What can student loans be used for?

When your loan funds are disbursed, they go to your school first to pay tuition, fees, and room and board. Any additional funds will be provided to you as a student loan refund to cover other education-related expenses.

While you won't have to provide your lenders with receipts to show how you spent the money, you likely promised to use the loan funds to pay for education-related expenses when you agreed to the loan terms. Remember that you'll eventually have to pay back your loans-with interest-so be judicious about how you spend your money.

Five things you should pay for with student loans

1. Tuition and fees

Generally your largest education-related expense, tuition and fees cover the basic costs of enrollment at your school. Tuition is the cost for your classes, while fees are the costs directly associated with attendance, such as activity fees (like to use recreational facilities), library fees, parking permits, and technology fees.

Prices vary widely depending on what type of school you go to, ranging from an average of around $10,940 per year at a public four-year college to more than $39,000 per year at a private four-year college, according to a report from the College Board^®.

2. Housing expenses

Whether you live in a dorm or an off-campus apartment, you can use your student loans to pay for housing and related costs such as utilities. Living expenses can also vary greatly depending on where you live and whether you attend an urban school (where housing tends to be more expensive) or a rural one, as well as whether you go to a public four-year college or a private four-year school. The College Board reports that the average price of on-campus housing ranges from about $12,310 to $14,030.

If you’re using your student loans for off-campus housing, it’s important to know when your loan money will be disbursed to you. Plan ahead so that you have cash on hand when your rent and other bills are due.

3. Transportation

It can be expensive getting to and from school, but student loans can help you cover the costs. You can use your student loan proceeds to pay for a parking pass, gas expenses, public transit costs, or flights to and from school. To help you save money, consider not keeping a car on campus, carpooling, and using a bike or other alternate forms of transportation.

4. Meals

Student loans can cover your meal plan and other food expenses during college. There are often several types of meal plans offered from commuter meal plans to those for students living on campus full-time. Be sure to look at the options closely and be realistic about what will work best for your eating habits.

5. Textbooks and supplies

When you’re taking a full course load and each class requires a textbook (or more than one!), book costs can really add up. Since books are essential to your education, you can use your student loans to pay for them. Similarly, you can use your loans for other required supplies and equipment for classes. Computers and other technology like tablets can fall into this category, too. To help save on costs, it's best to look for book rentals, used books, and refurbished electronics. You can also talk to your professors at the beginning of the term to see if you can buy earlier editions of a textbook to help reduce these costs.

Five things you shouldn’t pay for with student loans

1. Spring break

Student loans aren’t meant to pay for vacations. And if you can't afford to cover the cost of a trip to Cancun without misusing your student loans, then you should rethink your spring break plans.

2. Eating out

Everyone gets tired of eating in the dining halls day after day, but going out to restaurants on a regular basis can add up quickly. And even inexpensive takeout starts to become pricey when you pay for it with borrowed money—and then have to pay interest on that loan. If you have access to a kitchen (or even just a microwave), consider cooking some of your meals to add variety into your diet, and save dining out for special celebrations.

3. Dorm room accessories

Housing costs like rent and electricity are essential. But no matter how badly you want to deck the walls with posters and warm up the room with an area rug, these purchases are not necessities. Instead, you can save money and hone your DIY skills by finding creative (and inexpensive) ways to inject some character into your room.

4. A car purchase

Just because you need to get to and from campus doesn't mean you need fancy new wheels to do it. Stick with your current vehicle or look into mass transit and other alternative transportation options to keep costs down. If you absolutely must buy a car while in college, make a financially prudent choice and find a used car in good condition.

5. A wardrobe upgrade

You shouldn't be buying apparel with student loan money. If you're sick of your closet's contents, host a clothing swap with friends to score some new threads without damaging your bank account.

Just because you shouldn’t spend loan money on restaurant meals, vacations, or new clothes doesn’t mean you can never treat yourself while in college. If you want new dorm room accessories, a nice meal out on the town, or other non-essentials, consider getting a part-time job or saving your money from a summer gig to cover the additional expenses. The more you can reduce your expenses, the less student loan money you will use. This savings translates into smaller loan payments and more money in your wallet after graduation.

^{College Board® is a trademark registered by the College Board, which is not affiliated with, and does not endorse, this site.}