A while back I told a reader that I’d faced my own Stafford Loan conundrum in college. If you’ve been reading the Student LoanDown for a while, you know I didn’t take on any student loan debt to attend college, thanks to a full-ride scholarship.

But after a summer internship in Fargo, N.D., I thought about accepting a Federal Stafford Loan. Living on my own for a summer — making a small but adequate salary — I incurred some credit card debt to covering some necessities like groceries and other living expenses.

Because of my credit card’s high interest rate (about 17%), I wanted to throw all of the money I was going to make working that upcoming semester toward my debt. But that’d have me cutting it close on living expenses, since that’s what the money usually covered.

So when my college’s financial aid award letter arrived a little more than halfway through the summer, I took a second look at the funds I was offered. Alongside my two scholarships was an Unsubsidized Federal Stafford Loan — for somewhere around $2,000.

Even though I had scholarships coming my way, my dad had me fill out the FAFSA (Free Application for Federal Student Aid) every year just in case my situation changed. And with all the benefits of federal loans, it was a smart plan.

But when I looked at that loan on my award letter, I didn’t know if I should take it. In my mind, because I had my tuition covered and a little left over to live on, it seemed wrong to take the money.

I opted not to take the loan. Instead, I faced a financially tight year, and ended up with more debt after having to use my credit card in a pinch — well, several pinches. Definitely not the smartest decision, considering the Stafford Loan rate would have been 4.70% while I was in school and during a six-month grace period after graduating!

For those of you wondering what you can use Federal Stafford Loan money to pay for, here are the details from the Promissory Note. You can use a Federal Stafford Loan to pay for:

• Tuition
• Room
• Board
• Institutional fees
• Books
• Supplies
• Equipment
• Dependent child care
• Transportation
• Commuting expenses
• Rental or purchase of a personal computer
• Origination fee and federal default fee
• Other documented, authorized costs

So, bottom line: if the school awards it to you based on cost of attendance, expected family contribution, other financial aid, etc., and you use it for an authorized expense, you’re good to go.

Wish I’d looked into this two years ago! :)