You can't qualify for enough financial aid -- scholarships, need-based grants and federal student loans -- to cover the cost of attending college. That's when private student loans come into play. You can use these loans to pay for virtually any college-related expense, including on- or off-campus housing.
Most lenders calculate your maximum private student loan eligibility by subtracting your other aid from your cost of attendance, which is determined by your college or university. For example, if your estimated cost of attendance for the year is $30,000 and you financial aid award totals $25,000, most lenders calculate your maximum private student loan eligibility to be $5,000.
Cost of Attendance
Colleges determine the anticipated cost of attendance by estimating a student's required expenses. The U.S. Department of Education reports that higher education institutions include the cost of tuition and fees, transportation, books, supplies and room and board in every student's cost of attendance. Colleges also raise the estimated cost of attendance for students who are caring for dependents, disabled, studying abroad or participating in co-op education programs to compensate for the extra expenses these students encounter.
Depending on your situation, your annual housing expenses actually might be higher than your college estimates they will be. If you obtain private student loans based on the cost of attendance as calculated by your institution, you still might not have enough money to pay for housing. When you must cover excess housing costs out of pocket, search for less expensive housing or find other sources of credit to make up the difference.
Some lenders might be willing to approve a private student loan that exceeds your cost of attendance, which can be helpful if your housing costs are greater than anticipated. Unfortunately, if the lender is certified by your college, it must report the excess funds to the financial aid department, which could reduce your other aid. Lenders that aren't certified by your school can send private student loans directly to you without informing the school, thus allowing you to keep the extra money.
Amanda McMullen is a freelancer who has been writing professionally since 2010. She holds a bachelor's degree in mathematics and statistics and a second bachelor's degree in integrated mathematics education.