What Can I Use My Student Loans For?

Student loans are primarily used to cover tuition, room and board and other educational fees, and in most cases are directly deducted from the amount a student owes. Students seldom have the option of how to use both federal and private loans. In the case of loan overage, students are still expected to use excess funds on educational expenses.

How Are Loans Disbursed?

Federal Student Loans

In most cases, federal student loans given through the FSA will be deducted from the amount you owe your school for tuition, room and board and other miscellaneous fees. You won’t be given direct access to those funds.

Student Loan Refund

If your loan amount exceeds the amount you owe the school for tuition and other expenses at the time of disbursement, you will receive a financial aid refund. Each school has its own method and schedule for crediting student accounts.

How you use your financial aid refund is up to you – no one will be monitoring your bank account to determine how each dollar is being spent. While you may not need to use your excess loan funds for tuition or housing, that doesn’t mean it’s a good idea to plan a vacation or upgrade your wardrobe.

Spending money received from a student loan responsibly ensures you’re investing in your future. If not spent wisely, you might undermine your education and find yourself short on cash when it’s needed. And, whether or not you spend it wisely, always remember: you must pay back the loan. Make sure it’s worth it!

Private Student Loans

Each lender has different methods, but in most cases, a bank or private institution will send your student loan funds directly to your school, who will then deduct it from what you owe.

How Should You Spend Your Student Loan?


Every student’s biggest education-related expense is tuition and the additional fees that come with it. These costs can range from $3,000 per year at a local community college to more than $40,000 per year at a private four-year university. As such, you should consider the enrollment costs of the school you plan to attend carefully. Although you can borrow a hefty sum to cover a higher-priced college, you must still pay that money back after graduation.

Housing Expenses

The second biggest expense your student loans cover are housing expenses. If you live on-campus, your school will apply your financial aid to these housing costs automatically.

If you live in an off-campus apartment, however, you can use your student loan disbursement to pay for all housing-related expenses, including utilities. The only difference is that you must wait to receive your loan disbursement, which might take a few weeks after the semester has already started. It’s your responsibility to make housing payments on your own prior to receiving your financial aid.

Learn more here about the costs associated with living on campus, which you may use student loans to finance.


Student loans can cover your school’s meal plan and other food-related expenses. Be sure to review your options to see what works best for your eating habits. The school will apply your student loans to your on-campus meal plan before giving you the leftover funds.

Students living off-campus can also use their financial aid disbursement to pay for groceries. If you spend a lot of time on campus, though, it might be more cost-efficient to sign up for a commuter meal plan if one is available.


Getting to and from college can be expensive, but you’ll be happy to know that student loans can cover transportation costs. It’s OK to use financial aid for gas, parking passes, flights home for the holidays, or public transit costs. If you’re looking to save money on transportation and borrow less, consider options such as carpooling, not keeping an on-campus vehicle, or using a bike to get around.

Textbooks and Supplies

When you go to college for the first time, you might be surprised to learn just how much textbooks cost. Depending on your course load, a trip to the campus bookstore can easily total several hundred bucks, but financial aid can help.

In general, students receiving student loans are given a voucher to use for textbooks. This voucher provides proof of your financial aid amount after basic tuition and fees are covered and essentially subtracts your textbook expenses from your remaining aid before it’s distributed to you. Once you receive your remaining financial aid funds, you can use them for additional supplies, such as a computer.

To help save on textbooks, consider purchasing used books online or from the campus bookstore. You won’t be able to use your financial aid voucher off-campus, but it can pay to shop around.