Many new college students may be wondering what exactly they can do with their student loan money. For many young people, student loans are the first form of debt they will take on. If this situation sounds familiar to you, make sure you ask yourself these three questions before you start spending your student loan money.
What Can I Pay for With My Student Loan?
The purpose of a student loan is to pay for any expenses that are necessary to obtain your degree. Obviously, this would include your tuition, textbooks and course fees, but it could also include several other types of expenses. Some schools pair with institutions like Higher One to provide student ID cards that allow you to get your financial aid refund a little quicker. These programs are something you have to opt into, however, and you can look at HigherOne.com satisfied customer reviews to get a better sense of these programs.
For example, you’ll probably need to find a place to live while you are in school. You can spend your student loan money on rent or dorm fees. In addition, you can also use your student loan to purchase an on campus meal plan. You could even use your student loan to pay for transportation fees or a bus pass if you require transportation to campus.
Is There Anything I Can’t Pay for with My Student Loan?
According to the Federal Student Loan Debt Management Guide, you can only use your student loan to pay for education-related expenses at the school that awarded you your loan. For example, you can purchase a bus pass or parking permit from your university, but you cannot use your student loan to purchase a new car.
What Shouldn’t I Use My Student Loan for?
While the definition of an education-related expense is somewhat vague, this does not mean you should spend your student loan money on anything that will qualify. You are probably aware that your student loan is not free money; you will have to pay interest in the future. By minimizing your debt early, you can save thousands of dollars in interest expenses down the road.
Unfortunately, many students will end up in debt for several years after graduation for unnecessary expenses. Your university may allow you to use your student loan to pay for campus privilege fees, athletic tickets, or fast food from the student union food court, but these expenses will only rack up more debt you’ll have to worry about later. If you still want to purchase athletic tickets or go out to eat with your friends, consider getting a part time job to eliminate the need for additional debt.
Now that you are aware of what you can and shouldn’t use your student loan for, you have the knowledge you need to build a strong financial future.