Personal Loans for College Students

Do you know that you can opt for a personal loan as a college student? Even with a bad credit or without a cosigner! This article will show you everything you need to know from Available Options, Amounts, Features, Interest Rates, Terms, etc.

Updated by C Laltlanhlua on 5th July 2019

Education is expensive. With the increasing prices of tuition fees, the need for financial aid for college students has increased tremendously. If you are a student looking for such aid, you have several options such as scholarships, grants, federal student loans, credit union student loans, and private student loans, etc.

It is always recommended that you first consider an aid that you do not have to repay - scholarships and grants. If you do not qualify for such aids or the amount you get from them is insufficient to fund your education, the federal government provides attractive Direct Student Loans with low-interest rates and several perks such as forgiveness, discharge, and cancellation, and more.

The truth of the matter is that all these options may still not cover the entirety of your expenses as a student. In such cases, you may seek out loans from private lenders. There are many private student loans available from several private lenders. These loans are generally meant to aid the tuition fees, and other payments made directly to the institution. However, you may have found these loans to be unfit for your situation and the overall programs just do not suffice as there can be more expenses for college students that many of these loans do not cover.

For whatever reason it is that you may have, you can also seek out for Personal Loans to pay off your expenses as a college student. Keep in mind that not all lenders will allow you to use your personal loans to finance your college degrees. This article will be your guide to seek out personal loans that you can use to finance your expenditures as a college student.


List of Contents


What are Personal Loans?

Personal Loans, unlike private student loans, can be used where and when the borrowers want to. These expenditures may include food and accommodations, bills, electronic devices like laptops and tablets, transportation, etc.. The restrictions on how the borrower consume is usually minimal.

On the other hand, it is almost always very difficult to qualify for personal loans without a good credit history. The interest rates of some of the personal loans can be ridiculously high too. Moreover, unlike federal loans and private student loans where you can find considerable leniency, delinquency, and defaults on personal loans may have serious repercussions depending on the terms and contracts of the loans.

Important factors to keep in mind when shopping for personal loans

  • Eligibility criteria - minimum credit score, eligible schools, eligible programs

  • Interest rate - option for fixed or variable rates, the minimum and maximum ranges offered

  • Fees - origination fee, processing fee, prepayment penalty, late payment, discount if any

  • Loan amount - minimum and maximum amount of loan

  • Terms - option for a suitable term for the loan

  • Payment Options - availability of choices and deferred repayment option

  • Co-signer release option

  • Deferment, Forbearance or Cancellation of loan

  • Any additional features which may be beneficial for you


Personal Loan Lenders

There are lenders who strictly prohibits using their personal loans to finance post-secondary or above education for students as well as parents. In such cases, you would still be able to finance all the additional expenses except for the tuition fees or other fees which are paid directly to the institutions while you or your child is in college. In no particular order, the following is a list of personal loan lenders for college students without any restrictions on consumption for financing a college education.

Citizen Bank

Citizen Bank is one of the well-known lenders of student loans. They offer home loans, student loans, credit cards as well as personal loans too. The following consists of the features and criteria or the personal loan that they offer.

Number

Factors

Criteria

1

Minimum Credit Score

Good to Excellent Score

2

Interest Rates from

6.79% to 20.89% Fixed ARP

3

Fee

- No origination fee

- No application fees

- No annual fees

- No late fees

- No prepayment penalty fee

4

Loan Amount Limits

$5,000 - $50,000

5

Term Options

3 - 7 years

6

Repayment Options

Monthly

7

Co-signer Release Option

N/A

8

Additional Features

- A minimum annual income of $24,000

- No collateral

- Unsecured Loan

- Loyalty Discount

- Autopay Discount

The features and criteria mentioned in the above table may be subjected to change without any prior notice. Kindly take these pieces of information as a reference only and perform thorough research by yourself before you make any final decision.

Discover

Discover has always been one of the most prominent financial institutions. They are famous for the wide variety of credit cards that they offer. They also offer personal loans which may be really helpful for college students for aiding their extra expenditures while studying. The following consists of the features and criteria or the personal loan that they offer.

Number

Factors

Criteria

1

Minimum Credit Score

Good to Excellent

2

Interest Rates from

6.99% to 24.99% Fixed APR

3

Fee

- No origination fee

- No processing fee

- No prepayment penalty

4

Loan Amount Limits

$2,500 to $35,000

5

Term Options

3, 4, 5, 6, 7 years

6

Repayment Options

Monthly

7

Co-signer Release Option

N/A

8

Additional Features

Requires $25,000 minimum household income

The features and criteria mentioned in the above table may be subjected to change without any prior notice. Kindly take these pieces of information as a reference only and perform thorough research by yourself before you make any final decision.

