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What to Know About Using Student Loans for Living Expenses

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Yes! Your loan came through, and you have what you need to pay your tuition to go to university to get the qualification you need for your dream career in business.

But your part-time job doesn’t earn you enough to live on while you’re in learning. Or, with all the studying you’ll be doing, you won’t even have time for a part-time job.

Did you know that you can use student loans for living expenses too? Nobody will be watching over your shoulder on how you spend your living expenses loan disbursement. But you should be wise about how you use that money. It takes discipline to spend wisely and better to acquire the skill now, and it will work for you later on in your business or career.

Here are some tips to steer you in the right direction.

Use Student Loans for Living Expenses

The powers that be know that just because you are attending college, your living expenses don’t go away. Somehow you’ve got to pay for the costs of day-to-day life at the same time you’re going to university.

If you are living on campus, many of these expenses are rolled into the amount you pay the school—for example, the fee for your dorm room and the right to eat in the student cafeteria.

But, living off-campus is often a cheaper option. Buying your own food from the grocery store typically is as well. How do you take advantage of that if you don’t have the cash to do it?

Cost of Attendance

For this reason, your university’s financial aid office will work out your cost of attendance. This is above and beyond just the tuition charge.

The cost of attendance includes all direct and indirect costs of going to further education. So they’ll include tuition, housing, food, books and other academic expenses. They’ll even consider transportation costs if you live off-campus and other personal expenses.

Lenders will take your cost of attendance into account when determining that maximum amount they will lend you. Keep in mind that they won’t go over your cost of attendance, so this is an important number.

Your cost of attendance may change over time. You should check with the financial aid office for each year that you need to take out a loan.

Student Loan Disbursement

Once your tuition and other direct costs are paid, you’ll receive a student loan disbursement.

This is how you use student loans for living expenses.

This is the money above the direct costs that the school estimated you would need in the cost of attendance. What you do with it is up to you. But if you don’t use it wisely, you’ll pay for it later.

Most student loans are set up with a 10-year repayment plan. However, 60% of borrowers plan to be in their 40s by the time they pay off their loans.

You don’t want to end up in that statistic. Proper planning on your part now can help you avoid it. If you make the effort to pay off your student loan early, you’ll save money in interest charges – and the savings can be significant.

Keep Costs Down

If you have to borrow money for school, your goal should be to borrow as little as possible. That means cutting out personal costs where possible and keeping your living expenses minimal.

You’ll thank yourself later when all your friends are still saddled with student loan debt, and you’ve already paid yours off! Here are a few ideas on how to do that.


As much as you might want it, you don’t need a lavish apartment while you’re in school. If you’re paying for that apartment with your student loan disbursement, it’s a downright dumb idea.

Remember that money isn’t free. You will have to pay it back, with interest, later. The more you have to pay back, the longer it will take, and the more you will pay in interest.

Take a look at the cost of the dorms and school food plan. Compare it to the cost of a modest apartment nearby. It usually winds up to be a lot cheaper to live off-campus. Keep in mind that you’ll need to factor in transportation and food costs as well.


While we’re on the subject, let’s talk about food. There are so many ways to save on groceries.

If you don’t take advantage of them, you’re simply leaving money on the table.

Number one is to buy your own groceries and cook your own food. Restaurants are not a necessity. Even $5 sandwiches at the sub shop is a splurge. That’s $150 a month just for lunch!

You can make your own sandwiches at home for a fraction of the cost. And, as a bonus, you can make them exactly how you like them!

Fun Stuff

The college years are supposed to be about partying and having fun, right? Well, not unless you want to pay for it for the next 20 years.

Use your student loans for living expenses, not expensive, partying. Alcohol is expensive and won’t help you graduate any faster. If you spend every weekend partying you could even end up falling behind in school.

Trips to Mexico for spring break aren’t a wise idea either. You think you’re having fun now, but you won’t be when you’re drowning in debt later. Save that stuff for after school, when you have the money to do it.

That’s not to say that you can’t have fun while you’re going to school. There are plenty of free or inexpensive things that you can do in town with your friends. You just need to get a little creative about it.

Extra Money

If you manage your student loans for living expenses right, you may end up with extra money.

What do you do with it?

You can return money to the lender within 120 days without ever having to pay interest on it. This is a great choice as you’ll have less to pay back. Plus, with a lower principal, less interest will be piling up.

If you want a buffer for emergencies, you can squirrel some away. But keep in mind that money will get more expensive once the interest kicks in.

You could even use a little for starting a business while you’re still in college! That could give you the jumpstart you need to get ahead and get your loans paid off quickly.

Focus on School

Be frugal and focus on school. If you’re wise about using your student loans for living expenses, you will be setting yourself up for success.

Once you get out of school, you’ll pay off your debt faster and have money to realize your dreams. Now you can take that vacation, or build your own business. The possibilities are endless!

Check out our education section for more useful education information!

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