If you're an undergraduate or graduate college student, you may be eligible for loans that will cover living expenses. According to most lenders' guidelines, you may use federal or private student loan money to pay for qualified education expenses. Many lenders consider tuition and fees, books, and living expenses as qualified. You must be eligible for federal student aid to receive Perkins, Stafford or PLUS loans. Eligibility requirements include being a U.S. citizen or eligible noncitizen, financial need, academic progress, and no prior defaults on federal student loans. You may also be eligible for other types of student aid, including private, state and institutional loans.
Institutional and State Loans
Institutional loan money comes from your school. It does not come from the federal government, and the loan servicer is either your school or an agency acting on behalf of your school. If your school has this type of aid available, you would need to contact the financial aid office to find out the interest rates, fees and borrowing terms. State loans are administered by each state's office of education. While these loans are not backed by the federal government, you may receive more benefits than you would with a private loan. Interest rates could vary depending upon your location. The terms of the loans will vary depending on the lender, but when colleges and states determine your financial need, your living expenses will often be taken into consideration.
Students who are able to prove they have low income and exceptional need may receive a Perkins loan. Your loan does not accumulate any interest while you're in school. You pay only a 5 percent interest rate once your loan goes into repayment. The maximum amount of Perkins loans you can take out is $40,000. This is a lifetime maximum, so it applies to multiple degrees. If you're a graduate student, you are only eligible to take out $8,000 per year. As long as your tuition is less than your loan amount, you could use the rest for living expenses.
Stafford loans come in two forms. Subsidized Stafford loans are available to undergraduate students, and the government pays the interest while you're in school. The amount that you'll receive will depend on how long you've been in your degree program and your dependent status. Unsubsidized Stafford loans are available to both undergraduate and graduate students. You'll be responsible for any accrued interest on your balances, regardless of your enrollment status. The lifetime maximum on Stafford loans for dependent students is $31,000. For independent undergraduates the maximum is $57,500; it's $138,500 for graduate or professional students. Stafford loans can be used to pay for living expenses such as housing.
Graduate PLUS Loans
If you're a graduate student who's reached your limit on Perkins and Stafford loans, you might consider a PLUS loan. Graduate PLUS loans help cover other eligible educational costs, such as basic living expenses. You would consider a PLUS loan if other forms of financial aid are just enough to cover tuition. Since financial need is the cost of attendance minus your expected family contribution, you may qualify for additional loan money. Your cost of attendance covers tuition, fees, books and living expenses. Your expected family contribution is based on a government formula. It considers household size, income and the number of family members in college.
Private student loans are an option for undergraduate and graduate students who need money for living expenses. Eligibility requirements, interest rates and fees vary between lenders. A private student loan will usually allow you to borrow your cost of attendance. The lender will subtract any other financial aid you'll receive from your approval amount. If your cost of attendance is $20,000 and you're receiving $15,000 in federal loans, your maximum private loan would be $5,000. Your private student loans are not eligible for federal repayment programs, subsidized interest or federal loan forgiveness.