SunTrust

SunTrust offers student loans, home loans, and debt consolidation programs. Apart from these they also offer personal loans under their online landing division named LightStream. According to them, these personal loans can be used for just about anything. The following consists of the features and criteria or the personal loan that they offer.

Number

Factors

Criteria

1

Minimum Credit Score

Good to Excellent

2

Interest Rates from

3.99% to 16.99%2 Fixed APR with AutoPay

3

Fee

No fees

4

Loan Amount Limits

$5,000 to $100,000

5

Term Options

Differ based on profile

6

Repayment Options

Monthly

7

Co-signer Release Option

N/A

8

Additional Features

- Secured & Unsecured Loan

- Challenge Qualifying Rates of Other Loans by 0.1% pt

The features and criteria mentioned in the above table may be subjected to change without any prior notice. Kindly take these pieces of information as a reference only and perform thorough research by yourself before you make any final decision.

Wells Fargo

Wells Fargo is among the top ten bankers in the world according to Forbes magazine. They provide home loans, education loans, and even private loans. The following table consists of the features and criteria of the personal loan that they offer. The following consists of the features and criteria or the personal loan that they offer.

Number

Factors

Criteria

1

Minimum Credit Score

Good to Excellent

2

Interest Rates from

5.49% to 22.99% Fixed ARP

3

Fee

- No Origination fee

- No prepayment penalty

4

Loan Amount Limits

$3,000 - $100,000

5

Term Options

1 to 5 years

6

Repayment Options

Fixed Monthly Payments

7

Co-signer Release Option

N/A

8

Additional Features

- Checking account required

- Unsecured Loan

The features and criteria mentioned in the above table may be subjected to change without any prior notice. Kindly take these pieces of information as a reference only and perform thorough research by yourself before you make any final decision.

Advant

The Advant, LLC is a loan company in the financial technology industry. They offer personal loans and credit cards. They have helped more than 600,000 customers in their domain. They do not offer any student loan but the personal loan that they offer is a good option to look out for college students.  The following consists of the features and criteria or the personal loan that they offer.

Number

Factors

Criteria

1

Minimum Credit Score

No set minimum score. 600 to 700(on average)

2

Interest Rates from

9.95% to 35.99% ARP

3

Fee

- Administration fee up to 4.75%

- No prepayment penalty

- Late fees are applicable

4

Loan Amount Limits

$2,000 to $35,000

5

Term Options

2 to 5 years

6

Repayment Options

Monthly

7

Co-signer Release Option

N/A

8

Additional Features

N/A

The features and criteria mentioned in the above table may be subjected to change without any prior notice. Kindly take these pieces of information as a reference only and perform thorough research by yourself before you make any final decision.

Best Egg

Best Egg is an online platform owned by Marlette Funding, LLC. It is a platform where they offer credit card refinancing, debt consolidation and personal loans which can be used for various purposes. Their personal loans can be utilized by college students to fill in any financial gaps they may have while being in college. The following consists of the features and criteria or the personal loan that they offer.

Number

Factors

Criteria

1

Minimum Credit Score

640

2

Interest Rates from

5.99% – 29.99%

APR

3

Fee

- 0.99% – 5.99%

Origination Fee

- Late fee applicable

- Return fee applicable

4

Loan Amount Limits

$2,000 – $35,000

5

Term Options

3 to 5 years

6

Repayment Options

Monthly

7

Co-signer Release Option

N/A

8

Additional Features

Unsecured Loan

The features and criteria mentioned in the above table may be subjected to change without any prior notice. Kindly take these pieces of information as a reference only and perform thorough research by yourself before you make any final decision.


Alternative Options

There are many alternatives to personal loans for college students. These alternatives will potentially produce lesser stress and be less of a burden for students while they study and post-college. The five alternative options you have to personal loans are given below.

Scholarships and Grants

Scholarships and grants are the kind of funding that you do not have to pay back. They are offered by the federal government and private organizations. The amount of the scholarships or grants will vary depending on who is offering and for whom they are offering.

They have their own eligibility criteria. Two of the most common criteria used for selecting candidates for scholarships and grants are annual household income while others take your academic records. It is not always easy to qualify for scholarships and grants but if you do, it is a free-money you could use to fund your college education.

