There are many student loan myths floating around out there, such as the idea that student loans should only be used to pay for your tuition. Unless you make a lot of money outside of school or your private university comes with a massive annual tuition bill, you’ll likely qualify for more student loan assistance than you need for tuition alone. Is it alright to use student loans for living expenses?
When is it alright to use student loans for living expenses? What expenses should you use your student loans for? You certainly do not have to take out the full amount offered in your financial aid package, but you also don’t have to restrict yourself to only using student loans to cover tuition.
When To Use Student Loans For Living Expenses
If you’re debating whether or not to use some of your student loans for non-tuition expenses during undergraduate or graduate studies, here are some dos and don’ts you should follow when using student loans for living expenses.
Should you use student loans for living expenses? Here are a five times when you might have to.Click To TweetAcademic Expenses
There are multiple tax benefits for education offered by the IRS, including tuition payments (whether paid for with your own money or with the help of student loans) and other qualified academic expenses. For example, the tuition and fees deduction allows you to deduct up to $4,000 per year on your income taxes, which justifies the student loan expense.
You can also later deduct up to $2,500 per year in student loan interest payments if you borrowed them for qualified educational expenses (tuition and fees, room and board, books, supplies, equipment, and other necessary expenses for higher education, including graduate school). So, instead of avoiding student loans at all costs, you can embrace their assistance in short-term help with academic expenses and get some relief in the long-term payoff with student loan interest deductions.
Paying Rent with Student Loans
If you have access to another form of income during your studies, it’s best to pay for rent with that income instead of relying on student loans to cover your living expenses. Some folks may not have that option, however.
Unless you manage to live rent-free – with your parents or relatives, working as a residential advisor, etc. – paying rent is an unavoidable expense. If there are any ways you can minimize your living expenses while living on your own, then this will subsequently decrease the amount of student loans you need to take out for non-tuition expenses. You should consider comparing rental prices in the area, commuting from a city with a lower cost of living, getting a studio instead of single bedroom, or other cost saving measures to help you from using student loans for living expenses.
Student loan debt is something of an elephant in the room for couples nowadays, because it’s not fun or easy admitting just how big the burden is and discussing finances sometimes causes anxiety for both people involved. If you have a small student loan to pay back or you’ve paid off your schooling altogether, it can be tricky navigating issues like marriage when your partner has a significantly higher