Do Student Loans Cover the First Month & Deposit for Housing?

by Michael Marz
Student loan funds can be used to pay for off-campus housing.

If you're a student and don't have the money to pay the first month's rent and security deposit to secure housing near your school, student loans may cover these costs. How much of these housing costs your student loans will cover depends on the maximum amount your school lets you borrow, the funds you're left with after paying tuition and the number of years you've been in school.

Housing Is an Education-Related Expense

Provided you take enough courses to be considered at least a half-time student by your college or university, room-and-board expenses qualify as an education-related expense. This means your school can include a fixed amount of student housing expenses in its "cost of attendance." You can never take out student loans for more than your school's cost of attendance minus the other financial aid you receive -- including scholarships. Once your tuition is paid, you'll receive the remaining student loan funds, which you're free to use to pay the first month's rent and security deposit for off-campus housing.

Annual Student Loan Maximums

Before signing a lease, you may want to ensure that your student loans will cover enough of your housing expenses if you're relying on those funds. Undergraduate students can borrow between $5,500 and $12,500 in Direct Subsidized and Unsubsidized loans per year. The maximum loan you can take depends on how many years of school you've completed and whether you're considered a dependent or independent student. Graduate students can borrow up to $20,500 per year. In addition, both undergraduate and graduate students who have an exceptional financial need are also eligible for low-interest Perkins Loans.

About the Author

Michael Marz has worked in the financial sector since 2002, specializing in wealth and estate planning. After spending six years working for a large investment bank and an accounting firm, Marz is now self-employed as a consultant, focusing on complex estate and gift tax compliance and planning.

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