These days, most students have to borrow some money to get a college degree. With soaring tuition rates and outrageous textbook costs, it's no wonder that people obtain tens of thousands of dollars in debt just to get a degree. However, tuition and supplies aren't the only things that student loans can cover. If you need to borrow to pay for rent, food and a laptop, you have a few options.
How Much Money Can You Borrow?
The school and the federal government work together to decide exactly how much money you can borrow in federal aid each semester. The government tells schools to allow money for tuition, books, transportation to school, room and board, child care and various other expenses. The school then estimates how much all the applicable fees cost, deducts what your family is expected to contribute and allows you to borrow the remainder. Often times, this will leave you with money left over after paying your tuition and for books.
How Can You Spend the Rest?
Once you have paid the school and bought your books, you may receive a refund. Once you have that money, do everything you can to make it last. You are allowed to use it for rent, food, transportation and miscellaneous living expenses. If you buy a laptop, some new clothes and a few meals out, you aren't breaking any laws either. As long as you are borrowing as yourself and you do not lie on the applications, you can spend the money however you see fit.
Private Student Loans
In addition to the student loans that the federal government lends, you can get loans from private sources, like banks and credit unions. Unlike the government, these sources will check your credit. Furthermore, they may charge higher rates or require small payments even while you're in school. If you need the money to make it through college, the option is there. However, it's best to leave private loans alone if you can afford to do so.
While there may be no laws against spending student loan refunds on expensive nights on the town and the best apartment in the city, you will do yourself a favor by spending wisely. Try to live as frugally as possible in your college years because the loans and their interest add up quickly. Part of living frugally is borrowing as little as possible to make ends meet. The more you sacrifice now, the better you will set yourself up for your future.
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- Citizens Bank: Private Loans for Education
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