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Personal loans for students
How to cover larger personal expenses while you're still in school.
The coronavirus pandemic has had an unprecedented impact on Americans’ finances. If you lost your job and are considering taking out a personal loan to cover bills, you might have a difficult time qualifying. Read our financial guide to COVID-19 to explore other options available to you.
Student loans can help with tuition costs and living expenses while you’re in school, but they’re limited. You can’t use them to cover larger personal expenses like buying a car. And depending on how much you qualify for, you might not have enough left over to cover rent and food.
A personal loan can help in these situations, but consider avoiding them if you’re unemployed — repayments start right away.
What are the best personal loans for college students?
There’s no one “best” personal loan for everyone. It depends on what you need the money for and your personal financial situation. Your options can vary depending on what you need to buy, if you’re employed and if you have a credit score.
Personal loans for students
Don’t have a cosigner? You’re not totally without options. Some lenders specialize in offering personal loans to college students. Instead of looking at your credit score, lenders consider factors like your academic performance and standardized test scores. But these loans can come with higher rates than personal loans with a cosigner, and they’re often not available in all states.
These types of loans are typically available to international students on a valid visa and can be used as a student loan alternative. If this sounds like what you need, you can get started by looking into Boro’s personal loans.
Auto loans for students
You can’t use a student loan to buy a car, and most traditional auto loans are off the table if you have limited income or no credit. But it’s possible to find auto loans designed specifically for students. The down payment might be larger than your typical car loan, however. And it may not be ideal if you have less-than-stellar grades, since lenders often consider your academic record in determining your eligibility.
But if you have strong academics, this could be the easiest way to go — especially if you don’t have a cosigner. You might want to look into Boro’s auto loans if this describes your situation.
Personal loans with a cosigner
Bringing on a cosigner can help you qualify for a loan even if you don’t have a full-time job or credit score. With this option, your lender considers your cosigner’s creditworthiness when yours falls short.
Applying with a cosigner can also help you meet other requirements — like if the lender only works with residents of certain states. However, you typically both need to be US citizens or permanent residents to qualify. Sound like what you’re looking for? You may want to start by checking out FreedomPlus.
Federal and most private student loans allow you to use your funds to cover more than just tuition and fees. You can use student loans for living expenses like rent, transportation and even traveling home for the holidays.
If you still have funds available, consider taking on more student debt before you look into a personal loan. Student loans typically come with more flexible repayment plans and lower rates than personal loans. Plus, federal loans don’t have credit or income requirements, so you won’t need a cosigner.
Just finished law or med school? There might be a student loan for you.
Even if you aren’t technically a student, many private student loan providers offer financing for postgraduate expenses for medical and law students.
Law students who need help covering the cost of studying for and taking the bar might want to look into bar exam loans. Medical students can use residency relocation loans to cover the cost of applying for and relocating for a residency, as well as board exam study courses and fees.
Are you a student? Consider these lenders
How can I benefit from taking out a personal loan while in school?
Though personal loans can be more expensive than student loans, there are benefits to this type of financing:
- Improve your credit. Taking on and paying back a new type of debt can do wonders for your credit score.
- Take advantage of an opportunity. Need money to move to another city for an internship? Can’t quite cover your study abroad costs? A personal loan can help you take advantage of opportunities that can help your career.
- Cover a personal expense. When you’ve run out of student loans for the semester and need a new laptop or other personal item to stay on top of your studies, a personal loan can help cover those costs.
Why might I want to consider other options?
Before applying for a personal loan while you’re in school, consider these potential drawbacks:
- Repayments start immediately. This can be difficult to afford if you’re unemployed and your cosigner can’t cover your repayments while you’re still in school.
- Higher rates than student loans. Personal loans often come with higher rates than student loans, especially if you’re not applying with a cosigner.
- Repayments aren’t flexible. You can’t put your personal loan repayments on hold while you’re in school or if you lose your job.
How do I repay a personal loan while I’m in school?
Repaying a loan in school can be tricky, especially if you have a low-paying job. If you’re not employed, consider asking your cosigner to cover your in-school repayments — you can pay them back later.
Otherwise, make a budget that has room for the amount you owe each month. Taking on a side gig can also help cover the extra monthly expense. If you think you’ll have trouble making a repayment one month, contact customer service as soon as possible. Your lender could be willing to work out new terms that are more affordable.
3 alternatives to personal loans for students
Not sure a personal loan is what you’re after? Consider these alternatives:
- Ask family and friends. If you’re applying for a loan with a cosigner, it might be simpler and cheaper to ask your cosigner to loan you the money. You can even draw up a legally binding contract for more accountability.
- Crowdfunding. For expenses that would brighten your college experience but aren’t totally necessary — like backpacking around Europe — setting up a crowdfunding campaign through a service like PeduL is always an option. You don’t have to repay anything, though the platform you use will likely take a fee from your donations. People have also set up crowdfunding campaigns to pay off student debt.
- Grants and scholarships. Using a grant or scholarship for tuition can free up some of your student loan funds to put toward qualifying personal expenses. Some might also allow you to use your funds for living costs like rent and food.
Taking out a personal loan in college isn’t always a good idea, especially if you don’t have enough money coming in each month to cover repayments. But it could be useful if you want to take advantage of a career-changing opportunity or buy something integral to your academic life like a car or computer.
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