What can I use my federal student loans for?

If you’re a college student who’s applied for or received federal student loans, you may be wondering what you can spend the funds on. Besides tuition, you may be surprised to learn that your federal student loans can cover other approved educational expenses, such as technology you may need for your college classes.

That said, it’s important to understand that there are expenses that aren’t an approved usage of the funds. The U.S. Department of Education has certain rules in place to prevent what it considers to be the misuse of federal student loan funds.

Keep reading for information on the approved expenses you can use federal student loans to pay for and the expenses that aren’t approved.

What approved expenses can you use federal student loans to pay for?

You can use your federal student loan funds to pay for U.S. Department of Education-approved education expenses, including tuition, fees, and room and board. You can also use federal student loans to cover some of the expenses you may incur by pursuing higher education, including books, certain transportation costs (like gas), and childcare.

Here's a list of some of the expenses besides tuition and fees your federal student loans can cover based on guidance from the U.S. Department of Education:

• Books and supplies
• Transportation costs
• Computer expenses (e.g., laptop, printer ink)
• Childcare
• Lab fees
• Tutoring
• Disability services
• Food (e.g., groceries and meal plans)
• Housing (e.g., on-campus housing, rent, utilities)
• Professional expenses
• Study abroad (e.g., tuition, housing, other expenses)

What expenses aren’t approved to use federal student loans to pay for?

While there’s a long list of items that are approved expenses when it comes to using federal student loans, there are expenses that aren’t approved by the U.S. Department of Education.

Some of these items include:

• Purchasing a home or putting a downpayment on a home
• Restaurants and entertainment costs
• Nonessential household items (e.g., TVs, video games, decorative home items)
• Clothes and accessories
• Grooming items
• Cars
• Travel expenses (with some exceptions for study abroad and everyday transportation costs)
• Social outings

You may face consequences if you spend federal student loan funds on unapproved expenses, such as for a vacation or buying a car.

According to the U.S. Department of Education, anyone who intentionally misuses their disbursed federal student loans can be fined up to $20,000 or face up to five years in prison.

What should you do if you have money left over from federal student loans after paying for approved educational expenses?

If you think you have money left over from your federal student loans, you may want to familiarize yourself with the full list of approved educational expenses to explore if there are items you may not have realized the funds would be helpful for.

From there, you may want to consider canceling the part of the loan you don’t need. According to Federal Student Aid, you can cancel all or part of your loan within 120 days of receiving it. You’ll incur no interest or fees for doing this.

After 120 days, you can also return federal student loan funds, but that return will be considered a pre-payment on the loan, and you’ll be charged interest and a loan fee.

Common FAQs about what you can use your federal student loans for

Can I use federal student loans to pay for rent?

The U.S. Department of Education states that housing is one category that’s an approved expense when it comes to using federal student loan funds. This can include both on-campus and off-campus housing expenses, including rent for an off-campus apartment, for instance.

Can I use federal student loans to pay for food?

According to Federal Student Aid, you can use federal student loans to pay for your on-campus meal plan and groceries. It may be important to be especially mindful of using your federal student loans to pay for items in this category, as some food expenses, like eating out at restaurants, aren’t considered approved educational expenses.

Can I use federal student loans to pay for living expenses?

It’s an approved expense to use federal student loans to pay for many living expenses as you pursue higher education. You can use the funds to pay for housing, school meal plans, groceries, utilities, and some household items. Make sure to familiarize yourself with the complete list of approved expenses to make sure how you plan to use the funds is allowed.

Can I use federal student loans to pay for a car?

It’s an unapproved expense to use federal student loans to pay for a car, as outlined by the U.S. Department of Education. However, you can use the funds to pay for everyday transportation expenses like gas to get to and from school and car repair fees.

Final thoughts

If you have additional questions about what federal student loan approved expenses are, it may be helpful to seek guidance from your school’s financial aid office, which may be able to answer specific questions as they arise.