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The curt respond is, "Yes." You tin use educatee loan gain to pay for housing, whether you decide to live on-campus or off-campus while attending school.

Having said that, like nearly personal finance and higher-price topics, there'southward a bit more to the answer. Hither's a rundown of what pupil loans can be used to pay for, how yous tin employ student loans to pay for housing, and how much you might exist able to borrow to pay for all of your costs of attention schoolhouse, including housing.

How student loan borrowing works

When you accept out a pupil loan to help pay for school, the funds are generally disbursed directly to your school, regardless of what the funds are going to be used for. In other words, if you lot have scholarships that cover all of your tuition and fee obligations to your schoolhouse and y'all obtain a $10,000 student loan to embrace housing and other living expenses, that money volition exist sent to your school even if you owe the school no money.

Later on your school receives your student loan proceeds, the coin will first be applied toward any outstanding balance you may have. After that is done, you'll receive the rest of your loan funds from your school, either in the course of a direct deposit or a check.

For example, if your tuition and fees for the semester add up to $v,000 and you receive $7,500 in pupil loans, the coin will exist sent to your school and volition be used to pay the $5,000 balance first. And then, the remaining $2,500 will exist sent to you.

What can student loans pay for?

Educatee loans are designed to aid with whatever and all expenses associated with attention college. This tin can include, simply is not necessarily limited to:

  • Tuition
  • Fees
  • School supplies
  • Housing
  • Meals
  • Transportation
  • Other necessary costs of completing your degree, such every bit a laptop computer

Having said that, in practice, you can use your excess educatee loan proceeds (after your tuition, fees, and other direct obligations are paid) for near whatsoever you want. As I mentioned, the school sends whatsoever excess financial assistance direct to you. The money will be deposited in your bank account and there's no need to runway your expenses to go on your lender happy. In fact, while it's not recommended, it's non uncommon for students to pay for things similar leap interruption vacations with student loan money.

How much can yous borrow?

One of import thing to know is that while you tin can use student loan proceeds for a multifariousness of expenses, including housing, in that location are limits to the amount of coin you can borrow. In other words, the student loan market place is designed so you can't infringe enough to rent a luxurious house with your loan proceeds.

Specifically, federal student loans have annual borrowing limits that depend on your condition equally a dependent or contained, too as your yr in school. As of the 2018–xix school twelvemonth, here are the federal pupil loan almanac borrowing limits:

Year in School

Dependent Student

Contained Student

Showtime-Year Undergraduate

$5,500 ($3,500 subsidized)

$9,500 ($three,500 subsidized)

Second-Year Undergraduate

$6,500 ($4,500 subsidized)

$x,500 ($four,500 subsidized)

Third-Year and Beyond Undergraduate

$vii,500 ($five,500 subsidized)

$12,500 ($5,500 subsidized)

Graduate or Professional

Northward/A

$xx,500 (all unsubsidized)

Amass Loan Limit

$31,000 ($23,000 subsidized)

Undergraduates -- $57,500 ($23,000 subsidized)

Graduate/Professional -- $138,500 ($65,500 subsidized), including undergraduate loans.

Data source: studentaid.ed.gov

Because these limits are oftentimes non sufficient to embrace the entire cost of attending schoolhouse past themselves, many people seek loans from alternative sources.

On the federal side of the equation, there are PLUS loans available to parents of dependent students likewise equally directly to graduate students. There's also a large and growing individual pupil loan marketplace that'south designed to help borrowers span the gap between Federal Directly Loans and their full financial demand. With these options, yous can generally borrow upwards to the toll of attention your schoolhouse, minus any other fiscal aid you lot receive.

Toll of omnipresence example

I know that "cost of attendance" sounds like a vague number, but it'southward actually a specific effigy that is published past each private higher and university. To illustrate this concept and how it affects the educatee loan process, permit's have a wait at a existent-world example:

A quick search on the website of my alma mater, the University of South Carolina, shows a "price of omnipresence" page that breaks down the school's estimated cost of omnipresence by residency (in-land or non-resident) as well as past whether the pupil chooses to live on- or off-campus.

For our example, here'south the school'south annual breakdown of its estimated cost of omnipresence for an in-state undergraduate student who chooses to live off-campus:

Expense

Estimated Toll

Tuition and Applied science Fee

$12,618

Housing

$8,334

Meals

$2,672

Books and Supplies

$1,065

Miscellaneous/Transportation

$four,232

Full Price of Attendance

$28,921

Data source: University of Due south Carolina

Hither's why this is potentially important to y'all every bit a student loan borrower. Let's say that for the 2018–nineteen school year, you lot're a third-year dependent undergraduate and you lot take $10,000 in miscellaneous scholarships and grants.

Looking at the table of federal borrowing limits in the previous section, you lot'll see that you lot'd be eligible for $7,500 in federal pupil loans. Based on the academy's estimate, your total cost of attendance for the year exceeds your scholarships, grants, and federal student loans by $11,421.

If you were to utilise for a private educatee loan, or if your parents were to apply for a PLUS loan, this is the maximum corporeality of additional student loans you'd exist allowed to obtain, regardless of the lender's maximum annual loan corporeality (if any). In other words, the amount you lot can infringe for housing and other expenses depends on your school's estimate of how much those expenses are likely to cost.

The bottom line on using student loans to pay for housing

Housing is considered to be one of the costs of attention college, so paying for housing -- either on-campus or off-campus -- is an acceptable utilize of pupil loan proceeds. Mostly speaking, all the same, the maximum you're allowed to borrow is determined by your school's published cost of omnipresence, so the amount of money yous can borrow for all of your expenses (including housing) must attach to a reasonable limit.