Earning a college degree can be an expensive pursuit. A 2010 study conducted by the College Board indicates that almost half of U.S. colleges charge annual tuition between $9,000 and $35,000 or more. Students still must pay for room and board, or rent and living expenses, even when course loads do not permit working a full-time job. Students and parents with limited financial liquidity often borrow money to cover such costs.
Government-Backed Loans
You can apply for student loans through your college financial aid office by filling out the Free Application of Federal Student Aid, or FAFSA. The maximum amount you can borrow depends on your year in college -- freshman, sophomore or above -- the number of credits in which you enroll and whether you are dependent or independent. Your college typically applies the student loan to unpaid tuition and refunds you the unused loan amount, which you can use for living expenses. Your parents can also apply for a student loan on your behalf, known as the PLUS loan, the unused amount of which gets refunded to you for living expenses.
Private Loans
You, or your parents, can apply for a signature bank loan to pay for your college living expenses. Some banks offer signature education loans to preferred customers at special rates and terms based on credit rating. Parents generally borrow private education loans to pay the estimated family contribution, or EFC, of your total tuition bill. Such loans, although labeled "education loans," are neither affiliated with your college nor backed by the U.S. government. FinAid.org says that private education loans, although pricey, could be cheaper than credit cards.
Credit Cards and Home Equity
Some banks offer credit cards created specifically for college students regardless of income. You can apply for such credit cards online or fill out paper applications found in credit card promotional displays at your college. While credit cards can help you establish credit, some students avoid using them to pay for living expenses, because high balances and high interest rates could make monthly payments unmanageable. Students who own residential real estate, or their parents, can also borrow home equity loans, or HELs -- loans based on a home's value -- to help pay for college living expenses. Financial adviser Suze Orman recommends borrowing conservatively, but says that you get a tax deduction on already low HEL interest rates, which makes such the loans cheaper than other college loans.
Considerations
The more money you borrow for college living expenses, the more you'll owe when you graduate. Consider working a part-time job to cover living expenses instead of borrowing money. Adopting a frugal lifestyle while in college also cuts the cost of your education. A frugal lifestyle could include, but is not limited to, buying your textbooks used and selling them online for the price you paid at the end of the semester, sharing a residence with one or several roommates and cooking meals at home, rather than eating out.
Tags: living expenses, education loans, college living, college living expenses, credit cards