How Cost of Living Loans Can Help You Make Ends Meet

You can use student loans—federal and private—to cover living expenses like housing, groceries, toiletries, and more. These expenses are part of your school’s cost of attendance (COA), which lenders use to determine how much money you should receive.

Having enough money to cover basic necessities like housing, food, and transportation is crucial for getting by. But for many people, an unexpected expense or drop in income can make it hard to afford these basic costs of living. This is where a cost of living loan can help.

In this article, I’ll explain what cost of living loans are, who they can benefit, and how to get one. As someone who has struggled to pay bills in the past, I know how stressful it can be when you don’t have enough money coming in each month. My goal is to break down this loan option so you can determine if it’s right for your situation.

What is a Cost of Living Loan?

A cost of living loan is a personal loan that you can use to cover basic living expenses It provides you with a lump sum of cash upfront that you’ll repay in fixed monthly installments over a set repayment term

Cost of living loans are unsecured, meaning you don’t need to put up any collateral. Lenders will look at factors like your income, existing debts, and credit score to determine if you qualify and what interest rate you’ll pay.

These loans can be used flexibly as you see fit. Common uses include:

Paying rent or mortgage payments
Buying groceries and other necessities
Covering utility bills and transportation costs
Catching up on overdue bills or debts
Paying for medical expenses

They differ from payday loans and cash advances since they have lower rates and longer repayment terms. This makes cost of living loans more affordable and manageable for covering ongoing expenses.

Who Are Cost of Living Loans For?

Cost of living loans can benefit different types of borrowers struggling to keep up with regular bills and household costs. Here are some examples:

Individuals experiencing income loss: Losing your job or having work hours reduced can quickly leave you unable to cover normal living costs. A cost of living loan provides fast cash to bridge the gap.
People with high medical bills: If you’re hit with high out-of-pocket medical expenses, a cost of living loan can help you pay costs not covered by health insurance.
Single parents Single moms and dads often face financial challenges making ends meet This loan gives access to extra funds when budgets are overstretched,
Retirees: Retirees on a fixed income may need help affording essentials when unexpected costs pop up. A cost of living loan can supplement pensions or social security.
College students: College students struggling with housing, food, and other costs can use this cash infusion to avoid accruing credit card debt.
Individuals with poor credit: Those with bad credit often have trouble qualifying for loans with good rates. Cost of living loans provide an accessible financing option.

What Are the Benefits of a Cost of Living Loan?

There are several advantages to using a cost of living loan rather than other quick cash options:

Quick access to funds: You can complete an application in minutes and often receive your loan within one business day. This rapid financing helps when you need money urgently.
Fixed monthly payments: Your repayment schedule is set over a term like 2-5 years. This allows you to budget the fixed payment each month.
May improve your credit: Making on-time payments shows responsibility and can boost your credit score over time.
No collateral required: You don’t risk losing a valuable asset if you default since these are unsecured loans.
Spend money how you want: There are no restrictions on how you can use the loan, giving you maximum flexibility.
Potentially lower rates: Interest rates may be more affordable compared to payday loans or credit cards.

For people struggling to afford groceries, rent, or other necessities, the benefits of quick cash access and predictable payments can provide much-needed stability.

What to Consider Before Getting a Cost of Living Loan

While cost of living loans have advantages, they also have downsides to consider carefully before applying.

You must repay the money: A cost of living loan only provides temporary relief. You will have to budget to repay the loan amount plus interest charges over time.

Interest can be high: Interest rates on unsecured personal loans are generally higher compared to mortgages or auto loans. Be sure you can afford the payments.

Missed payments hurt: If you miss payments, you could face late fees, credit damage, and collection calls. This can worsen your financial situation.

Debt load increases: While manageable for some, a new loan means increased debt obligations that reduce disposable income.

Won’t solve ongoing issues: For expenses like medical bills, a one-time cash infusion treats the symptom. Insurance or budget changes may better address the root problem.

Other options may exist: Non-profit groups, government aid programs, or assistance from family/friends could provide cheaper alternatives to handle costs.

Consider both the pros and cons carefully given your personal circumstances to decide if a cost of living loan is your best choice. Analyze whether it provides lasting relief or traps you in a debt cycle.

What Expenses Can a Cost of Living Loan Cover?

Cost of living loans provide a lump sum you can spend as needed on essential costs like:

Housing: Pay rent, mortgage, home repairs, or temporary accommodations.
Utilities: Cover heating bills, water, electricity, phone, and Internet.
Food: Buy groceries, essentials, and daily meals.
Transportation: Pay for public transit, gas, car maintenance, repairs, parking, and tolls.
Insurance: Make health, home, auto, or life insurance payments.
Medical bills: Pay hospital bills, prescriptions, and healthcare expenses.
Childcare and family needs: Cover childcare, school costs, formula, and family necessities.
Debt payments: Pay down or catch up on overdue bills and debts.
Everyday costs: Purchase toiletries, cleaning supplies, clothes, and other personal items.

Any expense related to maintaining your housing, utilities, food, transportation and overall wellbeing can potentially be paid using funds from a cost of living loan. It’s a flexible way to cover gaps in any area of your basic budget.

