Editor's choice: PenFed Credit Union personal loans
- Competitive rates as low as 6.49%
- No hidden fees
- Loans up to $35,000
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
There are some solid benefits to both personal loans and student loans when it comes to paying for school. Personal loans have less limits on how you spend your funds but student loans are typically more flexible. Which option is right for you depends on your unique situation.
|Personal loan||Student loan|
Nearly any legitimate purpose, though some restrictions may apply
May only be used for secondary education expenses
Many lenders can directly deposit your funds into a bank account
Your school’s financial aid office receives your loan funds
Banks, credit unions and private online lenders
Federal government, banks and private online lenders
Repayments generally start after the first month
Repayments generally start after a grace period of at least six months after graduation
Interest paid is often deductible from your annual taxes
Can be discharged through bankruptcy
Much more difficult to discharge; may require a court appeal
Personal loans can be used for just about anything, though some lenders restrict how you spend your loan funds. On the other hand, student loans have just one purpose: being used for secondary education expenses.
These differences mean you need to break down a few points to see how they compare.
A personal loan may be a better option if you need money for more than just education. They can help with day-to-day expenses that may come up, or your loan funds can be used to pay for a unique trip during your college experience that you may not be able to take without a little extra funding.
However, if you know you’ll want a long term and more flexibility when it comes to payment, a student loan may be a better choice. Because they have lower interest rates and don’t require you to start paying back immediately, you can focus on your education without needing a job or payment plan.
Personal loan vs. Line of credit
Personal loan vs. Home equity loan
Personal loan vs. Mortgage
Personal loan vs. Business loan
Personal loan vs. 401(k) loan
Personal Loan vs. Home equity line of credit
Personal loans and student loans have their own unique features that make them regular borrowing choices for students across the US. If you’re looking for quick turnaround and only need a small loan, a personal loan may be better for your budget. But if you’re going to need to pay for four years of education expenses, the low interest and payment flexibility of a student loan may be more appealing.
You can read more about how student loans work and personal loans work by ready our guides. Carefully compare your loan options and weigh all the benefits with the drawbacks. After all, you’ll be paying for the next few years of your life.
Explore personal loans and student loans even further with these answers to common questions.
Business loan interest rates dropped in 2020 and are likely to stay low. Here’s why.
Get a low rate guarantee, but you won’t know if you’re eligible until you apply.
Get a line of credit with low closing costs — but you can’t apply online.
Two trading platforms for beginners with no commission fees or bells and whistles. But which one comes out on top?
From your marketing strategy to financing and insurance, we’ll walk you through how to start a career behind the lens.
Envel is a bank account that combines digital banking with the cash envelope budgeting system.
The best trading apps come with low fees and are easy to use.
Golden 1 Credit Union’s New Generation Checking account is free for teens and comes with check-writing capabilities.
Offers reduced-rate, no-closing-cost HELOCs, but only in specific states.
Features and feedback to consider before you sign up for Vanguard Digital Advisor.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.