With student loan debt at an all-time high, you may be questioning how and when to use your loan money. College tuition, housing, and all of the other expenses that go along with higher education can really add up.
Can you use student loans for rent? If you’re wondering if you can use student loans for rent and other costs outside of tuition, this guide has the answers.
We’ve rounded up everything you need to know about paying for an apartment with student loans.
Can You Use Student Loans For Rent?
The short answer to whether or not you can use a student loan to pay for rent is yes. Student loans can be used to cover room and board expenses. This applies to on-campus housing as well as off-campus options such as an apartment rental.
Typically, a student loan must first be applied to tuition. From here, any leftover funds can be used to pay for housing, food, books, and other fees.
While both living on and off-campus have their advantages, one of the biggest considerations is the cost.
Weighing Pros and Cons
Whether you choose to live on or off-campus, housing comes at a premium. Both housing options have their pros and cons that you’ll want to think about.
On-campus housing is often less expensive. Your dorm will also come with all of the essential furniture you’ll need. Schools will also include a meal plan that you can purchase.
On-campus housing will have food almost 24 hours a day that can be paid for using your plan.
Dorms will also come with on-campus security, utilities, and internet. You also won’t have to pay a security deposit or deal with landlord hassles.
With an off-campus apartment, you may save money on meals. You can cook and prepare your own food and split the rent between one or more roommates.
An apartment can also be available all-year-round. With a dorm, you likely won’t be able to stay on campus during the summer months. If you find a job you enjoy or want to stay near school throughout the year, this can be helpful.
How Can You Use Student Loans to Pay for Rent?
Let’s say you take out a student loan for $10,000. After scholarships, grants, aid, and your family’s contribution, you still need $5,000 to pay for tuition. That leaves you with $5,000 left on your student loan.
Your lender will typically require that you pay your tuition first with your student loan. Other educational expenses such as books must also be paid for.
With a balance of $5,000, you can use that money to pay for housing. This can be used to pay for rent on an apartment if you wish.
Keep in mind that your lease can be 12 months long. You’ll need to plan accordingly even if you’re only living there 9 months out of the year.
You can also split your rent between roommates to help cover the cost.
Working Through a Disbursement Delay
Another thing to consider is that the balance of your student loan will typically be sent to your bank through direct deposit. This may sometimes come after the school year has started.
If you need to pay a security deposit as well as the first month’s rent, you’ll want to plan for this disbursement delay.
Make sure you’re saving, obtaining a short-term loan, or planning to front the extra money needed for a security deposit as well as the first month’s rent before school starts. Use the summer to work on the funds you need.
If you have this money ahead of time, you can then wait for the disbursement of your excess student loan after you move in.
Plan Your Rent Ahead of Time
With the cost of tuition and other college expenses being so high, your student loans may not be enough to cover an apartment.
Before you apply for a student loan, estimate how much you’ll need in rent for the year. Make sure you account for the tuition money you need to pay as well as additional fees, books, and supplies.
If you’re getting a roommate, it is a good idea to talk about your budget and what you’re comfortable spending ahead of time. This will help make sure you know how much of a student loan to apply for.
You don’t want to be short after you have already signed your apartment lease and started school.
Don’t Forget the Extras
When you’re renting an apartment off-campus, make a list of the things you’ll need. You may need furniture, kitchen supplies, and a budget for household items.
On-campus, you may have had a laundry card, a card for your meals, and your utilities paid for. Once you are off-campus, you take on those costs.
Having roommates will definitely help lighten a lot of these bills. In addition to any student loan money you are using for rent, you may be able to pay for some of these expenses.
Additional Financing Options
When it comes to figuring out how to pay for off-campus housing, there are additional ways you can pay for rent.
The first choice should always be through existing savings and income. Whether that is your own, your parent’s or a combination of the two, the less student loan debt you can take on, the better.
While at school, you may be eligible for a work-study program where a portion of your income goes to tuition. This can free up some of your loans for rent or help you pay for utilities and groceries.
If you’ve maxed out all of the available financial aid, scholarships, and grants, a student loan, or a personal loan may be the answer. As you earn income, you can pay down as much of these loans as possible, even while you are in school.
Using Student Loans for Housing
As a new college student, you may be wondering how you’re going to pay for it all. The question, can you use student loans for rent is a good one to ask. Using student loans to pay for rent can have its advantages.
Although you have to take out a loan for more than tuition, the benefit is that you’ll be able to live off-campus with your roommates of choice.
You’ll also be able to focus on school without the burden of paying for rent.
Before applying for your student loans, consider how much debt you’re likely to have after graduation and how comfortable you are with this number.
Student loans are a big financial responsibility but education and the peace of mind that your rent is paid for may be well worth the investment.
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