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Can I Use Student Loans for Living Expenses?

Can you use student loans for living expenses?


Is it in your best interest to do so?


Let me explain…

Once I’ve gotten to know someone, I’ll usually ask the question, “Do you budget?” The response is always interesting. That was how I got into one particular conversation with my friend (we’ll call him Joe) about using student loans as personal loans.

Spoiler alert: using student loan money to pay for living expenses is a trap!

Joe went on to tell me that he and his wife used to budget, but felt like they “couldn’t have any fun” as young, married college students. I know that feeling, because I’ve been there, too. It’s true that finances can get a bit tight in college, especially as newlyweds.

Joe was telling me that they would want to go out on the town and do something different, but all of their friends would always say they didn’t want to spend the money. So, they’d end up in the same ol’, same ol’ routine for the sake of saving money: going over to someone’s house and chatting, then going home.

Money Stress for College Students is Real

Like Joe and his friends, many college students are stressed about money. Not only are you paying for tuition, fees, meal plans, books, and supplies, but also student housing. Then there are those other classic student worries. Will my car break down? Will I run out of money for Top Ramen? What if I don’t land a paid internship?

In Joe’s case, their solution to alleviate the stress of having very little income was to take out some additional student loans to help pay for living expenses.

He began to explain that at the time, by taking out more student loans for living expenses, they no longer stressed about money.  Their loans were approaching $30,000, and he still had four semesters of school left…but if the car did break down, they knew they had the money to cover repairs.

Don’t Use Loans as an Excuse to Live Above Your Means

I just listened. No stress? But what about being $30,000 further in debt? What about the high interest rates? What about affecting your credit? I couldn’t believe my ears. This is typical Student Loan Syndrome (SLS): using student loans as personal loans.

SLS is rampant on college campuses. You can usually find SLS when you see someone living beyond their means. A lot of times, especially with young married students, they tend to want to take on the lifestyle of their parents. The result is usually a lot of “necessary” purchases that really aren’t affordable for the young couple.

It may seem like a fellow student can magically afford what you cannot, but in reality, they may be using loans to pay for living expenses—a decision they’ll quite literally have to pay for later.

Watch Out for Economic Anticipation

SLS also appears when a young couple or college student is in “economic anticipation.” They anticipate they will have a huge jump in income once they graduate and land their first big job. So, taking out a few loans now feels like no big deal. The interest rate is unbelievably low (for now), and there will be so much more money coming in. They think they can use student loans for anything and pay them off in no time.

What You Should Do Instead of Using Student Loans for Living Expenses

How does one cure SLS? The first step is to build up a small reserve of one month’s expenses. When you’re in college, this will help you avoid the temptation to use your student loans for unexpected or personal expenses.

Next, start a budget and stick to it. Don’t worry: budgeting is not restrictive—you won’t be spending less, you’ll be spending right. What do you have to lose? Except all those loans to pay and money stress?

Sticking to a budget in college can help avoid student loan regret later.

Some might call me extreme, but if you’re really in need of money as a student, consider taking a semester off of school and building up a reserve. Students are notorious for saying they don’t have any money to spare—as they text message their friend on the latest new cell phone.

Treat the Problem, Not the Symptom

To take out a loan because you’re “avoiding stress” is treating the symptom, not the problem. If you want to get to the heart of your money matters then you need to follow the Four Rules of Cash Flow Management. This tried and true method treats problems, not symptoms.

If you do have student loans, pay them off! If you don’t, avoid taking them out! Your future self will thank you.

Do whatever you can to reduce your burden of student loans and avoid using them as a cushion for your living expenses.

Are you already neck-deep in student loans and feeling the stress? It is possible with some hard work, perseverance, and sacrifice, to rid yourself of the debt. Get inspired to live debt free by Vanessa, who took out student loans for living expenses, faced them head-on, and made a plan to pay them off—while still living her best life.

If you’re motivated to eliminate your student debt stress, learn how you can use your budget as a student loan planner. Don’t have a budget, try YNAB for free for 34 days!

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Can I Use Student Loans for Living Expenses?