Can student loans be used for housing?

Student browsing laptop in apartment
Student loans can be used for housing costs such as on-campus and off-campus rent.

Borrowers can use student loans for other educational costs beyond tuition such as housing, food, and textbooks.

There are some restrictions for certain student loans, both private and federal, and borrowers should closely review their loan terms. For example, Perkins federal student loans are primarily meant for tuition costs, but other federal and private loans can be used for both on-campus and off-campus housing.

In order to simplify the payment process, many lenders send loan funds directly to a student’s college or university.

Cathy Mueller, executive director of Mapping Your Future, said the cost of tuition and added fees will always be charged first.

“Student loans will be applied to the balance of your account at the school first, then if there are remaining funds, the funds may be released to the student for educational expenses outside of the school,” she said.

If the loans are not sent directly to a school, then the funding is sent to the student, who is able to distribute it as needed.

When Michael Richardson was gaining his undergraduate and graduate degrees, he used student loans to pay for rent, bills, and even a car. At the beginning of each semester, he received a check from his student loan lenders. His Stafford loans and Parents Plus loans were easily used for rent, he said.

But students should remain cautious about how many loans to request, and where the money is spent.

Now as a business development coordinator for Terwedo Financial Services, Richardson wished that he utilized his funds more appropriately, especially for the car that he purchased when his vehicle died during junior year.

“If I could go back in time, I still would’ve gotten a car, but it would have been a cheaper and more reasonable one,” he said. “Now that I’m out of college and having to pay those loans back, I would strongly caution against using loans for anything more than absolutely necessary.”

If the student loan is distributed directly to the student, it can cause financial issues if the money is misused. Richardson does not think that additional limitations should be placed on how loans are used, but he does wish he took out fewer student loans than he did. Each month he repays $1,200 towards his student loan debt. If he requested less funding due to spending less and working more during college, he would have saved between $300 to $400 per month.

“Losing that much of my current paycheck and having so little leftover is really sort of depressing when I know that I could have more spending money,” he said.