Living Off-Campus? Factors That Affect Your Financial Aid

Living Off-Campus? Factors That Affect Your Financial Aid
Imed Bouchrika, Phd by Imed Bouchrika, Phd
Chief Data Scientist & Head of Content

Do you receive more financial aid if you live off-campus? The short answer is no.

For many students, financial aid is an important consideration when going to college, and even more so when deciding to live off-campus. According to a recent report by the National Center for Education Statistics, approximately 85% of full-time undergraduates were recipients of financial aid during the 2019-2020 school year (NCES, 2020).

Typically, the amount of financial aid that students receive depends on various factors, with board and room usually accounting only for a small portion. However, this does not mean that students who choose to live off-campus are no longer eligible for financial aid.

If you are among those whose preference for student housing leans more toward off-campus living, it is best to know the details of how institutions compute financial needs and whether students in the United States get more financial aid if they are living off-campus.

Financial Aid If You Live Off-Campus Table of Contents

  1. Do you get more financial aid if you live off-campus?
  2. Understanding How Federal Student Aid is Determined
  3. Off-Campus vs. On-Campus: Which is more expensive?

Do you get more financial aid if you live off-campus?

In 2018, 93.9% of student housing beds were full as of August, just in time for the school opening. (Anderson, 2018) Meanwhile, a survey by Ipsos (2018) in the same year showed that a quarter of their respondents lived off-campus. Many of them do not necessarily experience loss of financial aid for room and board.

The University of Notre Dame, for instance, clearly states that “Living off-campus does not affect a student’s financial aid eligibility. A standard room and meals amount is used to determine undergraduate students’ cost of attendance whether they live on- or off-campus.”

Any student who plans to live off-campus must declare so in their Free Application for Federal Student Aid (FAFSA).

How much does FAFSA give you for off-campus housing?

For clarification, FAFSA is a form students fill out to get funding. The funding they get could be a loan, a grant, or a scholarship. Thus, FAFSA is not the one that gives the funds.

Nevertheless, when students, who are awarded financial aids, get a refund or excess funds, they can use it for any Cost of Attendance (COA), including off-campus housing. Thus, depending on the type of funding they get and whether the amount they receive is enough, they can cover their off-campus housing.

Students must verify with their institution if the available financial aid and tuition plans cover off-campus housing. Note that direct student loans, 529 plans, and prepaid tuition plans all have certain usage restrictions. The 529 plan, for instance, can be used for off-campus housing by students who are enrolled at least half the time. It is best to review every financial aid available to determine which one could address their need regarding off-campus housing.

It is also vital to note that the amount students may receive to cover housing is limited to what the college or university allocates under the room and board component of the COA. Also, the financial aid for off-campus housing would rely on the student’s account charges and the total amount of financial aid available per semester.

Nevertheless, for a general idea, for instance, the University of Notre Dame provides approximately $16,304 for on- or off-campus housing for the school year 2021/22.

Can Pell Grant be used for off-campus housing?

Pell Grant also requires a COA, which asks students to provide information about the room and board they would use for the term. As such, it is possible to use this grant for off-campus housing should the awarded amount has an excess after tuition and other school fees.

The Expected Family Contribution (EFC), students’ status (whether full-time or part-time), and their plans to attend school for a full academic year or less are also determinants of the number of funds that students could receive.

The amount that students may get could vary annually, and the maximum Federal Pell Grant award is $6,495 for the 2021/22 award year. (Federal Student Aid, 2021)

Source: College Board

Understanding How Federal Student Aid Is Determined

Students’ eligibility for financial aid is primarily determined by their COA and EFC, but would also consider their enrollment status (whether full-time or part-time) and their term of attendance (whether a full academic year or less). The institution that the student attends determines a student’s eligibility.

Cost of Attendance (COA)

The COA is an estimate of students’ total expenses. It includes tuition and related expenses, such as room and board for an academic year. Schools with longer programs (like an 18-month certificate program) may give students a COA covering more than a year.