What Are Cost of Living Loan Requirements?

Since cost of living loans are unsecured, lenders want to see you have adequate income and credit to qualify. Typical eligibility requirements include:

Steady income: Lenders may ask for pay stubs or tax returns to verify your income level and consistency.
Minimum credit scores: Each lender sets score requirements, often 600 and above. Higher scores increase your changes.
Low debt-to-income ratio: Lenders calculate your DTI based on existing debts and income. A lower ratio improves your approval odds.
No recent bankruptcies: Active bankruptcies can disqualify you. You often must wait 1-2 years after bankruptcy discharge to qualify.
Age of majority: You need to be at least 18 years old (or state age of majority) to apply for your own cost of living loan.
U.S. resident: Lenders require you to be a U.S. citizen or permanent resident.

Meeting these requirements shows lenders you likely have the means to repay. Make sure to check specific eligibility standards in advance.

Where Can You Get a Cost of Living Loan?

You have options when it comes to finding and applying for cost of living loans.

Banks and credit unions: Local banks or credit unions are one option. They may offer personal loans at competitive rates for qualified borrowers.

Online lenders: Many online lending companies like LendingClub and Prosper specialize in personal loans with easy online applications.

Peer-to-peer (P2P) platforms: Websites like Upstart connect you to individual lenders offering personal loans with more flexible approval.

Payday alternative loans: Some credit unions offer payday alternative loans (PALs) for under $1,000 at lower rates to members.

401(k) loan: You may be able to borrow against your 401(k) balance. While not ideal, it’s a lower-cost alternative to high-interest debt.

Family and friends: Asking family or friends to help with expenses through a personal loan is cheaper but can strain relationships.

Compare multiple lenders to find the best rates and terms for your situation. A loan pre-approval can give you an idea of rates you may qualify for based on a soft credit check.

How Do You Apply for a Cost of Living Loan?

The application process for a cost of living loan is fairly straightforward. Here are the basic steps:

Determine loan amount needed – Decide how much cash realistically covers your expenses based on bills and budget. Avoid taking more than necessary.
Check eligibility requirements – Visit lender websites to view their minimum credit score, income, and other qualification criteria before applying.
Compare lender loan offers – Look at different lenders an

Can I get in trouble for misusing student loan funds?

Your student loans are supposed to be used for educational expenditures and essential living expenses. If your student loan lender finds out you’re misusing funds, such as by paying for spring break trips or bar-hopping, it’s possible your loan could be terminated and you could be forced to pay back the full amount borrowed.

However, it’s unlikely lenders will look into what you’re using the funds for or take action if they find out you’re having fun with your student aid money. Their main concern is your ability to repay the loan.

You want to borrow the minimum amount of money you need to attend school and have a reasonable standard of living, but avoid taking out too many student loans.

Student loans for living expenses are available, but using them wisely is important, so you don’t run out of money and need to take on other consumer debt during the academic year.

Which living expenses are most often paid for with student loans?

Student loans can cover essential living expenses, including accommodation, meals, transportation, utilities, books, and personal and housing supplies. If you have a child, you may also use student loans to cover child care expenses.

Can You Take Out Student Loans For Living Expenses?

FAQ

Can I take out loans for living expenses?

Undergraduate, graduate, and professional students enrolled on at least a half-time basis are all able to use student loans for living expenses. This is because schools are required to include an estimate for living expenses in their Cost of Attendance (COA).

Do federal loans cover cost of living?

Can you use student loans for living expenses? If you live on campus, your student loans can help cover living expenses up to your school’s cost of attendance (COA). You can also use the funds to pay for living expenses off campus, including: Rent.

Can you get a personal loan for living expenses?

The funds from a personal loan can also be used for general college expenses like rent and school supplies. Unlike federal student loans, however, you usually have to begin making regular payments or even interest-only payments during school.

Can you use Sallie Mae loans for living expenses?

You can use Sallie Mae loans for educational expenses, including tuition, fees, and housing, whether it is on-campus or off-campus. So, you will be able to put them towards off-campus housing if you decide to.

Do student loans pay for living expenses?

Most people turn to student loans because of the high costs of college tuition, but that’s not the only thing loans can help with. In addition to tuition, fees and textbooks, many student loans cover the cost of room and board for on-campus and off-campus students. Here’s the breakdown of how to use student loans for living expenses.

What is cost of living?

Here’s an explanation for What is “cost of living”? The term “cost of living” refers to the overall amount of money required to cover necessary expenses to maintain a certain lifestyle standard in a particular place, including basics like housing, food, transportation and more.

What is a cost of Living Calculator?

The cost of living calculator also breaks down the difference in typical costs between the two locations, including average rent and home prices. Let’s say you currently live in Joplin, Missouri, and make $60,000 a year.

What living expenses count as authorized uses of student loans?

Besides tuition, the following living expenses count as authorized uses of student loans: Rent. Student loans can be used to pay for your housing. You can use borrowed money to pay for a dorm room, but you can also use student loans for living expenses off campus, such as getting an apartment with friends. Meals.