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Updated on Friday, April 24, 2020
Personal loans can be a boon for college students who need money for school, but aren’t able to get enough through grants, scholarships or traditional student loans. Most lenders won’t grant you a personal loan for tuition, but there are several noneducational expenses that you can pay for with that money.
But first, you’ll need to decide if a personal loan is the best way to fund those expenses for your situation. Here’s what you need to know about personal loans for college students, and how to find your best options.
- Can I use a personal loan for school?
- 7 options for personal loans for students
- Can you find personal loans for students with no credit?
- Alternative borrowing options for students
Can I use a personal loan for school?
Typically, lenders won’t let you use a personal loan for college tuition. For example, lenders such as OneMain Financial do not grant loans for expenses directly related to college.
However, there are countless noneducational expenses where bank loans for students could come in handy. Here are a few ways you could use a personal loan for school.
- Living expenses: You can use a personal loan to pay for living expenses while you’re in school, as long as those expenses aren’t directly tied to your education. This could still be helpful for college students who are unable to work full-time while taking classes.
- Student debt: Yes, personal loans can be used to pay off existing student loans, but you’ll need to weigh the pros and cons. Federal student loans — especially those for undergraduates — can come with low, fixed interest rates, plus borrower protections like income-driven repayment.
- Emergencies: College students can be short on cash, which is a problem if an emergency crops up. An unexpected car repair, for example, can put a dent in anyone’s wallet. But for those with tuition and other fees, it could be particularly detrimental. Personal loans can help there, but it’s also worth checking with your school first, as many offer other types of emergency aid.
7 options for personal loans for students
If you’re wondering how to take out a loan for college, you’re not alone. There are several kinds of lenders to consider, and sometimes, it can be daunting to compare them all.
That’s why we’ve highlighted seven options below — and provided the APR range and available loan amounts for each lender. It’s worth noting that we used a low credit score (below 640) when selecting these choices, as most college students haven’t had the chance to build their credit. When researching lenders, you should also take note of any fees they may charge, such as origination fees.
Avant touts serving 800,000 customers since its 2012 formation. It promises a quick loan decision and quick approval, with funding as soon as the next business day. There’s also an easy autopay feature and an Avant app to help you keep track of your loan. Plus, the lender has a minimum 580 credit score, and this can be a viable option for students who need a fast personal loan but only have OK credit.
LendingClub is a peer-to-peer loan marketplace and offers a fully online application process, making it a convenient option for students seeking a loan. As opposed to your typical personal loan, a peer-to-peer loan is funded by investors, so note that the time between you submitting an application and receiving funds could be longer (assuming you qualify).
Depending on your eligibility, you can compare potential loan rates by answering questions on how much you need to borrow, what you need the loan for and more. According to LendingClub, it does not have a minimum credit score requirement but instead considers each application independently based on a person’s financial situation. This could be a benefit for college students with unestablished credit.
LendingPoint promises instant approval for qualified borrowers, plus a fast application process. Additionally, there are no penalties for prepayment, which means you can repay your loan early if you’re able to save money over interest. That sort of flexibility could be ideal for college students — especially those who may be greatly improving their financial situation post-graduation.
Lastly, LendingPoint’s minimum credit score requirement is 585, which is impressively low for an unsecured loan — just expect a higher APR if your score is on the low end.
OneMain Financial offers plenty of flexibility, with zero prepayment fees and no restrictions on making extra payments — that way, you can start paying your loan back early if you’re able. OneMain Financial also allows for direct payments from your bank account, meaning you don’t have to worry about remembering your monthly due date. This lender has no set credit minimum for its applicants but instead evaluates each case separately. Keep in mind, however, that you’ll need to visit a local branch to complete your application.
Peerform is another peer-to-peer lending platform that may be a good option for college students seeking a personal loan. That’s because your application will be reviewed by individual investors who can fund your loan. In addition, Peerform’s minimum credit requirement is also 600, which can be accessible for student borrowers.
Upgrade’s lending process is easy and fast. The lender has a one-page online application, and promises to send your money within a day of approval. For college students with a minimum credit score of 620 and who need to cover a financial emergency, this could be a fast option.
Upstart claims that 99% of its applicants get their money within one business day of accepting their loan. Students looking to build their credit could benefit from the lender’s Financial Fitness Dashboard, which includes free credit monitoring. However, to qualify, you’ll need a minimum 620 credit score — that’s high compared to some of the other lenders found here.
Can you find personal loans for students with no credit?
Getting a personal loan as a student with no credit is certainly possible. However, you can expect high APRs, possibly into the triple-digits, if you qualify at all.
That’s because lenders base your APR, in part, on how trustworthy you are as a borrower; the lower your credit score, the bigger the risk you appear to lenders. However, you can find a few lenders above who may be willing to work with you. You may also explore these options.
Alternative borrowing options for students
If a personal loan doesn’t seem like the right solution, don’t worry. You’ve got other options, some of which may be faster than waiting to get approved. Still, these alternatives may come with downsides too, so do your research before making a decision.
- Credit card: If you need cash quickly, this could be an option even if you have bad credit. But credit cards can come with high interest rates that can make repayment an uphill battle. Granted, that rate may not be as high as you may find on a personal loan, depending on your credit.
- Secured loan: A secured loan is backed by collateral, such as a car. This is much different than a personal loan, which is unsecured — meaning you don’t have to put anything down in order to get approved. Still, secured loans can be risky, as you could lose your collateral if you’re unable to make payments.
- Personal line of credit: Somewhere between a personal loan and a credit card, this option allows you to withdraw money up to a certain maximum, or limit. The good news here is that you can take out money as you need it, as opposed to a loan where you get a single lump at once. However, you’ll still face interest rates, and possibly other fees as well.