What Expenses Your Student Loan Covers

A student loan is a lending tool designed to pay for higher education. In most cases, this type of low-interest loan can be used to cover a number of different expenses. Restrictions are not typically placed on how loan proceeds are spent, but it is not uncommon for educational institutions to disburse money to students only after classes and other similar expenses have been deducted.

Tuition Is The 1st Priority

In many cases, student loans proceeds are sent to schools for distribution. When this is the case, the educational institution will first be sure that the tuition for the school is covered. Whether funding comes from private lenders, or is backed by the U.S. government, a student loan is expected to pay for these costs as the priorities:

  • Tuition and school fees
  • Books and other necessary supplies
  • Other related expenses, such as dorm and activity fees

Other Allowable Expenditures

Once college costs are covered, the remaining student loan proceeds can be used to pay for just about anything. Remaining proceeds are generally issued to students directly from their school's financial aid or account office. Many students use the balance of their loans to help cover such things as:

  • Rent or mortgage payments
  • Utilities
  • Education tool expenses, such as the purchase of a computer
  • Food costs
  • Transportation expenses

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