In detail, the COA would include the following as per the Federal Student Aid (2021):

  • tuition and fees
  • cost of room and board (or living expenses for those who do not contract room and board with the school)
  • cost of books, supplies, transportation, loan fees, and miscellaneous expenses (also covering a reasonable amount for the documented cost of a personal computer)
  • allowance for child care or other dependent care
  • costs related to a disability; and/or
  • reasonable costs for eligible study-abroad programs

The COA determines students’ financial aid eligibility and helps institutions decide how much overall grant and loan money a student gets.

Expected Family Contribution (EFC)

The EFC is what an academic institutions’ financial aid office uses to determine how much financial support students could get. It is calculated using a formula established by law and may factor in taxable and non-taxable income, assets, and benefits (like Social Security). It may also consider family size and how many family members will attend college in the school year for which the student is applying financial aid.

The EFC does not reflect the cost of college or how much federal aid students will receive. It is a number used by a school to determine students’ financial aid eligibility.

need-based aid in princeton university

Need-Based Aid vs. Non-Need-Based Aid

Students may receive either need-based aid or non-need-based aid depending on their families’ financial capacity or need.

Need-Based Aid

Need-based aid is available to those who demonstrate financial need and meet other criteria. The financial need is computed by deducting the EFC from the COA.

Take note that students will not get more aid than they need. As per the Federal Student Aid (2021) example, a COA of $16,000 and an EFC of $12,000 equals a financial need of $4,000, and students cannot receive more than $4,000 in need-based aid.

The need-based aid programs as per the Federal Student Aid (2021) are as follows:

  • Federal Pell Grant
  • Federal Supplemental Educational Opportunity Grant (FSEOG)
  • Direct Subsidized Loan
  • Federal Work-Study

Non-Need-Based Aid

Students’ non-need-based aid is not based on the EFC. It is computed by deducing the financial aid so far awarded to students from the COA. The financial aid in this formula includes those from all sources, such as the school and private scholarship providers.

As per Federal Student Aid (2021) example, a student with a COA of $16,000 and a $4,000-awarded need-based aid and private scholarships can get up to $12,000 in non-need-based aid.

The need-based aid programs per the Federal Student Aid (2021) are as follows:

  • Direct Unsubsidized Loan
  • Federal PLUS Loan
  • Teacher Education Access for College and Higher Education (TEACH) Grant

When Housing Costs Exceed Financial Aid Package

Numerous students have discovered that living off-campus is more expensive than living on campus. Rent, utilities, and groceries may exceed the cost of a school meal plan and dorm room. If expenses exceed the amount of financial aid available, students will not be able to request further aid mid-year. Still, before signing the Master Promissory Note (MPN), students may appeal their financial assistance award if they believe it is insufficient in light of their income and estimated expenses.

Other Considerations When Filing FAFSA

There are several considerations that living off-campus may entail, but students often miss.

    1. If students stay home with their parents for the academic year, their COA would not include room and board. The assumption is that they will not require a rental fee and will eat for free since they are living with their parents.
    2. The duration of the lease is over nine months. Most off-campus leases are for 12 months. However, financial aid is limited to nine months. Some landlords in college communities, but not all, offer nine-month rentals. As such, students may have to cover the excess months personally.
    3. Paying for a security deposit before school starts. Most apartments or homes for rent require a security deposit, so if students would move in before the school starts or before their financial aid is awarded, they will have to pay for this deposit from their pockets.

Source: Savills;

Off-Campus vs. On-Campus: Which is more expensive?

After choosing a university course, students also have to decide where to live, whether on- or off-campus. However, the cost may be a major factor. Trulia Research (2018) examined campus housing websites for the 48 largest college towns in the U.S. The findings compare the cost of on-campus housing to that of a two-bedroom apartment shared with a roommate.

