What can student loans be used for?

People in line at cafeteria for food

Make smart choices with your student loan money

Imagine this. You’ve signed all your student loan paperwork and your loan has been disbursed (sent) to your school. The school takes out what it needs for tuition, room/board, and fees. Then you get the remainder of your loan amount in the form of a debit card or a check.

Let’s talk about what you can/should do with leftover federal or private student loan money.

What happens to unused student loan money?

Leftover student loan money might feel like a windfall, but it’s really not. Remember—you borrowed that money and you’ll have to pay it back with interest when your loan is due.

Consider sending the leftover funds back to your federal or private student loan servicer as a loan payment. That way, you can reduce your total loan cost and graduate with less student loan debt.

Otherwise, use your leftover student loan money for anything you absolutely need for school. For instance, if you’re a film student, you may need special camera equipment for a class you’re taking. If you’re living in off-campus housing, you may need your student loan money to pay for rent or food.

Need money for college?

Consider a Sallie Mae® private student loan

  • Available for online or on-campus study
  • Competitive fixed and variable rates
  • No origination fee or prepayment penaltyfootnote 1
  • 95% of undergraduate students who’ve been approved were approved again when they returned with a cosigner the following yearfootnote 2
Photo webImage blog Cross Sell study Girl.

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.

footnote Sallie Mae does not provide, and these materials are not meant to convey, financial, tax, or legal advice. Consult your own financial advisor, tax advisor, or attorney about your specific circumstances.

footnote External links and third-party references are provided for informational purposes only. Sallie Mae cannot guarantee the accuracy of the information provided by any third parties and assumes no responsibility for any errors or omissions contained therein. Any copyrights, trademarks, and/or service marks used in these materials are the property of their respective owners.

footnote Sallie Mae, the Sallie Mae logo, and other Sallie Mae names and logos are service marks or registered service marks of Sallie Mae Bank. All other names and logos used are the trademarks or service marks of their respective owners. 

footnote 1. Although we do not charge you a penalty or fee if you prepay your loan, any prepayment will be applied as provided in your promissory note: first to Unpaid Fees and costs, then to Unpaid Interest, and then to Current Principal.

footnote 2. Sallie Mae loans cover enrollment periods of up to 12 months. Students must apply for a new loan each school year. This approval percentage is based on students who were approved for a Sallie Mae undergraduate loan with a cosigner in the 2021/22 school year and were approved for another Sallie Mae undergraduate loan when they returned with the same or new cosigner in 2022/23. It does not include the denied applications of students who were ultimately approved in 2022/23.

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