It’s no surprise that college is expensive. Tuition costs continue to climb exponentially every year. But after tuition, the second biggest expense is room and board and other living expenses.

For students who live off-campus, the costs include far more than a dorm room and a meal plan. Some students end up attending school close to home, so they can stay with their parents and cut out the housing costs completely. But staying with your folks isn’t always an option.

Financial aid pays for room and board if you live in the dorms. If you live off-campus, financial aid and student loans can be used to help defray the cost there as well. But there’s a trick to using these resources in a smart way.

College Housing Costs: On-Campus vs. Off-Campus

A school’s cost of attendance, or COA, is the total amount that a student can expect to pay to attend that school. It includes not only tuition, housing, and books, but also fees and average living expenses for the academic year. Each school, however, determines their own COA, based in part on the cost of living in that area. Even two colleges within blocks of each other may have a wildly different housing estimates for housing costs.

So students often get creative. While it’s usually more convenient to live on campus, it can actually be cheaper to live off-campus, especially if you get a small studio apartment, or get a multi-bedroom apartment and split the costs with several roommates. For example, Barry University in Florida cites $6,612 as the cost of a single dorm room with a private bathroom per academic year. If a student rented an apartment with a roommate, however, the off-campus accommodations might only cost each student about $5,140 per semester — a potential savings of about $1,500.

Regardless of how you expect to pay for your off-campus housing, you’ll need to complete the FAFSA, or Free Application for Federal Student Aid. You’ll specify on the FAFSA if you plan to live off-campus, and that will be factored in when your college calculates your financial aid package. Not completing the FAFSA means you won’t be eligible for financial aid.

How to Pay for Off-Campus Housing With Financial Aid

When you receive your financial aid package, that money goes directly to the school — you generally don’t see any of it. Financial aid can sometimes be used to pay for off-campus housing, but the school’s financial aid office determines how much of your financial aid will be released directly to you to pay your off-campus rent.

In some cases, the school will only release an amount equal to what you would have paid for a dorm room on campus. In other cases, they will set a ceiling for rent cost based upon their cost of attendance. If you rent something costlier, you will pay the difference on your own.

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How to Pay for Off-Campus Housing With Student Loans

You can use federal and private student loans to pay for your housing, but how you’ll go about doing that is a bit different for each type.

With federal loans, you’ll receive funds disbursed through your school, like other types of federal and state financial aid. If you still have a funding gap after your financial aid package has been awarded, you can talk to your school’s financial aid office about taking out additional federal loans or adjusting the ones you have. They should also have a list of housing options that would qualify for student loan funds.

You should be aware that federal student loan funds do not typically process until about four weeks after school starts. In order to be settled and ready for the first day of class, you’ll need the first month’s rent and any necessary security deposits before your loan money comes in.

Private student loans are offered by banks and credit unions and are handled differently than their federal counterparts. Because approval for a private loan is based upon creditworthiness instead of financial need, the money is often disbursed directly to you to pay the expenses you need.

Before you take out any type of student loan for rent and utilities, however, there are a few things to keep in mind. First, for every dollar that you borrow now, you’ll pay back much more than a dollar by the time your loan is paid off. That could take well over a decade.

Other Ways to Pay for Off-Campus Housing

If you want to avoid debt completely, you can turn to other ways to fund your off-campus living situation. You could get a part-time job or check into federal work-study programs that allow you to make money while working for the school you’re attending.

One of the most critical parts of living off-campus is to save as much money as you can. Pass up the trendy digs with the great view in favor of a smaller, less expensive apartment. Rather than eating out, get some groceries and cook low-cost meals. Forgo the daily latte and use your coffee pot. Get some roommates to share the cost.

Summary

Living off-campus offers a lot of freedom and choices you may not have when living in a dorm room — not to mention more space. If you have your heart set on commuting to your classes instead of living near them, then plan your move, talk to your school’s financial aid office, and get your FAFSA completed early. Those three steps will get you well on your way to funding your off-campus living.