This study shows that living off-campus was either the same or cheaper than living on-campus in 28 of the 48 places studied, saving roommates $219 per month on average. However, utilities are a “deal-breaker if the off-campus advantage is slim,” according to Trulia.

Meanwhile, according to (2021), the average room and board cost in a dorm is $8,887 for a public university and $10,089 for a year at a private university. Apartment expenses could be around $1,178/month for a two-bedroom, but if about $112 monthly electric bill and $50/month for internet are added to the cost of the apartment, the total would reach $16,080 for someone who has no roommate.

Besides, the location may have a huge influence on how the costs of housing would vary. Again, as per Trulia Research (2018), on-campus housing is cheaper than splitting the cost of a two-bedroom unit off-campus in 20 places, though none includes a meal plan. Meanwhile, living on campus saves $636 per month at California Polytechnic State University in San Luis Obispo, where an off-campus two-bedroom unit costs $1,553 per person.

Ultimately, determining which between on-campus and off-campus living would be cheaper depends highly on location and utilities. Even deposits must be factored in before deciding where to live.

savings by students living on-campus

Other Reasons to Live Off-Campus

Cost is not the only reason why some students would consider living off-campus.  Wode (2018), in the study “Identifying the Factors That Motivate Students to Choose Off-Campus Housing,” stated that “there are concrete factors that differentiate students who choose off-campus housing from those who choose to stay on campus, some of which may be within an institution’s control.”

In this same study that appeared in The Journal of College and University Student Housing, Wode highlights “making housing available during breaks or ensuring that hall staff adds substantial value to the campus experience,” as among the factors that affect students’ decisions regarding housing.

Other factors that Wode (2018) found to affect students’ decision to live off-campus are as follows:

  • Privacy: Wode found that students wanting to move off campus regarded having a single room as vital, unlike students residing on campus. While having a single room was not a significant predictor of students’ plan to transfer off campus, having a private bathroom was.
  • Independence: Off-campus students value the ability to cook their meals. There was no substantial difference between on-campus and off-campus students or between students planning to stay or leave regarding the “ability to choose whether to have a campus meal plan.” This implies that it is not the necessary meal plan but rather the lack of access to a kitchen that drives students off-campus.
  • Specific housing policies: A restriction limiting visiting hours between students of different genders was notably mentioned in open-ended comments on the off-campus student survey as a reason for moving out of campus housing. The poll also noted that students were more inclined to live off-campus if they wanted to live with relatives or friends who were not students at the same university. Additional significant housing restriction found was ‘no pets.’

While the study focuses on students leaving college (and the associated financial loss), Wode (2018) found it worthwhile to look into what motivates students to stay on-campus. Those seeking off-campus living value cost, privacy, and independence, while those seeking on-campus accommodation value the following:

  • Convenience (i.e., being close to classes)
  • Connection (i.e., making friends)
  • Support (i.e., support from hall staff)

Closer proximity to classes, participating in campus events, and access to resources are more important to students than cost savings, greater privacy, and independence when considering where to live.

A scholarship is a strong predictor of students’ plans to stay on campus, too. Many scholarships solely cover the costs of on-campus housing. Thus, scholarship recipients may find that their housing options are limited to the point where other considerations become irrelevant. Students who do not qualify for a housing scholarship or who cannot afford on-campus accommodation may also have limited options. (Wode, 2018)

Source: NREI (2018)

Common Mistakes to Avoid When Living Off-Campus

Choosing to live off-campus could be counter-intuitive if not done with caution. Snider and Kerr (2020) list some of the common mistakes students make when living off-campus, as pointed out by experts.

1. Not filing the FAFSA

While there is no guarantee that students could get enough financial aid to cover their off-campus housing if they file their FAFSA, it is still worth trying. These cost-of-living calculations are used to assess a student’s loan eligibility, and colleges produce cost of living estimates for students based on surveys and statistics.

For a commuting student who lives with a parent, the tuition, fees, and perhaps meals will be the same in the COA computation. However, rent will not be included in the calculation since it is assumed they are living free of rent. As such, they must declare off-campus housing so that it can be included in the computation of their COA.

