Let’s face it – Education, especially higher education, is generally expensive. Taking care of your tuition fee, and still covering your basics like food and accommodation can be a bit of a task. Your savings, contributions from family, and friends can help you stay afloat.
If that’s not enough, personal loans for students can be an excellent option. So, what are they? Do you qualify for one? And, are there viable options to explore? We have all that and more. But first, check out some of the top lenders;
Personal student loans are meant to help students pay for tuition and cover other day-to-day needs. You can choose to borrow a federal or private student loan.
Federal student loans are often cheaper, and their approval is easy. They also carry very flexible repayment terms. Federal student loans are funded by the government. To apply, you first submit a FAFSA – Free Application for Federal Student Aid. These loans come with such advantages as the ‘forgive’ program that can see you get a partial or full waiver on your loan. They also have flat interest rates set by Congress.
Private personal loans for students, on the other hand, are issued by banks, credit unions, and online lenders. Their interest rates are set by the respective lenders. You apply them by approaching your chosen lender and submitting an application.
Because these loans are meant for students only, you’ll have to first prove your education status to the lender. For it to be a legally binding agreement, the applicant should have attained the legal age, which may differ from one state to another, but mostly 18 years.
Still, different lenders have different qualification requirements. Private lenders will still look at your credit score and income to determine if you’ll repay your loan. Scores above 600 will easily get your loan approved by different lenders.
However, because most students don’t have established income and good credit scores, lenders may be willing to accept such arrangements as having co-signers.
The federal student loan lenders won’t be concerned with your creditworthiness.
If you’re looking to take a personal student loan, here are some things you should know;
Take your time to shop around for suitable lenders if you’re considering private lenders. Find ones with lower interest rates and flexible repayment terms. Also, be on the lookout for offers and waivers from such lenders.
Here are some options you could check out if you’re contemplating taking personal loans for students;
These loan products will basically cover all expenses left out by grants and scholarships. The program is owned by the Federal Government through the Ministry of Education. The federal government set interest rates. They’re mostly fixed interest rates.
Here, your credit score won’t be checked. And, you don’t have to repay your loan while continuing with your studies.
Here are some federal personal loans for students;
Undergraduate students demonstrating financial hardship can apply for direct subsidized loans. These are mostly students whose family income is below $50,000 annually.
The government pays the interests while you’re still in school and during your grace period. You can also pause payments through the deferment period.
Your school will help you determine if and how much you can borrow. The freshmen borrow the lowest amounts while the sophomores all through final years borrow the highest amounts.
For a typical student, the limit before graduation is $31,000.
Plus loans are federal personal student loans meant for undergraduate students and parents.
Parent plus are specific for parents of undergraduate students. Grad Plus, on the other hand, is meant for the undergraduate students themselves. Graduate plus loans attract an interest rate of 6.08%.
Plus loans don’t have any set limit and can be used for all education expenses.
Direct consolidation loans allow you to combine different federal education loans into one loan product carrying a single fixed interest rate.
It comes with flexible repayment plans based on the abilities of the borrower. However, depending on the consolidation loan you choose, you could end up with a longer repayment period and higher interest rates.
Private education loans are the option for those who find federal student loans insufficient to sort out their financial need.
They carry fairly higher interest rates than federal loans for students and lenders may demand repayment before you’re done with your studies.
Medical students with good credit scores can go for medical school loans. They often charge lower interest compared to federal loans. However, they lack the forgiveness program common with federal loans.
These are meant for parents who wish to finance their undergraduate, graduate, or certificate courses. They should have an excellent credit score. Depending on the lender, they generally carry lower interest rates.
These are loans meant for those aspiring to further their education, specifically with a Master of Business administration degree.
The loan covers all expenses from tuition to other basics such as stationery and accommodation.
The loan comes with great flexibility of payment, with a grace period of up to 6 months to allow you to build your career.
You can borrow up to $100,000 or more with personal loans for students. Federal student loans, however, have limits, mostly capped at $31,000. However, this could be negotiated depending on the needs of the borrower.
The federal student loan limit isn’t affected by your credit scores. You’ll be issued a loan depending on your financial needs.
For private student loans, however, hardly put a limit on how much you can borrow. Products such as MBA loans offer you loans to take care of all your expenses. However, they’re strict on your credit score and stability of income.
A credit score of above 600 will open you up for better loan products from multiple lenders.
If you have a poor credit profile, getting a co-signer will save the day. Get one with an excellent credit profile. Alternatively, you can opt to repair your credit profile instead. You do this by repaying your existing loans promptly.
Before going for private student loans, college students are encouraged to try out federal student loans. These are cheaper and easier to qualify for. If you settle, choose a loan product among the ones we listed above. Once you’ve made that decision, you now start looking for a suitable lender. Focus on the borrowing cost while at it. Check out, not only the interest rates but other loan charges, too.
Go for lenders with lower monthly repayments to save on cost. Also, seek loan products with deferment options so you can save yourself from defaulting even during financial struggles. Only apply for these loans only if you need them.
Though they have limited options, international students can apply for personal loans. However, it’s not exactly an easy process. Lenders will require an F1- visa holder to have a good credit score. Most lenders will also need to see 2-year credit history.
You’ll also need to prove to lenders that you are a legal US resident and provide proof of your identity. Ideally, you don’t need collateral, social security number, or a co-signer to qualify for these loans. However, you have the option of getting a co-signer with a good credit profile in case you don’t a good credit score.
Yes. Students can access federal loans and loans from private institutions such as banks, credit unions, and online lenders.
Federal student loans. They are subsidized, have lower interest rates, and are accompanied by occasional waivers.
You may need a cosigner if you have a poor credit profile and credit score.
Any legal US resident with a student and good credit profile can get personal loans for students.
Consider getting a private student after applying the Federal student, and if it’s not enough to cater to your needs.