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.
The COA typically includes costs for one academic year:
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.
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:
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:
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.
If you’re not already a member of a credit union, we can help match you with one for your student lending needs. Ready to learn more and apply? Find a credit union and apply easily online.
This post was updated on 11/4/2022.