Can Student Loans Be Used for Housing

Learn how student loans can help pay for on-campus housing, plus receive helpful tips and tricks for budgeting during college. 

Deciding where to live during college can impact your student experience and determine what your schedule will look like. Outside of that, it can also affect how much your living expenses will be, as countless factors play into housing prices. However, this shouldn’t keep you from living where you’d like. 

Student loans are designed to help with a wide range of educational expenses beyond tuition, including housing costs, whether you live on or off campus. By understanding how these loans work and planning your budget wisely, you can find housing that fits your lifestyle and financial situation without compromising your educational goals.

To make student housing more affordable, you can use student loans to help fund your college expenses. Here’s what you need to know.

Paying for Student Housing

Yes, student loans can generally be used for housing expenses, as they’re intended to cover the cost of attendance beyond just tuition. The cost of attendance includes essentials like room and board, so you can use student loan funds to pay for:

• On-campus living (housing and meals)
• Utilities
• Other living expenses like groceries and household supplies
• Transportation 
• Books and equipment

Understanding Loan Coverage

When your student loan funds are disbursed, they often go directly to the school to cover tuition and fees first. Any remaining funds, called a "refund," are given to you to cover other costs, including housing. You can then use this money at your discretion for rent and other living expenses, as long as they’re related to your education and living needs. 

This is a fairly typical approach. However, this process looks different based on the types of student loans you receive:

• Direct federal loans: Federal student loans are distributed through your school. After covering tuition and fees, any leftover funds (including for housing) are refunded to you.
• Parent PLUS loans: If a parent takes out a PLUS loan, the process is similar, and funds are distributed to you or your parent.
• Private loans: Many lenders allow you to use the private student loan money for living expenses, including housing. Funds might be sent directly to you or your school, depending on the lender's policies.

What Student Loans Can and Can’t Be Used for

While student loans cover a broad range of expenses, you must understand the boundaries of what they can and can’t be used for. Misusing student loans can lead to financial strain and other consequences that can add stress to your years of higher education. 

Let’s break down the essentials: 

Can Use Student Loans 

Outside of housing, student financial aid can be used for many school-related expenses, including:

Tuition and Fees

Tuition is often the largest expense for students, and student loans are designed to handle this primary cost. Fees such as lab fees, student activity fees, or health services fees also fall under this category. These costs are typically paid directly to your school before any remaining funds are disbursed to you.

Meals and Groceries

Student loans can be used for meal plans provided by the school or for groceries if you prepare your own meals. While they cover basic food needs, it’s important to avoid splurging on frequent restaurant outings or gourmet items, as this could stretch your budget too thin.

Books and Supplies

Books, course materials, lab supplies, and other required educational tools are valid expenses. This also includes software or specialized equipment needed for certain programs, like engineering calculators or art supplies.

Transportation

Transportation costs such as gas, public transit, or ride-share services can be covered by student loans. For students who commute, this ensures you can get to and from classes or internships. However, loans cannot typically be used for purchasing a car.

Technology

A laptop, printer, or other tech essentials for school are considered valid uses of student loans. If your program requires specific technology or software, these costs are also covered. Keep in mind that splurging on top-of-the-line or unnecessary gadgets may not be the best use of funds.

Can’t Use Student Loans

While student loans are versatile, they come with clear restrictions to ensure they’re used responsibly. Using loans for non-educational purposes can violate loan agreements and lead to financial or legal repercussions:

Non-Essential Entertainment and Travel

You cannot finance vacations, concerts, or any form of recreational travel with student loans. While it’s important to enjoy your college experience, these costs should come from personal savings or part-time income.

Luxury Purchases

Student loans are intended for basic needs, not luxury items. For example, loans can help you buy a functional laptop for school, but not a premium, high-end gaming laptop unless it’s specifically required for your coursework. Similarly, designer clothing, high-end furniture, or expensive gadgets are not valid uses.

Personal Debts

Loans cannot be used to pay off credit card debt, car loans, or other personal financial obligations. Doing so not only misallocates funds but also puts you at risk of being unable to meet your educational expenses.

Business Investments

If you’re thinking about starting a business while in college, you cannot use student loans to fund it. These loans are strictly for education-related purposes and cannot be diverted to entrepreneurial ventures.

Other Non-Educational Costs

Student loans are not a source of disposable income for non-educational spending. Expenses like gym memberships (unless part of your tuition/fees), streaming subscriptions, or personal hobbies fall outside the intended scope of loan usage.

Why It’s Important To Use Student Loans Wisely

Knowledge really is power when it comes to using your student loans. They’re extremely helpful, but not understanding how they’re meant to be utilized can lead to long-term situations, like:

• Debt accumulation: Every loaned dollar spent on non-essentials adds to your student loan debt, which accrues interest over time, making repayment more burdensome.
• Loan agreement violations: Federal and private loans have strict terms about usage. Misuse can result in penalties or immediate repayment demands.
• Reduced financial flexibility: Mismanagement of loan funds can leave you short for essential expenses later in the semester.

On-Campus vs. Off-Campus Living: How Student Loans Play Their Part

While on-campus and off-campus living have their differences, you can use student loans for both, with each option offering unique benefits and challenges. 

On-Campus Living

Living on campus is a popular choice for first-year students and those who want to immerse themselves in the college experience. One of the primary benefits of on-campus living is the simplicity of managing housing costs with student loans.

How It Works

When living on campus, student loans often cover room and board directly. These charges are usually added to the tuition bill, which makes the process simple—loan funds are applied directly to tuition, fees, and housing, and you don’t need to worry about handling rent payments each month. This seamless process eliminates the need for you to handle housing payments directly.

