When studying as a student, the tuition is just a part of the overall education costs. There are also others like transportation, rent, books, and meals that you need to consider as expenses. Most of these costs are around an average of $17,000 annually.
Most families and students don’t have much money to prepare and pay for these charges, so you may want to utilize federal or private student loans for living expenses to cover some of these. However, there are restrictions and drawbacks that you need to keep in mind before deciding to use the loans as your living expenses.
Is It Possible to Pay your Living Expenses with the Debts?
Fees and tuition are only a tiny percentage compared to all the other costs when you go to college. This is why schools will show you a COA or cost of attendance which is an estimated amount on how much individuals spend on transportation, board, room, fees, tuition, supplies, textbooks, and other essentials while on campus.
How the COA is Determined
COAs are often determined by the individual campuses and not necessarily by the government. The numbers of COA will vary depending on your location and the school you are attending. If you are in New York, the COA will undoubtedly be higher than when you’re in states like Mississippi. This is not surprising as Mississippi is one of the states known for its lower costs of living.
There are formulas for calculating COA, but many use averages to calculate and determine the costs spent on a typical factor. COA that the school decides is a very important factor because this is usually the maximum that you will receive as financial aid.
This will affect the number of your student loans, grants, and scholarships as well. Both the private lenders and federal governments will use the COA to determine the maximum amount you can borrow. Get more info about the cost of attendance at this link.
Authorized Use of Student Loans
When you have received the money from a grant, know that you will have to sign and agree with the terms, conditions, and interest rates stated on the document. However, in this agreement, the authorized use of money is also going to be listed. Aside from using the funds for tuition fees, here are the other qualified expenses where you are authorized to use the funds:
- Rent. You can pay for your board and lodging with the loan that you have just taken out. The borrowed money can pay for your dorm room, but this is also applicable for off-campus housing. If you decide to get an apartment and share this with friends, then paying with the loan should not be a problem.
- Meals. The COA includes an allowance to cover your daily meals. You may be purchasing your groceries or sign up for a college meal plan, using your debt to pay for food is allowed.
- Laptops and Computers. Renting or purchasing a PC is fine, especially if you need this to complete projects and class works.
- Personal Supplies. Aside from the computer, you can use the loan for pens, notebooks, books, software, and other important materials that you need to purchase.
- Childcare. Use the debt to hire babysitters or pay for childcare when you attend class.
- Transportation: Use the loans to buy maintenance for fuel, car, bus, and taxi fares.
Avoid Paying these Things with your Loans
It is essential to use the funds well and make sure that your tuition fees are all paid up before the end of the semester. However, many students should still be careful about the type of purchases after they get the money. Read more about how to prevent misusing the money in this link: https://www.usnews.com/education/blogs/student-loan-ranger/articles/201 8-04-18/what-happens-if-you-misuse-your-student-loans. Most of the federal student loans are so easy to get, even if you have bad credit. However, using student loans for expenses like these might be a mistake:
- Buying a new car. While the money is something that should be used for transportation, the rule is that they are ideally used for fares, fuel, and maintenance. They are not designed to give you an auto loan.
- You can use a portion of the funds to continue your education abroad. However, the non-essential ones like taking a spring break vacation or going into private islands for the weekend are not recommended.