Loans and grants

Student loans & living expenses: 5 questions answered

How to pay for college living expenses with student loans

Did you know that along with tuition and fees, your student loans can be used to pay for college living expenses? Not only can you use your loans to buy books, a laptop, and other equipment necessary for your college or training, but you can pay for school meals, groceries, rent, room and board, supplies, and utilities, too.

How much money can I get, and how can the funds be used?

The amount of student loan funds you can receive is calculated based on your expected education expenses. Before you consider a loan, make sure to first take advantage of free aid (such as grants and scholarships) and any work-study position offered. Your eligible student loan amount is determined by your school’s cost of attendance, also known as COA. The COA is an official number determined by each college, based on costs that include:

  • Tuition & fees
  • Books & supplies
  • Living expenses (on or off-campus) & utilities
  • Meal plans or groceries
  • Transportation
  • Personal expenses

All the above are necessary expenses that can be paid for with a student loan.

What to Know: Find out your school’s COA and calculate what additional money you will still need after you’ve received any free aid and federal student loans. Will you need another student loan to close the gap?

Can I use student loan funds to live off campus?

Most schools estimate a budget for on-campus college living expenses, so if you’re living off campus, they can’t certify the exact amount of money you may need for your actual rent, meals, internet, and incidentals like renter’s insurance. However, the school will certify an amount equivalent to the cost of living on campus for use for off-campus expenses. Using student loan funds to live off campus is permitted, but you’ll need to budget to be sure you set aside the monthly payments you’ll need to cover your off-campus expenses.

Along with checking local rental costs, if you’re planning to live off campus:

  • Research the cost of living in the area.
  • Communicate with your school’s financial aid office so they can include as much aid as possible in your COA.
  • Consider how you’ll cover any unexpected expenses that may crop up.

What to know: You may use your student loan to live on campus or off campus, but planning is key.

How do I use student loans to cover living expenses?

If you’ll be using loan funds, you’ll typically need to secure the loan for the full year in time to pay the tuition bill. Student loans are usually disbursed directly to the school to cover tuition and fees, plus room and board if you’re living on campus. Which means you don’t usually have to do anything more to cover your bill if the total student loan and financial aid meet your entire college costs.

If you’re moving off campus and you’ve requested additional funds for living expenses, any remaining funds after covering the tuition bill can be refunded directly to you. Consider putting the extra money into an account that is earmarked for your living expenses to better manage your money during your college experience. Contact your school’s financial aid office directly to review your school’s specific process for managing refunds.

What to know: VSAC, Vermont’s nonprofit higher education agency, offers competitive loans that can be used for off-campus living expenses, meals, and related expenses that are included as part of your school’s COA.

How do I manage my loan money?

It all begins with the disbursement of funds. Generally, schools tell lenders when to send your loan payment, and typically the funds are sent in two separate disbursements (one for each semester, fall and spring). Don’t hesitate to contact the financial aid office to follow up about the status of your aid or loans so that you’ll know when funds will be available.

If you’re living off campus and intend to move in before the semester starts, create a financial plan on how you’ll cover those initial costs before your loan funds are available.

Other tips:

  • Budget: Your loan and aid cover your costs for either a single semester or school year. If you receive a refund or extra aid, add your own “money management 101” into your personal course load. Managing your money weekly keeps you ahead of your housing, food, and entertainment expenses.
  • Avoid unnecessary spending. College is a time to learn and grow, but it is also an experience in managing time and finances. Student loans aren’t for:
    • spring break
    • clothes
    • excessive social expenses
    • the latest gadgets
  • The loan and financial aid funds are an investment. Invest wisely in your future, and take a long-term view on the use of your money.
  • Use any excess funds to start paying down your loan. What you pay for now, you won’t pay for later. Paying toward your loan can reduce the overall interest and your final cost of borrowing.

What to know: Follow the cardinal rule. Live like a student in school so you don’t have to live like one for 10 years after graduation to pay down unnecessary debt.

How do I apply for student loans to pay for tuition and college living expenses?

You now know how to pay for housing and expenses with a student loan, but how do you apply for a student loan for education or training?

  • Fill out the FAFSA. The first stop for any college-bound student is applying for federal student loans by filling out a FAFSA. The Free Application for Federal Student Aid determines the federal student loans and federal financial aid for which you’re eligible.

Because federal student loans have special benefits and protections, students should always apply for and accept those funds first. And no matter what you’re offered, always compare options before applying for federal PLUS loans (for parents or grad students).

  • Consider private student loans (like VSAC). So, you’ve completed your FAFSA, and received your federal student loan options, along with any grants and scholarships. Do you still need funds to cover the remaining college costs? That’s where private student loans come into play.

The thing to remember is that all loans are not created equal. All private lenders have different interest rates, terms, and repayment options. It’s important to learn how loans work so you aren’t caught off guard. Unlike federal student loans, private loan approval is based on the creditworthiness of you and/or your cosigner. Whenever you’re looking for a loan, you should shop around with local banks, credit unions, nonprofit state agencies for higher education (such as VSAC), and online lenders.

Vermont students heading to school anywhere in the U.S. or internationally, as well as out-of-state students studying at a Vermont school, have access to VSAC’s student and parent loans for undergraduate and graduate/professional or trade education. For more than 50 years, VSAC has supplied students and families with tools for informed federal and/or private loan buying. VSAC wants you to make the best choices for your life today while minimizing what you’ll need to pay back tomorrow.

Before you sign up for an education loan, remember:

  • Fill out a FAFSA to get as much federal aid as possible. Accept free “gift aid” first, then federal student loans.
  • If you still need funds to pay for school, shop around for a lender that fits your current and future needs.

What to know: If you’re a Vermont resident heading to school anywhere or a student thinking about coming to college in Vermont, consider a VSAC fixed rate loan to bridge the financing gap and invest further in your education.

This story is produced by Vermont Student Assistance Corp., created by the Vermont Legislature in 1965 as a public nonprofit agency, to advocate for Vermont students and their families to ensure that they achieve their education goals. Our vision is to create opportunities for all Vermont students, but particularly for those—of any age—who believe that the doors to higher education are closed to them. We begin by helping families save for education with Vermont’s state-sponsored 529 savings program. To help Vermonters plan and pay for college or career training, our counselors work with students in nearly every Vermont middle school and high school, and again as adults. Our grant and scholarship programs attract national recognition, and our loan programs and loan forgiveness programs are saving Vermont families thousands of dollars in interest.

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