What to do with private student loans – I bet you don’t know or you haven’t thought about it. Well just in case you think you can spend your student loan on just about anything, then I am sorry to disappoint you. There are things you can spend your private student loan on as well as things you cannot spend it on.
What to Do With Private Student Loans
It is true that when you take out a private student loan it can be very tempting to spend the said cash on whatever it is that you want. But it is however very important to note that the money in question is not a windfall and that your lender on the other hand is not just writing you a blank check.
Usually, you can only borrow up to the cost of attendance, minus other types of financial aid as the lender also will set rules in place in regards to how you can spend the money that you borrow. You generally can use private student loans for education costs as well as living expenses.
Things You Can Spend Your Private Student Loan On
You should know that every private lender has its own set of rules about how you can spend loaned funds, so you should do well to check your loan documents or rather contact your lender for details in that regard. Borrowers typically can use private student loans in paying for educational and living expenses only and they may include;
- College tuition
- Fees associated with your degree program or institutional fees that cover things such as parking at the school as well as using campus facilities.
- Room and board
- Book and supplies
- Transportation
- Equipment such as a laptop, software program, or camera
- Dependent care expenses such as child care or adult care while you get to attend classes.
What You Cannot Spend Your Private Student Loans On
When you normally take out a private student loan, then you will typically sign a loan agreement that outlines the things you can and cannot spend your private loans on. You should pay attention to this very piece of information because you could get to face serious consequences in the event that the lender in question finds out that you misused loan funds. For example, the lender could even terminate your current loan, and then ask you to repay the loan balance immediately as well as block you from borrowing in the future.
And even if you do get away with using the loan for unauthorized purchases, it is generally not a good idea, because you will eventually have to repay that very money with interest. All of those fancy dinners, extravagant trips as well as brand-new cellphones will ultimately cost more when you get to repay the loan, all thanks to compounding interest.
Below are some of the things that you should not spend your private student loan money on;
- Entertainment such as concert tickets, streaming services, and movie passes.
- Nonessentials such as high-end clothing, gym membership, or even a new TV.
- Travel such as pay for vacations and other related pieces of stuff.
- Dining out.
- Other debts such as balances like credit cards and auto loans.
- Emergency funds.
That’s it!
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