplies (notebooks, pens, etc.) that you need for school.
• On-campus room and board: These include your dorm expenses and any meal plan you purchase; the school will automatically deduct these from your loan if you’ve signed up for them.
• Off-campus housing: If you live off-campus, these eligible expenses can include rent, utilities, and groceries.
• Transportation: These include gas for getting to school, parking fees, bus passes, etc.
• Study abroad: If you’re spending a semester or year abroad for school, you can use your loan for those expenses.
• Technology and equipment: If you need a laptop, software, and or any other equipment for your classes, you can use money from your loan.
• Personal costs: These can include sheets and towels, toiletries, or even a microwave and refrigerator.
• Professional expenses: You can use your loan funds for professional testing, licenses, and certification.
• Disability needs: You can use your loan to pay for specialty services, equipment, and supplies that you need.
• Childcare: If you’re a single or working parent, you may be able to use your loan to pay for childcare while you’re in classes; check with your financial aid officer to make sure.

Nope, don’t use student loans for these items

These are not school-related expenses, so don’t use your loan money to pay for them:

• Non-school food: Don’t use your loan for take-out pizza and beer for your roomies or taking your family out to dinner.
• Vacations: Sure, spring break travel is fun, but it’s not necessary for your education.
• Debt: Don’t use your loan to pay off credit cards, a car note, or other debt. You also can’t use it to pay for a down payment on a new house or condo.
• Non-school services: You can’t use your loan for hiring cleaners, paying gym fees, or any other non-education services.
• Entertainment: Don’t use your loan for streaming services, sporting events, concerts, theater, etc.
• Clothing and shopping: Buying an outfit for your friend’s wedding or a new flatscreen TV doesn’t qualify as a school expense.

What if you misuse your student loan money?

There may be penalties for spending loan money on non-school items. But even if you go ahead and spend the funds that way, you’ll likely pay more over the long run—that’s because you’ll have to pay extra for the interest that accrues (grows) on those borrowed funds.

For example, if you use loan money to pay for a vacation trip in sophomore year, it may feel good to be able to get away. But after you leave school, you’ll have to pay back that money—along with the interest and any other fees that have grown since the trip. By then, the sun and sand will be a long-forgotten memory. But the payment will be real. Part of adulting is making smart financial decisions. Why not start now?

Alternatives to using your student loans

So, if you can’t use your loan for non-education expenses, but need other items to make your life easier, what can you do to get more money?

• Part-time job: If you’ve been approved (in your financial aid offer) for work-study, that’s a great way to get money you don’t have to pay back. You can also get a part-time job on your own or develop a side hustle for spending money.
• Scholarships: Some scholarships require that you use their money for tuition but there are others that let you pay for living costs with the funds. Best part? You don’t have to pay the money back.
• Your savings: If you didn’t have to use all your savings for school, this is the time to use it. Don’t forget to put the word out that money would be a welcome gift for birthdays and holidays.
• Crowdfunding: This can be touch-and-go, but it might work by encouraging friends and family to help you pay for non-school items.

Another way to avoid using your loan on non-education expenses is to spend less. Consider creating a budget to see if you can save on any of your day-to-day expenditures.

Make good financial decisions with unused student loan money

The easiest way to avoid issues with using student loans for non-eligible expenses? Just don’t do it. And if you find that you have leftover money from your loan, don’t see it as “found” cash. You’ll have to pay it back eventually, along with the interest that has grown over time. So, either use your loan for a qualified expense or return it to the lender, so you don’t have to pay interest on it later.

If you have questions about whether an expense is allowed for your federal or private student loans, check with your school’s financial aid officer for guidance.