When financial aid, grants, and scholarships don’t cover the full cost of your college education, federal student loans should always be your first borrowing option. But if federal student loans, which have borrowing limits, aren’t enough, you may be wondering if you should get a personal loan or a private student loan to cover any shortfall.
While you may be able to get a personal loan with strong credit, steady income, or a cosigner, personal loans are almost never a better option than a private student loan. This guide will help you understand the advantages of a student loan over a personal loan when it comes to paying for college-related expenses.
Can I get a personal loan for school expenses?
People consider personal loans for a number of reasons. Personal loans usually have lower interest rates than credit cards. And they’re flexible, meaning you can use them for virtually anything — even school expenses.
While it may be possible to get a personal loan as a student, it probably won’t be easy. Most personal loan lenders require good credit, stable employment, and steady income.
Credible makes it easy to research private student loans and compare rates from multiple lenders.
Advantages of student loans for school vs. personal loans for students
The largest benefit of using student loans instead of personal loans as a student is that student loans typically offer lower rates. In fact, personal loan interest rates are usually in the double digits, while student loan rates are typically well under 10%. By choosing a student loan, you can potentially save thousands of dollars in interest.
Also, student loans are much easier to qualify for with no income or poor or no credit history. And they have flexible repayment options and longer repayment terms. If you take out a student loan, you may have up to 10 years to repay it. A personal loan, on the other hand, will likely need to be paid back within one to five years…Read more>>