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How Can I Use My Private Student Loans?

When you receive your award letter from your college of choice, you’ll see a couple of important numbers listed – the estimated cost of attendance (COA), and any financial aid for which you are eligible, such as scholarships, grants, and federal loans/work study.

What is Cost of Attendance (COA)?

The COA typically includes costs for one academic year:

  • tuition and fees
  • room and board (including a meal plan) or off-campus housing
  • books, supplies, transportation, and other school-related personal expenses

Keep in mind that while some of these costs (e.g. tuition and fees) are fixed costs, others could be higher or lower based on your personal situation. For example, if you purchase used books or do not park on campus, your actual costs could be slightly less than what the college lists.

Many students will need more funding than what is included in their financial aid package to fully cover the balance, which is where private student loans come in.

What Do Private Student Loans Cover?

Great news – a private student loan like our education line of credit can be used for any items listed in your cost of attendance, or other education-related expenses! The amount you are eligible to borrow will be certified by your school, and the funds are sent directly to your college. Some examples of these items include:

  • Personal laptop or computer: this one is obvious, but you can also use your private student loan to cover software and other class-specific equipment such as art tablets or cameras
  • Reasonably priced car for transportation: this has the potential to make a big dent in your private student loan, so make sure you do what you can to keep costs down (e.g. looking at used car options, less-sporting models, etc.)
  • Meal Plans: this may be another obvious option, but it is important to note that private student loans do not cover meals at restaurants or ordering take out.
  • Studying Abroad: you may use your private student loan to cover the cost of a study abroad program and any additional travel expenses within reason.
  • Dependent Care: if you are a parent, your student private loan can be used to cover childcare expenses.

If some of the loan will be used to cover items not directly paid through the school, such as books, off campus rent, or a laptop, the school will issue you a refund for the excess amount. You may need to pay for some of these expenses before your refund arrives; in this case, be sure to use your refund to reimburse yourself and not for personal purchases!

Example: Your school receives $15,000 from your loan disbursement. Only $12,000 is needed to cover your tuition balance. The school will issue you a refund of $3,000 to pay for out-of-pocket education costs. You can then use those funds to purchase necessary items, or to recoup what you have already paid.

If you are unsure of what your private student loans do not cover, or are curious about how to use some left over money after cutting-costs, here are some things that you should NOT spend your private student loans on:

  • Travel for Leisure: travel for leisure or spring break is not something that is rightfully covered by a private student loan.
  • Non-Essential Room and Board: things like bed sheets, mattresses, and pillows are covered by private student loans, but shag rugs, posters, and other purely decorative items are not.
  • Entertainment: This takes on many forms, but you won’t be able to pay for streaming service subscriptions (e.g. Hulu, Netflix), movies, or video games with private student loans.

The terms and conditions for private student loans will vary depending on the organization you borrow from, but it is generally good advice to avoid spending parts of your loan on frivolous and non-essential costs similar to the ones listed above.

How Do I Apply for an Education Line of Credit?

Student Choice has partnered with hundreds of credit unions nationwide to provide a private student lending solution from your local, trusted financial institution. Find a credit union and apply easily online.

If you have additional questions about paying for college, consult our College Counselor, who provides free, personalized guidance on paying for college and navigating your options.

This post was updated on 11/4/2022.