Can Financial Aid Help with Rent?

In this article, we explore the options for financial aid when it comes to rent, and whether college loans can also help you with housing. We've also compiled a list of the best alternative options to consider if you’re looking to cover the cost of housing during college, so if you need help with rental costs, we've got you covered.

Many students rely on financial aid to pursue their education and cover increasing college costs. In 2021, around 83.8% of students received some form of financial aid to help them pursue higher education. However, college involves more than just attending classes, and you’ll need somewhere comfortable to stay during your studies.

As a result, students often wonder if financial aid can be used for other important expenses, such as rent. There are often limitations with this, but in some instances, financial aid can be used to ease the burden of housing expenses.

What is Financial Aid?

Financial aid refers to the support provided to students and their families to help cover the costs of education. It can come in the form of grants, scholarships, work-study programs, or loans. Federal student loans are often considered part of the financial aid package.

Whilst financial aid will initially cover the cost of tuition and university charges, any leftover student loan money will be given to you via direct deposit or as a paper check, and it can then be used to help with school-related fees, including school supplies such as textbooks, meal plans in college, and living expenses.

Student loans can either be in the form of private student loans, or federal student loans. These differ from grants, as they will need to be paid back.

Take a look below at some of the key differences between private and federal loans:

Private Student Loans

• This type of student loan is offered by a private lender, such as a bank, an online company, or a credit union. It can be difficult for many students to get approved for private loans on their own, so it can be beneficial to apply for a co-signer if you choose this option for financial aid.
• Private student loans often allow you to borrow more money than federal loans.
• They are typically more flexible than federal student loans, giving you more time to pay them back.
• The interest rates can be high, meaning your overall student loan debt can be higher with a private loan.

Federal Student Loans

• This type of student loan is available through the U.S. Department of Education. They are considered a cheaper option than private student loans and offer benefits that can be useful throughout your time in college and beyond.
• Many federal student loan options offer loan forgiveness when you meet certain requirements, meaning that you will be relieved of some or all of your student loan debt. For example, if you work in a certain sector after college, such as teaching, you may qualify for student loan forgiveness.
• Federal loans have limited credit requirements, if any at all, so there will be no credit check necessary. Whilst having any kind of loan will impact your credit score in the future, a federal student loan can help you to build up your credit score providing you pay the loan off on time.
• There are upfront fees for taking out a federal student loan, which do increase if you are a graduate student.
• Federal student loan funds are more limited than private loans, meaning you can't borrow as much with this type of loan.

While financial aid primarily focuses on educational expenses, some types of aid can also be used towards housing costs. According to the National Center for Education Statistics, in 2020-2021, the average cost of a room at a public four-year college was $11,963, and $13,488 at a private college. This means that housing can be incredibly costly for students, and financial aid can be a great support to help subsidize these costs.

What Types of Financial Aid Can Be Used Towards Rent?

Several types of financial aid can be used towards rent, depending on the specific circumstances and eligibility criteria. Here are some common forms of financial aid that students may utilize for housing expenses:

1. Federal Pell Grants: Pell Grants are need-based grants provided by the U.S. federal government. This grant requires students to provide their Cost of Attendance (COA), including information about the room and board they will use whilst at college. While the primary purpose of Pell Grants is to assist with educational expenses, excess funds can be used towards housing costs, including rent.
2. Institutional Grants: Many colleges and universities offer their own institutional grants and scholarships. Some of these grants explicitly allow students to use the funds for housing expenses, while others may have flexibility to cover a variety of costs, including rent.
3. State Grants: State governments also provide grants to eligible students. These grants, like Pell Grants, may focus primarily on educational expenses but can often be used towards rent as well.
4. Work-Study Programs: Federal or institutional work-study programs provide part-time employment opportunities for students to earn money while attending college. Although work-study earnings are typically intended to cover personal expenses, they can be allocated towards rent if needed.
5. Scholarships: While scholarships are primarily awarded for academic achievements or specific talents, some scholarships explicitly include housing expenses in their coverage. It's important to carefully review scholarship guidelines to determine if funds can be used for rent.
6. Student Loans for Rent: While loans are typically borrowed money that must be repaid with interest, they can indirectly contribute to covering housing costs. Students may use loan funds to pay for other educational expenses, freeing up their personal funds or other financial aid to be used towards rent.

