What Can Private Student Loans Be Used For?

October 27, 2010 | posted by Tia Peterson.

One of the big questions students have when considering alternative sources of education funding is, “What can private student loans be used for?” Should you use your loans to pay for your spring break, or Christmas gifts? That’s probably not the best idea. But what about books or computers?

Private student loans can be used to cover a variety of college-related expenses, including:

  • Tuition,
  • Room and board,
  • Other housing,
  • Books,
  • Fees,
  • and Transportation.

How Much Should You Borrow?

Generally, you can take out a private student loan for the cost of attendance minus any scholarships, grants or other financial aid you receive. However, smart borrowing means that you should only borrow what you need and what you can pay back.

Private student loans should be considered after you’ve checked out all of the other, free sources of college money, such as scholarships or grants. You should fill out your FAFSA application first and receive your SAR, so that you are aware of what you are expected to pay once your financial aid package is processed.


We recommend that you apply for a private student loan with a co-signer. Having a co-signer can help you quality for lower interest rates, as well as provide some extra assurance to you should you need help paying back the loan.

Keeping Expenses Low

You can get by on less than you think. If you’re still in high school, don’t intentionally plan to lean on loans to help you get through school. Instead, take this opportunity to purchase the things you will need for school in advance, such as computers, airline tickets, and housing needs, and then put the rest toward paying for tuition or books.

If college is right around the corner for you, or you’re already in college, keep costs low by buying used books, planning to travel to and from school with friends, or seeking lower-cost housing opportunities. If you end up not needing all of your student loan, use the extra to make interest payments while you are still in school. Paying the interest in advance can make a huge difference in what will be due once your grace period ends.

Comparing Your Options

When you’ve decided that you need to find a private student loan to cover your education expenses, be sure to use a comparison tool such as the Student Loan Marketplace so that you can find loan options from multiple lenders. You can save money by finding a lower interest student loan, and sites like the Marketplace assist with that. Don’t forget to look at several factors, including interest rate, terms, and length of the loan.

Putting It All Together

It would be wonderful if every prospective and current college student could attend school completely free, but we know that’s not the reality. Across the country, financial aid budgets are tightening and students and families need to find alternative sources of college money. If you need to find a private student loan, you should find one that’s right for you, and then spend it wisely.