What Costs Do Student Loans Cover?

what do student loans cover

Are you wondering what do student loans cover? Many students, are unsure about what expenses the FAFSA or a private student loan can actually cover. Most understand that the funds should be used for education-related expenses and not wasted on unnecessary items, such as alcohol or a new PS4, but determining what qualifies as an eligible expense may not be as easy as it seems. The most simple way to determine what the FAFSA covers is to refer to your school’s Cost of Attendance. Learn about what do student loans cover below.

What Do Student Loans Cover?

In general, a student may not borrow more than the COA provided to them in their financial aid award letter. Student loans may cover tuition, housing, transportation, books, supplies, service fees and miscellaneous expenses. The loan may also cover for equipment such as computers or dorm necessities. To help students understand what expenses their student loans should cover, we’ve put together this list of college expenditures that are generally covered by the FAFSA as well as private student loans.

1. Tuition

Sometimes the student loan may cover tuition, but not always. Sometimes the loan amount may be too little to cover full costs, as you may have to find other financial means to cover the tuition gap. The majority of students who take out student loans use the funds to cover their college tuition each semester. This is the amount charged per credit or clock hour to enroll in classes and varies depending on the type of college students attend.

2. Room and Board

Student loans could cover both on campus and off campus housing. Student loans will cover the cost of on-campus housing (otherwise known as a dorm room) and meal plans. Commuter students, or those who live off campus, may have a portion of their living expenses covered through student loans, as well. This may include rent, utilities and food expenses.

3. Fees

Along with tuition, most students will need to cover fees for student services on campus. Some common fees include: activities, athletics, health and counseling, technology, transportation and student union fees.

4. Books and Supplies

According to College Board, students will spend an average of $1,298 a year on textbooks. In addition, they may also need to purchase other supplies, including: notepads, paper, writing implements, folders and other items necessary to complete assignments.

5. Equipment

Equipment typically includes computers, printers, scientific calculators and other materials required for classes, but may also cover microwaves, refrigerators, lamps and other dormitory necessities.

6. Travel

Students who live off campus may use student loans to cover the expense of travel to and from campus, including gas and maintenance on their personal vehicles. On-campus students may also use the funds to cover travel during school breaks.

7. Miscellaneous

Additional expenses that may be covered by student loans include study abroad trips (through the student’s home university/college), child care for dependent children, clothing and even cell phone plans.

Students should always check with their financial aid office and student loan lenders if they have questions about college-related expenses that may, or may not, be covered by their loans. Another thing students should keep in mind is that many of the expenses allowed under student loans are not considered a qualified education expense for tax purposes.

For example, those who plan to take either the American Opportunity Tax Credit or Lifetime Learning Credit will not be able to include room and board, transportation, or health fees as an educational expense. To limit their tax liability, students should only borrow what is needed and consult a tax professional for advice.

The list above shows that both the FAFSA and private student loans may cover any expense related to their college education. But be warned! You must be honest. Do not attempt to claim expenses that are not really related to your college education. If lenders discover you have misused funds, your financial assistance will stop.  Even worse, you will immediately have to pay back the money you’ve already been given.

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