Federal and private student loans are the traditional route to fund your education and living expenses, but a personal loan can provide funding coverage anywhere you still fall short.
Use Benzinga’s list of the best personal loans for college students to find lenders and loan comparison services to help you get the cash you need.
Best Personal Loans for College Students
College is expensive. Life is expensive. And when you’re a student, you’re focusing on your studies, not on making ends meet. This is why it’s so common for students to need outside financial support, whether from a relative, loans, other aid or all of the above.
It’s always best to exhaust your federal loan options before moving to other resources. Federal loans are typically low, fixed-rate loans with flexible repayment plans and deferment periods.
You can apply for federal loans via the Free for Application for Federal Aid (FAFSA) form. But you may not be eligible if you’ve reached your federal aid cap or your program isn’t eligible for federal aid. If that’s the case, take a look at personal loans.
Personal loans can also offer low, fixed rates, especially if you’re a relatively older student with a good credit history. If you don’t have the best credit, services like BadCreditLoans.com can connect you to lenders who will still work with you. These loans are available in amounts up to $10,000 and can be a solid alternative to private student loans, which usually require that you or a cosigner have good credit.
A personal loan from a lender like Boro can also be ideal for college expenses. These are small loans up to $2,000 can be paid off in shorter amounts of time. These can help cover costs like books or a laptop without adding to your long-term debt load. If you repay these loans as agreed, it will also establish you as a trustworthy borrower and reflect positively on your credit report.
Take a look at the loan comparison among some of our recommended lending services.
Types of Personal Loans for College Students
You can generally think of personal loans as general use loans paid off in installment plans. But there are certain characteristics that individuate one type of personal loan from another, each of which has its benefits depending on your financial situation.
Learn more about the most common personal loans to figure out which is best for you.
If you’re approved for a secured loan, the lender is asking that you put up collateral to back the loan. This could be in the form of an asset like your home or car, or with a bank account. A lender may offer a secured loan if the loan is very large or if something in your credit history is perceived as troublesome but not necessarily a deal-breaker for a lender.
Because a secured loan reduces risk for the lender (your collateral could be seized if you default on your repayments), you take on more personal risk. Be sure you can meet the terms of the loan before you agree with it to avoid trouble.
If you don’t have an asset to offer as collateral, look for unsecured loans. These are the preferable options for most borrowers, especially if the amount you need to borrow is relatively low. These loans are typically offered to borrowers with good credit that marks them as low-risk.
Although you take on less personal risk in theory with these loans, the integrity of your credit is on the line. It is important to meet the terms of your loan so your credit score isn’t impacted negatively. This will ensure that you will save money by qualifying for low interest rates and favorable terms when using credit in the future.
Fixed-Rate vs Variable-Rate Loans
A loan with a fixed rate is usually preferable to a variable rate loan. Your interest rate remains static throughout the lifetime of your loan, so you know exactly how much the loan will cost you overall. The only real downside is that fixed rates can be higher than variable rates. Lenders issue high rates to ensure the loan is profitable for them. Monthly payments may be also higher.
A variable rate loan may be a better option if your circumstances require that you conserve cash now. A variable rate loan may have smaller monthly payments with a lower interest rate. This could be of interest to cash-strapped college students or people working full-time while going to school.
Spending a little more on the loan may be worth the peace of mind of financial security throughout your education, especially if you think the investment in your education will net you a worthwhile return in the form of an income increase.
Personal Loan Requirements and Criteria
Reach out to a lender to find out their specific requirements, but use the following as a general guide for personal loan borrower requirements:
- Your FICO credit score
- Debt-to-income ratio
- Delinquencies or negative remarks on your credit report
- Credit utilization (your credit balance vs. your credit limit)
- Open accounts with a positive standing (payments being made on time and the like)
A loan comparison service like Credible can also cut down time researching borrower requirements from individual lenders. By prequalifying, you can see which lenders’ standards you meet and go from there.
Personal Loan Considerations
If you’re a college student who can’t get federal aid or are a non-traditional student ineligible for financial aid, a personal loan is a worthwhile consideration. Consider a personal loan an investment and weigh the financial return possible.
Don’t take out a loan if it’ll cost you more than it was worth in the end. And if you’re not sure you’ll be making enough to pay the monthly payments while you’re still in school, it may not be your best bet.
Be 100% positive you can meet the loan terms before agreeing to anything. Even 1 missed payment can negatively impact your credit score and prevent you from using credit in the future.
Always be sure to watch out for sketchy lenders, especially online. It’s best to use industry-vetted lenders like SmarterLoan.com.
A loan comparison service such as Even will link you with lenders with established records of trustworthy lending. You’ll be able to view your individual offers and safely compare their rates and terms without hurting your credit report.
Personal Loans vs. Credit Cards
Personal loans and credit cards are both useful when you need access to more spending power, but 1 can be more beneficial than the other in certain situations.
If you’re looking to fund a large expense, a personal loan may be your best bet because it’s 1 lump sum payment. Because personal loans usually offer low-fixed rates, they are often a great way to consolidate debt under a lower interest rate as well.
The personal loans from Payoff are a perfect example of this — they’ll give you enough money to pay your debtors and you’ll pay 1 streamlined monthly payment instead of keeping track of several payments.
Credit cards are a revolving line of credit, while personal loans have a set repayment term. When you pay down your credit card balance each month, your available credit is increased by that amount.
A credit card is best for covering smaller daily or recurring expenses because they tend to have higher, variable rates, so you don’t want to get buried under high balances. Credit cards can help your credit by increasing your credit age (the average length of your positive credit relationships) if you keep them open and pay them off regularly.
Alternative Funding for College Students
If you’re a student who needs an alternative to federal or private student loans, consider a personal loan. Determine your financial needs, and contact our recommended lenders or loan comparison services to explore your personal loan options today.