What can you use student loans 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. Your 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?

Got leftover money from your student loan? Time to treat yourself to a new college wardrobe, right? Not exactly.

Leftover 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. As a rule of thumb, ask yourself, “Do I need this to allow me to attend 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.

Use your student loans for these

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:

  • Books and supplies
  • Room and board (meal plans, food, etc.)
  • Off-campus housing (rent, utilities, etc.)
  • Transportation (gas, bus pass, etc.)
  • Computers and software
  • Study-abroad costs
  • Any equipment you need for classes
  • Sheets and towels

Don’t use your student loans for these

These are not allowable expenses to pay for with loan funds:

  • Pizza and beer for your roomies
  • Spring break travel
  • Taking your family out to dinner
  • Buying a new Mercedes
  • An outfit for a friend’s wedding
  • Cleaning services
  • Entertainment (sports, concerts, theater, etc.)

Make smart financial decisions with unused student loan money

Ultimately, any leftover loan money is yours to use however you’d like. While you won’t go to jail for spending student loan money on expenses unrelated to school, you’ll likely pay more over the long run because of the extra interest that accrues (grows) on those borrowed funds.

For example, if you use loan money to pay for a 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?

If you have questions about paying for expenses with your federal or private student loans, you can always ask 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.

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