The majority of students take on debt to pay for college. More than 6 in 10 college seniors who graduated from public and private nonprofit colleges in 2019 had student loan debt, owing an average of $28,950, according to the latest annual study from our organization, The Institute for College Access & Success, based on data provided by various federal and nongovernmental sources.
Students take on this debt because the cost of going to college is more than just tuition and fees. It also includes textbooks, transportation, housing, food and other living expenses. Each college calculates its cost of attendance, which is the amount it says it will cost a student to cover expenses associated with attending that school. Your cost of attendance will vary depending on whether you’re attending full time or part time and whether you’re living on or off campus.
You can use your financial aid funds — including student loans — to cover expenses that fit into the definition of cost of attendance. Here are some key considerations that you should take into account when using student loans to cover nontuition college expenses.
Understand That Federal Student Loans Are Provided by the U.S. Government
The U.S. Department of Education originates all federal student loans, which account for more than 90% of student loans made each year. Like Pell Grant aid and federal work-study, student loans may be part of the financial aid package that you get from your college once you complete the Free Application for Federal Student Aid, known as the FAFSA.
If you choose to borrow some or all of the student loans you’re offered, the federal government sends the funds directly to your college to cover your tuition, fees, room and board, and perhaps other school charges. Any loan money left over after that, called a credit balance, is supposed to be sent to you via direct deposit or check within 14 days unless you have asked the school to retain it for future expenses.
You also can choose to return these funds or use them to cover qualifying nontuition expenses.
It’s important to note that although student loans come alongside other forms of aid, such as grants and scholarships, they are not free money and will have to be repaid with interest. Federal student loans are the safest option if you need to borrow for college because they come with protections that can help make repayment more affordable, including the ability to make payments based on your income.
Consider Your Budget Each Semester
Colleges usually disburse student loans twice per academic year, at the beginning of each semester. If you’re expecting to cover your living expenses using a student loan refund, it’s important to be aware of this timeline and to make a plan to cover expenses in the meantime.
You should also be sure to carefully budget your funds to cover costs over the entire semester. For example, to get a sense of your monthly resources, you could divide the semester’s total refund amount by the number of months until your next disbursement.
You can use a free online budgeting tool such as Mint to map out ongoing expenses, including rent and utilities. If there’s not enough money to cover expenses, other options are available.
Weigh Getting a Part-Time Job
If you need additional funds to cover living expenses, or if your basic needs are covered but you’d like additional spending money, you can work while in school. Check with your college’s financial aid office to see if you qualify for the federal work-study program, which provides a part-time job that pays you at least once a month, or seek out some other kind of part-time employment.
However, it’s important to balance your needs and priorities and to give yourself the necessary time and space to focus on your studies. Research shows that working too many hours while in college can make it harder to graduate.
Ask Your College to Help You Access Additional Support
If you are struggling to cover basic needs and living expenses, you have options. Your school can help you determine whether you’re eligible for federal or state benefits programs to help you pay for food, housing, medical insurance or child care.
Many colleges also offer emergency aid programs to help students cover unexpected expenses, such as if you need car repairs in order to get to and from campus. Your school’s student affairs office or financial aid office can help connect you with these supports.
Be wary of taking on private student loan debt to cover expenses. Besides a credit card, private student loans are one of the riskiest ways to cover college costs because they don’t include the same benefits and protections as federal student loans.
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