Using Student Loan Money for Other Purposes

Obviously, when people borrow student debt, the reason they are loaned money is to pay for educational expenses. However, students are usually allowed to borrow money in order to pay for living expenses, and this can sometimes be a significant sum of cash. Students can decide to use this part of their student loans for purposes other than paying for housing, food, and related expenses. However, student debt borrowers should keep some things in mind when using student loan money for other purposes.

Family Emergencies

Perhaps the primary reason why student debt borrowers might consider using student loan money for other purposes is if their family faces an emergency. In an emergency, individuals need to deal with the situation at hand without thinking of the long-term financial consequences of eliminating an emergent circumstance. Families may face financial emergencies that require students to loan or gift part of their student debt proceeds in order to assist relatives.

For instance, when I was a student, a family member of mine needed money on short notice. My brothers and myself were students, so we did not have money from jobs that we could offer in order to help our family member out. However, we decided to borrow the maximum permissible sum for student loans and devote some of the money that was supposed to pay for living expenses and give this money to our relative in need. Fortunately, our relative was able to pay us back the money in a relatively short period of time and we were not too inconvenienced by this situation.

Family is extremely important, and student debt borrowers can assist relatives even if they do not have jobs and are likely earlier in their adult lives. As a result, students should feel comfortable assisting family with their resources in some situations.


Another, albeit risky, situation in which using student loan money for other purposes may make sense is to make investments. Let me say right at the onset that using student loan money for investments is a risky proposition. Student loan money is intended to pay for educational costs, and since you can lose money you devote to investments, not only may you not be able to pay for educational costs, but you will have to pay high interest rates on student debt. Students should not lightly consider using student loan money on investments due to this risk.

However, as previously mentioned on this website, I am sad that I did not make certain investments earlier, and such investments could have dramatically impacted my student debt story. For instance, I first heard about Tesla while I was a student and I thought about investing in this company at an early time. Moreover, Bitcoin was launched while I was a student, and if I knew about Bitcoin as a student, it might have made sense to invest money in this asset class. If you know that an investment is solid and will have high returns that can impact your student debt burden, it might make sense to make investments with money that you have from student debt.

Bar Costs

For law students, another circumstance in which using student loan money for other purposes is a good idea is for costs associated with studying for the bar exam. As many people already know, individuals need to take and pass a bar exam in order to be licensed to practice law in many jurisdictions. In order to study for the bar exam, recent graduates usually need to pay several thousand dollars to enroll in a bar exam course and float themselves for a few months so they have the time to properly study and take the bar exam.

Sometimes, it makes sense to use money from student loans to pay for these costs. It is oftentimes possible to borrow a bar loan to specifically pay for these expenses. However, the interest rates on bar loans may be higher than the interest rate on student debt. As a result, if you can borrow more student loans at a rate that is lower than a bar loan, you might consider using the funds to pay for bar exam costs.

Moving Expenses

Similar to paying for bar costs, using student loan money for other purposes might be a good idea if you need to pay for moving expenses. Recent graduates oftentimes need to pay money to get established in their careers after graduating from a program. This might include paying for a new wardrobe, taking required trainings, and moving to a new location. It can oftentimes cost thousands of dollars to move, depending on the distance between where you are and to where you are moving and the amount of items you need to move. It might be difficult to borrow money for moving costs, and personal loans oftentimes have high interest rates. Under certain circumstances, it might make sense to devote student loan funds to moving costs, especially if the interest rate of this debt is lower than other loans.

All told, student loan money should usually be used to pay for educational expenses and related living costs. However, in certain circumstances and with some forethought, using student loan money for other purposes might be advisable if student debt borrowers keep a few things in mind.

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