Using Your Student Loans For Living Expenses
Loans can be tricky. You might find yourself searching for a loan, choosing between different types of loans, selecting a payment plan, or even trying to figure out how to use your loans once you have them. At Ascent, private student loans are our thing, so this blog will walk you through how and how not to use your private student loans to pay for college.
There is a lot of information about best practices for private student loan borrowers. To help make sense of it all, start with the basic rules you agree to when you apply for a private student loan.
What are the guidelines when applying for student loans?
No matter what kind of student loan you take out, whether federal or private, there is typically a set of guidelines you agree to when applying for and accepting your loan. For federal student loans, you will review and sign a Master Promissory Note, a legal document from the United States Department of Education in which you promise to repay your loan(s) and any additional interest and fees. As you’re applying for private student loans (and federal loans, too), you’ll most likely need to review and sign Truth-In-Lending Disclosures required upon applying and receiving approval for student loans.
The Truth-in-Lending Disclosures are often provided as part of most loan applications so that borrowers may be given the opportunity to review the terms of their loan. There are a few different types of disclosures and loan terms you may encounter, so research, compare, and read the fine print before signing anything.
How are student loans sent to students?
Once you’ve accepted your loan offer (whether you have federal or private student loans), there is a disbursement process your lender must follow.
Your lender will send your funds directly to your school’s financial aid office to cover the cost of tuition and additional academic fees due. If any funds left over, your financial aid office will send that directly to you.
How can student loans be used?
During your time as a student, there are a lot of necessary school expenses to pay for outside of tuition. Student loans can have guidelines limiting those funds to be used strictly for tuition and other fees (like room and board). However, many student loans can be used to cover your higher education costs.
Student loans can help students pay for their education, campus life, and living expenses such as rent, textbooks, additional school supplies and even transportation like gas, bus fare, etc.
Depending on the lender you choose, some funds may even support necessities such as school meal plans or child care for students who may also be parents or legal guardians of small children.
Things to keep in mind
Being able to borrow for necessary expenses can be a huge relief. No matter your student loan situation, there are always some best practices to keep in mind.
- Remember that student loans are borrowed. They must be paid back in full (plus additional interest that accrues). Try to limit your spending on unnecessary purchases.
- The list of required purchases for school can seem long, always keep an eye out for small ways to save, such as getting used textbooks versus new ones or finding a roommate to share rent and additional bills with you.
- There can be a lot to think about when searching for the right loan. Don’t hesitate to ask a trusted mentor to help you with the process and make the best decision for you.
There are so many options that exist when borrowing and spending. Remember that research is the best way to make an informed decision about your borrowing and spending. Take a look at your finances and understand where your necessary purchases may fall.
You can explore Ascent’s other blog posts for more advice on healthy spending and student loans here.