Can I use student loans for rent?
Once your tuition and school-related fees are taken out of your student loan the excess money will be refunded to your account to use for other expenses.
Getting a higher education can be terribly expensive and in order to cover that upfront cost with the hope that it will improve your future earnings many American students take out student loans. Those funds go straight to the school which it uses to pay tuition and any school-related fees first.
Any excess money will be given to the borrower as a refund that can be used to cover other expenses, including rent. Ideally though, you want to incur as little debt as possible while you get your degree, meaning that you will need to budget wisely on how you use the money you’ve been lent.
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How the amount of your student loan is determined
When you apply for federal student aid, the financial aid office at your institution will determine how much financial aid you are eligible to receive. Eligibility to receive a federal student loan “depends on your Expected Family Contribution, your year in school, your enrollment status, and the cost of attendance at the school you will be attending,” according to the Department of Education.
The financial aid staff will use a formula to calculate how much need-based aid you can receive. This is determined by looking at the cost of attendance at the school, then subtracting your Expected Family Contribution.
The amount of financial assistance those that apply for aid on a non-need basis can receive is determined by using the cost of attendance minus any financial aid that’s already been awarded which includes aid from all sources, such as need-based aid and private scholarships, among others.
What expenses can funds from student loans be used to pay?
When determining the cost of attendance, the financial aid staff take into account several factors including tuition and fees, books, supplies, equipment, transportation and miscellaneous personal expenses, as well as room and board at on-campus school housing or rent for off-campus housing. Additionally, other factors such as special needs expenses for disability, childcare or other dependent care are included. Even “reasonable costs for eligible study-abroad programs,” are taken into consideration.
Federal student loans are decided for the entire academic year and need to be renewed on a yearly basis. The sooner you know where you will be living will help you determine how much money you will need to cover your cost of attending a school.
Once you’ve been granted a federal student loan, you should know that the funds are disbursed in at least two periodic lump sums. You will need to calculate your monthly budget to avoid the need of further financial assistance through private loans which can have higher interest rates and don’t afford many of the benefits of federal loans.
How to apply for a federal student loan
In order to get the ball rolling you will need to fill out the Free Application for Federal Student Aid (FAFSA) form as soon as possible in the prior academic year. When you have committed to attend college you will want to submit your FAFSA at the earliest possible date to allow the federal government to consider your case. The FAFSA forms are available 1 October each year and you will need to submit it before the deadline for your state.
Besides the calculation from the school’s financial aid staff, the Department of Education will need to know your parent’s economic situation and your dependency status. If you need help filling out the form, the government’s Federal Student Aid website provides a guide.