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Can you use student loans for rent?

Student Loans
Written by Fiza Usman
Updated: November 16, 2022
6 min read
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With the rising costs of attending college, millions of students depend on federal and private student loans to pay for their expenses, leaving many wondering how can you use student loans. In addition to scholarships, grants, and financial aid, student loans are another way for more people to have access to higher education.

These student loan funds are essentially borrowed money from either the government or a private lender. Unlike the scholarships featured on, these student loans have to be paid back later, with an interest that accumulates over time. As a result, scholarships are often the preferable form of financial aid. To start earning scholarship aid today, sign up for a free account!

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Federal student loans

Federal student loans are money received by the federal government. Students can apply for this type of loan through the Free Application for Federal Student aid (FAFSA). Using both financial information from the applicant and their guardian, the respective school's financial aid office will determine how much a student qualifies for.

Federal student loans

Private student loans

Private student loans, on the other hand, are acquired through private student loan lenders. With a higher interest rate, these loans are pricier and require students to pay their debt while still attending college.

Although they differ in logistics, both these forms of student loan money can go towards living expenses and housing supplies. So simply put, yes, student loans can pay for your rent in both on-campus and off-campus housing.

Be cautious

These benefits should be taken with caution, however. Student loan funds may seem like easy free money, but they can be detrimental to one's future. There is currently 1.75 trillion dollars in student loan debt - a number gathered by 43 million people across America.

Each year, people take out large sums in more student loans with the mentality that it will be easy to pay back upon graduation. Yet, these impending education expenses have prohibited many from buying a house later, leaving permanent damage to credit scores.

The interest on these loans builds up, making it feel impossible to pay them off while still having enough money to fuel your lifestyle.

Although student loans are effective in giving money that may not be currently available, it is best to not be too reliant on them.

Similar to student loans, scholarships are financial opportunities designed to help students obtain their undergraduate or graduate degrees as well as cover other living expenses. And, this money never has to be returned. The more you earn through scholarships the less you owe, and one step closer to graduating college debt free!

Explore the wide variety of scholarships featured on our page, and apply today.

What can you spend student loans on?

Student loans should strictly be used for educational and essential living expenses. Due to high interest rates, it is also best to be careful with acquiring student loans to only pay for what you absolutely need on your college campus.

What can you spend student loans on?

College costs

Most students use student loans to cover their cost of attendance for the academic year at their respective universities. This includes tuition costs and fees, room and board, textbooks, and study abroad costs. Learn more about the costs of college in this guide!

School necessities

Loans can also cover additional school-related expenses. With this money, students can buy school supplies, a personal computer, transportation expenses, and any other vital purchases promoting one's success.

Housing expenses

Finally, as discussed earlier, student loans can fund housing expenses for those living off campus. It can be used to pay rent, utilities, groceries, or a security deposit.

Students have a lot of autonomy over the allocation of their student loan funds. This flexibility can leave the temptation to splurge on unapproved purchases, but it is heavily discouraged.

Breaking these rules can result in significant consequences including immediate cancellation of the loan, and risk to a student's eligibility to receive financial aid in the future.

While federal student loans prohibit students from spending on personal expenses, private lenders can establish their own terms. These terms might differ slightly from the Department of Education between institutions.

What can I not use student loans for?

If you are ever unsure of a student loan purchase, it is always best to contact the provider to confirm the loan terms. Although these can differentiate among lenders, there are a few purchases that are especially forbidden.

What can I not use student loans for?

Anything that does not relate to your education should be avoided.

This includes:

  • Eating out
  • Vacations
  • Clothes
  • New vehicle or home
  • Outside activities
  • Expensive technologies
  • Subscriptions

The rule of thumb is that if it does not directly apply to your school, it should not be bought using student loans. Despite how it feels, the money still belongs to either the government or private lenders. They have full authority to break the agreement at any time regardless of the academic year.

Students interested in covering other expenses not affiliated with their education are better off investing in personal loans.

Do student loans go into your bank account?

Currently, there is no uniform student loan disbursement process adopted by all federal and private student loans. While some lenders deposit the funds to a student's university, others send it to the individual's bank account instead.

Most funds are first sent to the school's financial aid office to cover tuition as well as room and board for students residing in on-campus housing. Once all outstanding payments are made, any leftover student loan money will transfer to the student. These remaining funds can be used as spending money for eligible purchases.

In other cases, student loans are given to students for them to distribute themselves. This leaves students with the responsibility of paying school fees on a timely basis on their own.

It is usually more convenient for student loan funds to go directly to the school. This increases transparency between the University's financial aid office, lender, and student.

Do student loans go into your bank account?

Can I use student loans for car payments?

No, student loans are not permitted to be used for buying a car.

Technically, student loan agreements highlight that purchases should solely be spent on educational expenses - which cars are not included in. Regardless, it would not be wise to use student loans on this specific purchase as cars' value depreciate quickly.

They can, however, be used to fund maintenance and gas for an already-owned vehicle. These expenses would be included under "transportation."

Students interested in investing in a car during college should also take advantage of other resources:

  • Ridesharing apps: Uber, Lyft
  • Car-sharing companies: Zipcar
  • Public Transportation

What happens to leftover financial aid money?

It truly depends on what form of financial aid is received, and who the money is being lent by.

Student loan money

Federal and private student loans usually send student loan funds directly to the student's institution to cover the school-certified cost. If there is any leftover student loan money after paying everything, it will often go to the student's personal bank account to fund other expenses.


Grants are gift-aid awarded by the government to fund projects, ideas, and future aspirations. As long as a student completes all their fulfillment, this money does not have to be paid back! If there is an overflow of this money it is often deposited to the student for their personal use. You can learn more about the distinction between grants and scholarships in this guide.

Scholarships scholarships are essentially free money that is to be used for educational expenses. Students are welcome to apply for's diverse array and have more financial freedom in college! Usually, these funds are directly allocated to the student's college or university. If their bill is less than the award amount, the rest will be held until the student has eligible expenses or used towards any student debt. These decisions are entirely up to the donor or lender so it is best to reach out to them in this scenario to ensure you're not breaking the rules of your scholarship!

Fiza Usman
Content Writer

About Fiza

Fiza is a dedicated writer and researcher with expertise in internships, scholarships, career opportunities, and financial aid. Her skills enable her to craft engaging and insightful content that guides students through the complex processes of applying for financial aid and pursuing career opportunities.

She graduated from Boston College, majoring in Applied Psychology and Human Development and Computer Science.


Fiza has experience in writing blog posts, SEO content, and creative storytelling. On her personal blog, she shares engaging narratives through personal anecdotes. Her international experiences have given her a global perspective, enabling her to connect with a diverse audience. Fiza is committed to making a meaningful impact through her writing, always considering the perspectives and experiences of others.

Since joining the team in 2022, Fiza has channeled her passion for guiding students through pivotal stages of their academic journeys. She understands the challenges associated with college life and is dedicated to helping students adjust to their degree programs and manage their finances. Motivated by her own experiences, Fiza is passionate about empowering students by providing guidance and support that she wished she had during her undergraduate years.

Quote from Fiza

“To educate is to empower.”

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