Benefits of On-Campus Living

• Convenience: On-campus housing is often located within walking distance of classes, libraries, and other campus facilities, saving time and transportation costs.
• Community engagement: Dorms foster a sense of community through organized activities, shared living spaces, and easy access to peers and campus events.
• Included amenities: Utilities, Wi-Fi, and sometimes meal plans are typically included in the housing fee, simplifying budgeting.
• Predictable costs: On-campus housing provides fixed costs for the academic year, helping students plan their finances without unexpected expenses.

Challenges of On-Campus Living

• Higher costs in some cases: Depending on the institution, on-campus housing can be more expensive than off-campus options, especially when meal plans are required.
• Limited privacy and space: Dorm rooms are often shared, and amenities like bathrooms and kitchens are communal.
• Restricted choices: Students are usually limited to the dorms and dining options offered by the university, which might not align with their lifestyle or dietary needs.

Off-Campus Living 

Living off campus appeals to students seeking greater independence, more space, or a specific lifestyle. While managing off-campus housing requires more responsibility, student loans can still be a reliable source of funding.

How It Works

When you choose to live off-campus, your student loans can still be used to cover these essential living expenses, as they’re included in your school’s estimated cost of attendance. Once your student loans are disbursed and the school deducts tuition and fees, any remaining funds are refunded to you. These refunds can then be used to cover your off-campus living expenses.

Benefits of Off-Campus Living

• Flexibility and independence: Off-campus housing allows you to choose your living arrangements, whether it’s an apartment, house, or shared rental. This flexibility can accommodate various budgets and lifestyle preferences.
• Potential cost savings: In many cases, off-campus living is more affordable than on-campus housing, particularly when shared with roommates.
• More space and privacy: Apartments or houses often offer more living space, private bedrooms, and personal amenities, which can enhance your quality of life.
• Real-world budgeting skills: Managing rent, utilities, and other bills teaches valuable financial and organizational skills that can benefit you after college.

Challenges of Off-Campus Living

• Upfront costs: Moving off campus often requires upfront expenses like security deposits, first and last month’s rent, and furniture purchases.
• Managing loan refunds: You’ll need to manage your loan refund carefully to ensure it covers all necessary expenses throughout the semester.
• Unpredictable costs: Utility bills, maintenance, and other unforeseen expenses can make budgeting more challenging.
• Transportation needs: If you live far from campus, you may need to factor in transportation costs, such as gas, parking, or public transit.

Factors To Consider When Choosing Between On-Campus and Off-Campus Housing

Both are great options, but which is right for you? While you can thrive in any setting and environment, it’s best to be in a place where you feel most comfortable. Here are a few ways to make your decision for this upcoming semester:

Cost Comparison 

Compare the total costs of on-campus and off-campus living, including rent, utilities, transportation, and meal plans. While one may seem cheaper at first glance, you should also consider expenses like commuting, furnishing a rental, or meal plans. It’s also helpful to know how your student financial aid will be used with each option, which might sway your decision. 

Lifestyle Preferences

Your personality and preferences play a significant role in your decision. If you value convenience, community, and structured living, on-campus housing might be the better fit. If you prefer independence, privacy, and flexibility, off-campus housing could be ideal.

Accessibility to Campus

Consider how close your housing is to classes, libraries, and other facilities. Long commutes from off-campus housing can add stress and reduce time for studying or socializing.

Academic Year vs Full-Year Leases

On-campus housing is typically rented for the academic year, while off-campus leases are often year-long. If you don’t plan to stay in your college town over the summer, this difference can significantly impact your costs.

Social Environment

Dorm life can offer a built-in social network and easy access to activities, which is especially beneficial for first-year students. Off-campus living may be quieter but less socially engaging.

7 Tips for Managing Student Costs

College is an exciting time, but managing your finances can be challenging, especially if you’re new to budgeting or if this is your first year of higher education. Developing smart money habits and finding ways to cut costs can make your education more affordable and reduce your reliance on loans. Here are some practical tips to help you stay on top of your student costs:

1. Budget carefully: Loan funds are finite, so calculate your housing expenses and allocate the refund wisely.
2. Separate wants and needs: Prioritize spending on necessities like rent and textbooks. Avoid using loans for discretionary purchases or activities.
3. Be aware of loan limits: Loans may not cover all housing costs, especially for private apartments in high-cost areas.
4. Choose affordable options: On-campus dorms or shared housing off-campus can save money.
5. Monitor disbursement dates: Refunds for off-campus housing are typically issued at the start of the semester, so plan rent payments accordingly.
6. Use refunds cautiously: If you receive a refund, remember it’s still borrowed loan money. Allocate it to education-related costs, and consider returning any excess funds to minimize student debt.
7. Minimize textbook costs: Textbooks can be expensive, but there are some ways to save. Buy used textbooks from online marketplaces or campus bookstores, rent instead of purchasing them, and explore digital versions or free online resources for course materials. Also, check out your school’s library to find copies of your required reading. 

MCPHS’s Housing Options

When you attend school at Massachusetts College of Pharmacy and Health Sciences (MCPHS), you have plenty of on-campus and off-campus housing options. It just depends on what you’re looking for in terms of accessibility, community, and environment. 

For our Boston campus, we offer the following residence halls:

• Fennell Hall
• Matricaria Hall
• The Treehouse
• St. Julie Hall

Our Worcester location has both on and off-campus options:

• Main Street
• Foster Street
• Lincoln Square Academic and Student Center
• Lancaster Street
• 50, 60, and 72 Salisbury Street

Apply to MCPHS today, and explore all our housing options to find your right fit.