Are There Specific Eligibility Criteria for Using Financial Aid to Pay Rent?

Eligibility criteria for using financial aid to pay rent may vary depending on the specific type of aid. Typically, students must demonstrate financial need by submitting the Free Application for Federal Student Aid (FAFSA) or any other required application. Universities or colleges may also have their own criteria for determining eligibility for institutional or state grants that can be used for rent. It's essential to check with your institution's financial aid office to understand specific eligibility requirements.

How Does the Process of Applying Financial Aid Towards Rent Work?

When using financial aid or student loan funds for rent, the process generally involves two steps. Firstly, students must apply for financial aid by submitting the necessary applications, such as the FAFSA. Once approved, the aid package is determined, and the funds are typically disbursed to the institution's financial aid office. Secondly, if the financial aid received exceeds the amount required to cover tuition and other educational expenses, students can request a refund or apply the excess funds toward housing costs, including rent.

Are There Any Limitations on Using Financial Aid for Housing Expenses?

While some forms of financial aid can be used for rent, there may be limitations on the amount that can be allocated toward housing expenses. The specific restrictions can vary depending on the institution, the type of aid received, and the cost of attendance. For example, if a student's financial aid package doesn't fully cover their educational expenses, they may need to prioritize using aid for tuition and other academic costs, leaving limited funds for rent.

It's also important to note that students will have to cover the security deposit for their housing, and monthly rent payments must be made on time, so consider whether your financial aid can provide funds toward this, or if you will need to look elsewhere for help with expenses.

How Can College Students Find Additional Housing Assistance if Financial Aid Falls Short?

If financial aid falls short of covering housing expenses there are alternative housing assistance options available to college students. It's crucial to explore and exhaust all options before making a decision. Some possibilities include:

1. Scholarships: Look for scholarships that explicitly cover housing expenses or provide general financial support for living costs. You can browse our database to find a scholarship that suits you. There are many scholarships available for a range of majors and financial situations.
2. Off-campus Housing: Consider living off-campus, where rent and other living expenses might be more affordable than on-campus housing. This is a common option for students looking to reduce the cost of housing. However, there are additional off-campus expenses that you'll need to account for, such as internet, energy bills, furniture and housing supplies, that would otherwise be provided by living on campus. You may also need to use public transportation to travel to and from campus.
3. Roommates: Sharing living expenses with roommates can significantly reduce the burden of rent. If you have friends in a similar situation, sharing the cost of housing with them can help you to save money. Having roommates can also open up opportunities in college, allowing you to experience events with friends and make connections through your roommates.
4. Local Assistance Programs: Research local housing assistance programs that specifically cater to college students or low-income individuals. Many communities have nonprofit organizations or government programs that provide rental assistance to individuals in need. These programs often have income requirements, but can offer support to students who fall within the specified range.
5. Part-Time Job: Consider finding part-time employment to help cover housing costs and other personal expenses. This can also help to boost your resume when you graduate college.
6. College Housing Office: Students can consider reaching out to their college's housing office or student affairs department for guidance. These offices usually have information about affordable housing options in the area, as well as resources for finding roommates or off-campus housing.
7. Online Platforms: Websites like Craigslist, Facebook Marketplace, or college-specific housing groups can provide listings for affordable rentals or roommates wanted. These platforms allow students to connect with other students who may be in a similar situation, making it easier to find suitable housing arrangements.

It's important for students to proactively research and plan their housing options while considering their financial aid package. By being proactive, seeking out additional resources, and making informed decisions, college students can find ways to bridge the gap between their financial aid and housing expenses, ensuring they have a stable and affordable living situation throughout their education journey.

Consider Your Options to Get the Most Out of Your Financial Aid

Financial aid can be used towards rent, but it depends on the type of aid received, eligibility criteria, and the specific limitations in place.

Whether you're a college-bound student, or you're already settled into your studies, it's essential that you thoroughly understand your financial aid package, prioritize your expenses, and explore other housing assistance options if financial aid falls short. By utilizing available resources and seeking additional support, you can alleviate the financial stress of renting while focusing on your education.