Besides, students with financial aid packages that are higher than the amount of tuition, fees, and other charges receive a refund for the excess amount. This money, which is often disbursed at the onset of a semester, can be used for rent, bills, food, and other off-campus expenses. (Snider & Kerr, 2020)

2. Overspending

Being mindful of spending habits is vital for students to maximize their financial aid amounts. Overspending or using student loans to fund an extravagant lifestyle can lead to massive debt, according to Julie Selander, director of One-Stop Student Services at the University of Minnesota—Twin Cities, as cited by Snider and Kerr (2020).

To avoid overspending, students should keep track of all off-campus expenses in a personal budget.

3. Borrowing too much or too little

Like all other borrowers, off-campus students should follow the ABC rule: Always borrow conservatively, according to Jerry Cebrzynski, associate vice president for financial aid at Lake Forrest College in Illinois, as cited by Snider and Kerr (2020). It is not always prudent to borrow the full amount of a student’s loan eligibility.

Deborah Stanley, director of financial aid at Bowie State University in Maryland, in an email to Snider and Kerr (2020), notes that students frequently underestimate the costs of living off-campus, resulting in over-borrowing or under-borrowing.

If a student chooses to live off-campus, the price of cable and internet, electricity bills, and furniture will be deducted from their loans or pocket. Students will also need to pay a security deposit, renter’s insurance, and home maintenance supplies. Thus, they must consider all these to determine the amount they need as aid.

4. Relying only on loans

Student loans may be able to fund living expenses fully, according to Selander. (Snider & Kerr, 2020)

However, students must keep in mind that after graduation, each dollar borrowed must be repaid plus interest, which varies depending on the loan type and the first disbursement date of the loan. According to Federal Student Aid, interests on loans that are first disbursed on or after July 1, 2021, and before July 1, 2022, are as follows:

  • 3.73% on Direct Subsidized Loans and Direct Unsubsidized Loans for undergraduate
  • 5.28% on Direct Unsubsidized Loans for graduate or professional
  • 6.28% on Direct PLUS Loans for parents and graduate or professional students
  • 5% on Perkins Loans (fixed interest rate regardless of the first disbursement date)

Students should find other sources of funds like part-time work to avoid incurring too much debt.

Is living off-campus a wise choice?

Student housing is an expense that goes into the college cost incurred by students and is, therefore, part of the COA used to compute students’ financial needs. However, while financial aids could cover off-campus housing, there is no guarantee that students are awarded a higher amount if they choose this type of housing. As such, students must still be cautious when choosing to live off-campus.

It will not always be wise to choose to live off-campus since the cost varies significantly depending on various factors like location, utilities, and other services.  The only way for students to say in full confidence that their choice to live off-campus had allowed them to reap the benefits of college education is if their reason for doing so is indeed met, and they are not burdened, especially financially.



  1. Anderson, B. (2018, October 8). Fall 2018 School Year Starts Strong for the Student Housing Sector. Wealth Management.
  2. Chacon, F. (2018, August 23). Campus Report: Is Off-Campus Housing Cheaper? – Trulia Research. Trulia Research.
  3. Dorm vs. Apartment: Which is Cheaper | (2021, May 13).
  4. Federal Student Aid. (2021).
  5. Ipsos. (2018). How America Values College. In (p. 25). Sallie Mae Bank.
  6. NCED. (2020). Digest of Education Statistics.
  7. Snider, S., & Kerr, E. (2020). When Living Off Campus, Avoid These Loan Mistakes. US News & World Report; US News & World Report.
  8. University of Notre Dame. (n.d.). OFFICE OF STUDENT FINANCIAL SERVICES. Retrieved November 23, 2021, from
  9. Wode, J. (2018). Identifying the Factors That Motivate Students to Choose Off-Campus Housing. The Journal of College and University Student Housing, 44(2), 44–63.

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