Should College Students Consider Personal Loans?

Image by Getty Images, Illustration by Bankrate

Key takeaways

Personal loans cannot be used to pay tuition.
Personal loans can help cover personal expenses once you exhaust student loans.
Personal loans feature fast funding times and attractive rates, but they are often more expensive and lack the perks of student loans.

The average annual tuition in 2024 ranged from $11,610 to $43,350 per year, depending on the institution and program. Add in the costs of room and board, books and supplies and other expenses, and the average cost of college can be more than $60,000 per year.

While scholarships, grants, federal and private student loans can help you cover these costs, you may need additional funds for other costs of living or to cover an emergency.

A personal loan can’t be used to pay for your tuition, but it can be used for almost anything else, including school supplies and living essentials. If you’ve exhausted your financial aid and student loans, a personal loan may be an option.

Pros and cons of using a personal loan for college students

Even if you can qualify for a personal loan as a student, it may not be a smart financial move. You’ll want to weigh the pros and cons before moving forward.

Pros

Fast funding times: Most personal loan lenders offer funding within the same week of approval, and some even offer same-day funding. If you’re cash-strapped, a personal loan can put money in your pocket quickly.
Lower interest rates than credit cards: In September 2025, the average personal loan interest rate was 12.39 percent, compared to the average credit card APR of 20.12 percent.
Funding for non-educational needs: Student loans are restricted to education expenses, but personal loans can be used for almost anything else, including emergencies and consolidating other debt.

Cons

More expensive than student loans: The interest rate on federal loans is just under 8 percent, regardless of credit. Personal loans range from 6 to 36 percent, with the best rates reserved for excellent-credit borrowers. But many students don’t have stellar credit or the long credit history required to qualify for those lowest rates, making a personal loan a potentially expensive option.
Usage restrictions: Most personal loan lenders prohibit borrowers from using funds for educational expenses. You can likely use a personal loan for school expenses outside tuition and fees, but you’ll have to confirm with the lender first.
No deferment: You’ll start repaying personal loans the month after approval, while most student lenders give you the option to defer student loan payments until six months after graduation.
No income-driven repayment option: With federal student loans, you may qualify for an income-driven repayment plan aimed at ensuring you can afford your payments. Personal loans lack such plans. Be sure you review your budget and confirm that you can afford your monthly personal loan payment.

Personal loans for students vs. student loans

Student loan: Used for college-related expenses, especially tuition, fees, room and board

Personal loan: Flexible use, perhaps school supplies, campus clubs and activities and non-school-related needs, like cost of living expenses and emergencies

Personal loans differ from student loans in a few major ways:

Loan type: Student loans are unsecured, which means they aren’t backed by collateral. Many personal loans are also unsecured, but some are secured and require collateral to secure funding.
Loan amount: Many student loan lenders have loan amounts up to the total cost of attendance, which can be over $100,000. Some personal loan lenders have maximum loan amounts of up to $100,000, but many limit loan amounts to $50,000 or less.
Loan cost: The maximum federal student loan rate for 2025-26 is 8.94 percent, while the maximum private student loan rate is usually around 17.99 percent. In comparison, the maximum personal loan rate is typically around 35.99 percent.
Repayment term: Student loan repayment terms can last up to 25 years. Some personal loans may have repayment terms of up to 12 years, but they typically range from one to seven years.
Eligibility criteria: You’ll typically need good or excellent credit and a steady source of income to qualify for a personal loan with competitive terms or a private student loan. However, federal student loans are issued based on your academic status, not your credit score.
Funding: Personal loans are deposited into your bank account, and student loans are first sent to the school’s financial aid office to cover tuition, room and board and other fees.

Where to get a personal loan for students

Banks, credit unions and online lenders may provide personal loans for college students, though qualification requirements will vary per lender. A few examples of lenders that may offer personal loans to students are:

Lender	Loan amount	APR	Minimum credit score	Repayment term
U.S. Bank	$1,000–$50,000	8.74%-24.99%	660	12–84 months
Upstart	$1,000–$75,000	6.70%-35.99%	300	36 or 60 months
Upgrade	$1,000–$50,000	7.99%-35.99%	600	24–84 months
Prosper	$2,000–$50,000	8.99%-35.99%	600	24–60 months

Before moving forward with this type of loan, compare personal loan lenders. You’ll want to verify that you can use the funds as needed and afford the monthly payment.

Calculate your monthly payment

Use a personal loan calculator to see what loan terms get you the most affordable monthly payment.

How do I qualify for a personal loan?

Personal loan eligibility requirements vary by company. However, most lenders require the following:

Minimum age of 18
U.S. citizenship or permanent residency
A minimum credit score, usually in the mid-600s
Minimum or steady income
Proof of employment
Debt-to-income ratio lower than 50 percent

If your credit history or score, income or employment status prevent you from qualifying for a loan, you may consider adding a co-signer, applying for a secured personal loan or looking into bad credit personal loans.

Alternatives to using a personal loan for school

If you need to cover the cost of college, a personal loan isn’t a good fit. Ask your financial aid office to explore available options and research other ways to pay for college. Such alternatives may include:

Free funding sources, like scholarships and grants
Work-study programs
On-campus or part-time jobs
Gifted money from loved ones
Secured credit cards

Bottom line

Student loans are the best first option for students looking to finance their education. If you’ve exhausted your federal aid, and federal and private loans and still need money to cover life on and off campus, a personal loan could be a less costly option to get the funds you need. But it’s not without risks, and you should consider the advantages and disadvantages before you apply.

Frequently asked questions

Yes, it is possible to get a personal loan as a student. However, you’ll typically need to provide proof of income and have an established credit history before you can borrow money. If you’re a student with no job or no credit history, it may be difficult to get a personal loan.
Deciding whether to take out a personal or student loan depends on how you plan to use the funds. If you need to pay for school, start with federal student loans. Fill out the FAFSA to figure out how much federal aid you can get. If you’ve exhausted your federal aid and still need money for school, explore the best student loans.

If you need money for expenses other than school, a personal loan may be a better fit, as student loans can only be used for tuition, room, board and other school-related expenses. Keep in mind that you’ll need to start making payments on a personal loan as soon as you open the loan.