Options for Paying for Off-Campus Housing

Sara Lindberg Updated on April 19, 2018

Off-campus housing is a rite of passage a lot of college students look forward to. If you (or your child) are considering off-campus housing, you're probably wondering how paying for off-campus housing differs from paying for dorms.

Here's what you need to know before you sign off on the rental agreement. 

Is off-campus housing covered by financial aid?

If you receive financial aid, you can use it to help pay for off-campus housing. The Free Application for Federal Student Aid (FAFSA) says that you can use these dollars to pay for the cost of attending an institution of higher education, which includes room and board, including off-campus housing. 

When you fill out your FAFSA, you can indicate that you plan on living off-campus. This will help the school determine the amount of aid you should receive.  

Your financial aid budget will be calculated to include a standard cost to live off campus. 

Can you pay for off-campus housing with a 529 plan?

Yes, you can pay for off-campus housing with a 529 plan — but there are limits.

Since housing is considered a qualified education expense, it doesn’t matter where you're living as long as you're enrolled at least half-time in school.

With that being said, make sure your parents only withdraw the cost of rent the college included in your financial aid award letter. Anything above that may not be considered a qualified education expense.

This figure is often on the school’s website as well. It's the amount specified by the college as a room and board allowance. If you're unsure what number to use, call the financial aid office — do not guess.

Also, keep in mind that if you're paying for 12-months of off-campus housing, tax law does not specify whether or not you can withdraw enough money to cover that entire time. 

Since the guidelines say “enrolled at least half-time” there could be an issue with withdrawing money if you're not enrolled in school during the summer months.

Unfortunately, there is not a clear answer to this question. So to be safe, your parents might want to only use 529 funds for the nine months you're enrolled in school. 

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Is off-campus housing tax deductible?

Unfortunately, you cannot deduct off-campus housing on income taxes.

When it comes to college, the only qualified education expenses that can be deducted are tuition, fees, or other course materials required to attend classes.

Can you get a student loan for off-campus housing?

Yes, you can get a student loan for off-campus housing. Since housing is considered part of the cost of attendance, it qualifies as a legitimate expense. 

The key is to make sure you choose housing that is affordable and realistic for your budget. Be careful about over-spending on a great apartment that your future self could end up footing the bill for.

It might be a good idea to take the housing allowance as defined by the college and use that as a reference. Try to stay as close to this number as possible when looking for off-campus housing. 

If you do find that you need to take out a student loan to cover tuition, housing, or other educational expenses, check out our recommendations for the best student loan deals.  

About the Author
Sara Lindberg

Sara Lindberg, B.S., M.Ed., is a freelance writer specializing in business, finance, health, and wellness. She holds a Bachelor's of Science degree in Exercise Science and a Master's Degree in Counseling. When she’s not writing, Sara can be found at the gym lifting weights, running the back roads to train for her next half-marathon, and spending time with her husband and two children. Read more by Sara Lindberg

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