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what can i use student loans for

What Can I Use a Student Loan For?

When you receive money from any of the student loan programs in the United States, the first question might be—what can you use the money for?  Other questions could be: Are there any restrictions on how the money is used? How is the money disbursed?

Student Loan Amounts

For a federal student loan, the money is intended to be used for college expenses. But, how much will you receive? It depends on what year of college you are in. Here are the maximum amounts (subsidized and unsubsidized combined) for dependent students:

  • First year- $5,500
  • Second year- $6,500
  • Third year and beyond- $7,500

Note: Dependent or independent student status is determined by your responses on the Dependency Status Worksheet of the Free Application for Federal Student Aid (FAFSA). You are considered a dependent student if you are younger than 23 years old, unmarried, not in a graduate program, are not a veteran or a person classified in active military duty.

If you are an independent student, the amounts are higher. They are:

  • First year- $9,500
  • Second year- $10,500
  • Third year and beyond- $12,500
  • Graduate level- $20,500

Student Loan Expenses

You can use the money for anything related to school expenses. These expenses would


Tuition- The yearly school tuition is the main expense you would use student loan money for. You can have it disbursed directly to the school if you like.

Housing- Housing refers to on-campus living including the meal plan. The money could also be used for off-campus residence.

Fees- College expenses include costs like medical and student life fees. You can use your student loans to pay these expenses.

Books- Books are a mandatory college expense. You can use your student loan to pay for these, also.

Of course, to pay for all of these expenses, you have to have enough money. The funds you will need may have to come from personal and federal loan sources. For instance, if you’re in your freshman year the maximum loan amount is $5,500. Is that enough to cover all of the costs your school requires?

As an example, following are the current expenses for the University of Illinois at Urbana-Champaign for Illinois residents:

Tuition and Fees:     $13,658 to $18,386

Room and Board:       $9,714 (10 meals a week plan)

Books and Supplies:   $1,200

Other Expenses:         $2,500

Total:                        $27,082 to $31,810

These expenses are just for the freshman year. So, even after the maximum federal student loan of $5,500 is applied, there is still a significant amount of cost that needs to be funded.

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