Personal Loans to Finance Your Education

Personal loans are a subset of private loans, and as such, should be used when all other resources are exhausted. Personal loans designed for students are not as plentiful as private student loans. These loans typically require that:

  • You must be enrolled at least halftime in a degree program,
  • You must have a good credit history, or have a co-signor who does.
If you do not use a personal loan that is tailored to students, you will likely be subject to a high interest rate and strict repayment schedules with no provision for deferment or forbearance.

Choosing A Personal Loan

In general students should avoid private banks when looking for a personal loan. While they all extend personal loans, and even bad-credit loans, these are usually not tailored to students.

Students should shop for personal education loans within the population of companies that specialize in student loans.  Look for loans that:

  • Require that you prove enrollment in your school (this means it really is specifically for students), and
  • Allow you to defer repayment while you are still a student.

In the world of personal loans, there are a variety of products available, each with different requirements and features, to attempt to provide flexibility for a wide array of needs. For example, Sallie Mae, one of the largest and best- known of student loan providers, offer three different products that can be called personal loans.

How to Use Personal Loans

Here is a good way to prioritize your funding sources and decide if you really need to get a personal loan.

  1. File FAFSA to apply for every federal loan program and work-study program you might qualify for.
  2. Research grants and scholarships from you college or university and be prompt in applying for them.
  3. Once you know your federal awards and awards from your school, add these figures together with any savings you have for your education. This is the amount you have to spend. Using a college cost calculator, add up tuition, room, board, book expenses, transportation expenses, extra student fees, and any other extra expenses you will be responsible for. Subtract the amount you have to spend, and the balance is what you still need. A personal student loan can help with this amount.