What Student Loans Can & Can’t Be Used For


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Paying for higher education can be a major financial burden — but student loans can lighten that burden. Student loans can make it more manageable to cover the costs of college, but you can only use them for certain expenses.

Here’s what you can use student loans for and what you can’t:

Can you use student loans for anything?

You can’t use student loans for just any expense, like you can with a personal loan. Student loans are designed to cover certain costs of attending college. It’s OK to use student loans for a few types of expenses, but a handful of expenses can’t be covered with student loan funds:

What student loans can be used for

The following expenses are approved by the U.S. Department of Education (and most private lenders follow suit):

If you’re not sure whether or not an expense would be approved, you can contact your loan servicer or lender.

Check Out: Your Student Loan Servicer Changed: What Now?

What student loans can’t be used for

Along with limitations on what expenses are covered by student loans, limitations also exist within some of the approved expense categories.

Let’s look at transportation as an example. If you already own a car when you start college, you can use student loan funds to cover the costs of vehicle maintenance and gas. But you can’t use student loan funds to buy a car. Similarly, food you purchase at a grocery store may fall under the approved expense of room and board (such as housing), but dining out at a restaurant may not.

The following personal expenses are ineligible for federal student loans and are likely also ineligible with many private lenders:

  • Travel
  • Clothing
  • Video games
  • Business expenses
  • Down payment for a house
  • Expensive meals and drinks

Find out how much you’ll owe over the life of your federal or private student loans using our student loan calculator below.

Enter your loan information to calculate how much you could pay

Total Payment
$

Total Interest
$

Monthly Payment
$

With a
$
loan, you will pay
$
monthly and a total of
$
in interest over the life of your loan. You will pay a total of
$
over the life of the
loan, assuming you’re making full payments while in school.


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Consequences of misusing student loans

Many college students tend to live on tight budgets, and it may be tempting to use student loan funds to cover other expenses not directly related to attending college. Be careful here, though: Using student loan funds on unapproved expenses can violate your student loan agreement.

When you sign a student loan agreement, you agree to only use the loan funds disbursed to you to pay for college education expenses. If you use these loan funds inappropriately, the Department of Education or your private lender could cancel the loan agreement and demand immediate repayment of the loan.

Check Out: The Complete List of Student Loan Forgiveness Programs

Student loan uses FAQs

Here are answers to some commonly asked questions about how you can use student loan funds.

What happens to unused Pell Grant money?

Federal Pell Grants aren’t loans, so they don’t need to be repaid (except in certain circumstances). This means you can keep any amount of Pell Grant money you don’t use. For 2022-23, the maximum Federal Pell Grant award is $6,895. Filling out the FAFSA can help you qualify for grants and scholarships.

What happens if I don’t use all my financial aid money?

When you take out a student loan, the lender (whether federal or private) pays the school directly first. The school then applies the loan or grant funds toward tuition, fees, and room and board (for students living on campus).

Your school will disburse any remaining funds directly to you, and you can use the leftover money to pay for your educational expenses.

Good to Know: If you receive a student loan refund and don’t use all the remaining funds for education expenses, you can apply them toward repaying your student loan balance.

Can I use student loans for car payments?

No, you can’t use student loan funds to make car loan payments. Transportation expenses to get to and from school are an approved expense, but you can’t use the loan money to buy a car. You can, however, use student loan funds to pay for gas and vehicle maintenance.

Is it illegal to misuse student loans?

Yes, when you take out student loans, you sign a loan agreement stating you’ll use the funds for education expenses. If you misuse federal student loans, you risk the Department of Education canceling the loan agreement and demanding immediate loan repayment. How private lenders handle this situation can vary.

Can I use student loan money for living expenses?

Yes, you can use student loan money for some living expenses. For example, an approved living expense is room and board. That category can include food purchased at the grocery store.

Can I use student loans to pay for health insurance?

In some cases, you can use student loans to help pay for health insurance. Many schools require that students have healthcare coverage in order to enroll. Often, colleges and universities offer an on-campus healthcare plan that you can enroll in if you don’t have outside health insurance. If you sign up for on-campus health care, the cost of that care will be added to your cost of attendance, which can be covered by student loans.

The companies in the table below are Credible’s approved partner lenders. Whether you’re the borrower or cosigner, Credible makes it easy to compare rates from multiple private student loan providers without affecting your credit score.

Lender Fixed Rates From (APR) Variable Rates From (APR)


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


5.0%+

1.75%+
  • Fixed APR:

    5.0%+
  • Variable APR:

    1.75%+
  • Min. credit score:
    540
  • Loan amount:
    $2,001 to $200,000
  • Loan terms (years):
    5, 7, 10, 12, 15, 20
  • Repayment options:
    Full deferral, fixed/flat repayment, interest only, academic deferment, military deferment, forbearance, loans discharged upon death or disability
  • Fees:
    None
  • Discounts:
    0.25% to 1.00% automatic payment discount, 1% cash back graduation reward
  • Eligibility:
    Must be a U.S. citizen or permanent resident or DACA student enrolled at least half-time in a degree-seeking program
  • Customer service:
    Email, phone
  • Soft credit check:
    Yes
  • Cosigner release:
    After 24 months
  • Loan servicer:
    Launch Servicing, LLC


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


3.47%+1

1.86%+
  • Fixed APR:

    3.47%+1
  • Variable APR:

    1.86%+
  • Min. credit score:
    720
  • Loan amount:
    $1,000 to $350,000
  • Loan terms (years):
    5, 10, 15
  • Loan types:
    Any private or federal student loan
  • Repayment options:
    Full deferral, full monthly payment, interest only, immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability
  • Fees:
    Late fee
  • Discounts:
    Autopay, loyalty
  • Eligibility:
    Available in all 50 states (international students can apply with a creditworthy U.S. citizen or permanent resident cosigner)
  • Customer service:
    Email, phone, chat
  • Soft credit check:
    Yes
  • Cosigner release:
    After 36 months
  • Loan servicer:
    Firstmark Services


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


3.22%+2,3


0.94%+2,3
  • Fixed APR:

    3.22%+2,3
  • Variable APR:

    0.94%+2,3
  • Min. credit score:
    Does not disclose
  • Loan amount:
    $1,000 up to cost of attendance
  • Loan terms (years):
    5, 8, 10, 15, 20
  • Repayment options:
    Full deferral, full monthly payment, fixed/flat repayment, interest only, immediate repayment, academic deferment, forbearance, loans discharged upon death or disability
  • Fees:
    Late fee
  • Discounts:
    Autopay
  • Eligibility:
    Must be a U.S. citizen or permanent resident and be making satisfactory academic progress.
  • Customer service:
    Email, phone
  • Soft credit check:
    Yes
  • Cosigner release:
    After 24 months
  • Loan servicer:
    College Ave Servicing LLC


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


3.2%+

1.6%+
  • Fixed APR:

    3.2%+
  • Variable APR:

    1.6%+
  • Min. credit score:
    Does not disclose
  • Loan amount:
    $1,000 to $99,999 annually
    ($180,000 aggregate limit)
  • Loan terms (years):
    7, 10, 15
  • Repayment options:
    Full deferral, immediate repayment, interest-only repayment, flat/full repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability
  • Fees:
    None
  • Discounts:
    Autopay
  • Eligibility:
    Not available to residents of AZ, IA, or WI
  • Customer service:
    Phone, email
  • Soft credit check:
    Yes
  • Cosigner release:
    After 36 months
  • Loan servicer:
    American Education Services
  • Min. income:
    Does not disclose


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


4.52%+7

3.37%+7
  • Fixed APR:

    4.52%+7
  • Variable APR:

    3.37%+7
  • Min. credit score:
    750
  • Loan amount:
    $1,000 to $200,000
  • Loan terms (years):
    7, 10, 15
  • Repayment options:
    Full deferral, full monthly payment, interest only, immediate repayment, academic deferment, loans discharged upon death or disability
  • Fees:
    Late fee
  • Discounts:
    Autopay
  • Eligibility:
    Must be a U.S. citizen or permanent resident and have a minimum income of $30,000.
  • Customer service:
    Email, phone
  • Soft credit check:
    Yes
  • Cosigner release:
    After 36 months
  • Loan servicer:
    Granite State Management & Resources (GSM&R)


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


3.33%+8

1.7%+8
  • Fixed APR:

    3.33%+8
  • Variable APR:

    1.7%+8
  • Min. credit score:
    670
  • Loan amount:
    $1,001 up to cost of attendance
  • Loan terms (years):
    5, 10, 15
  • Repayment options:
    Full deferral, full monthly payment, interest only, immediate repayment, academic deferment, forbearance
  • Fees:
    Late fee
  • Discounts:
    Autopay, reward for on-time graduation
  • Eligibility:
    Must be an Indiana resident or a U.S. citizen attending an eligible Indiana school
  • Customer service:
    Email, phone, chat
  • Soft credit check:
    Yes
  • Cosigner release:
    After 48 months
  • Loan servicer:
    American Education Services


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


4.89%+
N/A
  • Fixed APR:

    4.89%+
  • Variable APR:
    N/A
  • Min. credit score:
    670
  • Loan amount:
    $1,500 up to cost of attendance less aid
  • Loan terms (years):
    10, 15
  • Repayment options:
    Full deferral, interest only, immediate repayment, academic deferral, forbearance
  • Fees:
    None
  • Discounts:
    None
  • Eligibility:
    Must be a U.S. citizen or permanent resident and be making satisfactory academic progress.
  • Customer service:
    Email, phone
  • Soft credit check:
    Yes
  • Cosigner release:
    After 48 months
  • Loan servicer:
    American Education Services (AES)


Credible Rating



Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


3.75% – 12.85% APR9

1.87% – 11.97% APR9
  • Fixed APR:

    3.75% – 12.85% APR9
  • Variable APR:

    1.87% – 11.97% APR9
  • Min. credit score:
    Does not disclose
  • Loan amount:
    $1,000 up to cost of attendance
  • Loan terms (years):
    10 to 15
  • Repayment options:
    Full deferral, fixed/flat repayment, interest only, academic deferment, forbearance, loans discharged upon death or disability
  • Fees:
    Late fee
  • Discounts:
    Autopay
  • Eligibility:
    Must be a U.S. citizen or permanent resident. Also available to non-U.S. citizen students (including DACA students) attending a school located in the U.S. who apply with a qualifying cosigner.
  • Customer service:
    Phone, chat
  • Soft credit check:
    Yes
  • Cosigner release:
    After 12 consecutive on-time payments
  • Loan servicer:
    Sallie Mae
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Lowest APRs reflect autopay, loyalty, and interest-only repayment discounts where available | 1Citizens Disclosures | 2,3College Ave Disclosures | 7EDvestinU Disclosures | 8INvestEd Disclosures | 9Sallie Mae Disclosures

About the author

Jacqueline DeMarco

Jacqueline DeMarco

Jacqueline DeMarco has been a personal finance writer for over seven years and is a contributor to Credible. She has contributed content to more than a dozen financial brands, including LendingTree, Credit Karma, Fundera, Chime, MagnifyMoney, Student Loan Hero, ValuePenguin, SoFi, and Northwestern Mutual.

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