Federal Student Loans

The U.S Department of Education offers Direct Student Loans for undergraduate students, graduate students and parents of dependent students. They have competitively lower interest rates and multiple repayment options including Deferred Payment Income-Driven Repayment Plan, Pay As You Earn Repayment Plan, Revised Pay As You Earn Repayment Plan, etc..

These loans also offer deferment and forbearance in case borrowers come across documentable financial hardships. They also have Forgiveness and Discharge Programs for several cases such as Total and Permanent Disability, death of the student, etc.. It is fairly easy to be eligible for federal student loans. Students must clear the FAFSA in order to be considered for the loan.

Credit Union Student Loan

Credit Unions are not-for-profit organizations under the regulation of the federal government or their respective state governments. They are financial institutions who are meant to serve specific communities. Members from these communities can become a member of a Credit Union and enjoy their services.

Most Credit Union offers student loans to their members and families for fairly decent interest rates. They may also provide deferment and forbearance options on a case-to-case basis. If you or a member of your family is part of a Credit Union, please consider the student loans from these unions before looking at personal loans.

Private Student Loan

Private Student Loans are offered by private financial institutions such as private banks or organizations and loan servicers. They usually have higher interest rates compared to the above options. If you have a good credit score or can provide a cosigner with a good credit score, it is fairly easy to be eligible for these loans.

However, they do not always offer deferment and forbearance options, unlike federal student loans. Some private student loans do offer forgiveness and discharge. It is important to do your own research thoroughly before you choose a lender to get the best rates, the best terms and the most affordable option for your personal financial situation.

Peer-to-peer Loan

Peer-to-peer loans are funded by individual investors on a platform that provides the necessary documentation, such as loan contract and promissory notes, etc., with compliance with applicable federal and state laws. One loan may be fully funded by one investor or partially funded by more than one investor.

These loans usually require a lesser credit score and are suitable for students who have difficulty obtaining a creditworthy cosigner. Most investors invest in multiple loans with a smaller amount due to the risks of delinquencies and defaults of loans. Hence it is easier to get a lesser amount of loans with higher interest for shorter terms. It is a better option if you are looking for a small amount to fill the financial gap that the above options left you with.


Conclusion

As we have discussed at the beginning, there are several options apart from personal loans. These options are always preferable for college students before seeking out personal loans. Personal loans should always be your last resort when all the other options are approached and applied for. You must only borrow an amount that is absolutely required for your college financing and use personal loans to pay for any gaps that the other options fail to meet.

If you take time to carefully figure out which loan to apply for and how much you can afford to repay, a personal loan can serve you a great deal. On the other hand, if you are not cautious of the terms and conditions of the loan that you are asking for, it could be a serious burden for the rest of your life as we have seen in many cases in the past and even till today.


FAQ's

  Should I get a Personal Loan to finance my college education?


College students have multiple options to finance their studies. First, consider seeking the money you do not have to pay back - scholarships and grants. Second, check out the Federal Direct Loans as they have lower interest rates and other additional benefits that are not available elsewhere. Third, check the Private Loans which are made specifically for Students. If all the above aids still leave a gap uncovered from your expenses, you should then get a personal loan. Make sure you limit your loan to the bare minimum that would not be of trouble for you in repayment.

  Which is better, Private Student Loan or Personal Loan?


Private Student Loans usually come with a much lesser interest rate compared to Personal Loans. They are directly disbursed to the college unlike personal loans and no amount will be handed to you. On the other hand, unlike Private Student Loans, Personal Loans do not always require you to have excellent credit history or cosigners. You are free to decide where you need to spend the loan amount that is handed to you.

  How do Personal Loans affect credit score?


Personal Loans will affect your credit score the same way as any other secured loans when a hard credit pull is done. It will show on your credit history as an unsecured loan and increase your debt-to-income ratio. Besides that, it will not negatively affect your credit score. However, it will, in turn, enhance your credit score as long as you make your monthly payments on time.

  What is the minimum FICO score for Personal Loans?


The minimum FICO score for Personal Loans will differ from lender to lender. There are lenders who would offer personal loans to borrowers with a credit score as low as 300.

  Can I take Personal Loans while having Federal Loans?


Yes, you can take Personal Loans even when you have active Federal Loans.

  What can I use Personal Loans for?


Some lenders specify that you may not use your personal loans to finance your college education. However, for expenditures that do not go directly to your institution, there should not be a problem - expenses such as transportation, food, electronic devices, etc..

All the loans mentioned above have no such restrictions, at the time of producing this article. You may use these personal loans wherever you need to.