Using Student Loans for Off-Campus Housing
Living off-campus can give students freedom and allow them to experience being on their own. However, off-campus housing comes with different costs than living in a dorm. Some students may choose to use student loans for off-campus housing expenses. Here are some things to keep in mind when using student loans to live off-campus!
Related: How to pay for housing
Cost of attendance
Colleges offer financial aid based on the estimated cost of attendance. The cost of attendance includes the expenses of tuition, fees, supplies, meals, housing, transportation, and more. Oftentimes when students take out a loan, it is based on the cost of attendance. A good rule of thumb is to check the school’s housing allowance, and try to stay near that amount when borrowing loans for off-campus housing. Be cautious of luxury apartments targeted at students, as they can be quite expensive. For comparison, the average cost of on-campus housing at the University of North Carolina at Chapel Hill is $3,438 per student per semester ($6,876/year) for a double occupancy room. For a private university like Wake Forest, the average cost is $5,072 per semester for a total of $10,144 per year.
Both federal loans from FAFSA and private loans can be used to pay for off-campus housing because it is included in the cost of attendance. It’s helpful to decide if you want to live on- or off-campus as soon as possible so that it can be factored into your FAFSA. Living off-campus raises the cost of attendance and may result in more financial aid.
See also: How to complete the FAFSA
Student loan refunds
One of the more common uses of a student loan refund is to pay for off-campus housing. Refunds can be used for other expenses associated with living off-campus such as utilities, groceries, and transportation. It’s easy to use a student loan refund for off-campus housing. Once you receive the refund check, deposit the money to your bank account and pay from there.
Always borrow loans conservatively, and try to avoid relying solely on loans to pay for living expenses. When borrowing loans for off-campus housing, be aware that there are additional expenses associated with living off-campus. These expenses include utilities, transportation, WiFi, parking, and furniture, to name a few. Most apartments and houses also include a security deposit equal to one month’s rent.
Another important thing to keep in mind is that student loans are disbursed to your school first to pay for tuition and fees. The amount that you borrow may not be the whole amount that you receive to pay for living expenses. Additionally, student loans are disbursed once per semester. Be sure to budget accordingly to stretch your loans for as long as possible.
Lastly, when it comes to budgeting, be sure to consider the area you’re living in. Larger cities can have more costly off-campus housing. On the flip side, it may be cheaper to live off-campus than in dorms in a smaller town.
How to use student loans to pay for off-campus housing
Using student loans for off-campus housing is a simple process.
- Deposit your student loan refund check or receive direct disbursement to your account
- Write a check or make payments for rent and other expenses as you normally would with your own money
- Keep an eye on your account and budget appropriately to ensure you have enough funds to pay for the whole semester
- Use the funds only for essentials related to your education
Remember, student loans are not “free” money. Any funds that you use for housing costs will have to be repaid with interest. However, if you budget your funds and make good financial decisions, you will be able to live off-campus with your student loans!