Can You Use Student Loans to Pay for an Apartment?

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By Mark Kantrowitz

August 6, 2020

Federal and private student loans can be used to pay for the rental of an apartment or off-campus housing.

Cost of Attendance Includes Room and Board

Student loans can be used to cover the college’s full cost of attendance, also known as the student budget. The cost of attendance includes room and board in addition to tuition and fees, books, supplies and equipment, transportation and miscellaneous expenses.

Most colleges will have four student budgets based on where the student lives:

  • Students who live on campus in the college dormitories or other college owned or operated housing. 
  • Students who live off campus in an apartment.
  • Students who life off campus at home with their parents.
  • Students who live on a military base or who receive a basic housing allowance from the military. This student budget will include costs for meals but not for housing. 

There may also be other student budgets for students who are married or have dependents. 

You can use student loans to pay for the cost of the apartment, up to the allowance specified by the college.

There are no restrictions on where the apartment is located.
The apartment does not need to be near the college campus. 

See also: What Happens When You Borrow Too Much Money for College

How Student Loans Are Disbursed

The student loan funds are sent to the college, not to the student. 

The college will apply the student loan funds and other financial aid first to college tuition and fees. If the student is living in the dorms or other college housing, the money will also be applied to room and board.

If a credit balance remains, it will be “refunded” to the student within 14 days. The student can use this money to pay for rent, textbooks and other college costs.

Since the loan proceeds will be paid to you in a lump sum, you will have to manage the money carefully to have enough money available to pay the rent each month. 

Some colleges have “Pell as a paycheck” programs where you give them permission to hold onto the money and they disburse it to you in monthly or biweekly installments. But, you may be better off depositing the money to a bank account so you can control the timing of the rent checks. 

See also: The Complete Guide to Applying for Student Loans


Living off campus in an apartment can be a great way to save on room and board, especially if you get a roommate to split the rent. But, it can also increase costs if you need to commute to school. 

Using student loan money to pay the rent will also increase your costs, since student loans must be repaid, usually with interest. Every dollar you borrow will cost you two dollars by the time you repay the debt. 

See also: How to Minimize Student Loan Debt

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