Personal Loans for Students
Need a personal loan to cover your study expenses? Compare student personal loans here with Savvy.
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Getting a degree or extra qualifications is a valuable investment in your future, but balancing the cost of education with daily living expenses can be tough. If you’re a student in need of financial support during your studies, you might want to consider student personal loan. If you’re not sure where to start or what you could qualify for, Savvy can help. We can compare offers from dozens of lenders to see if there is a loan to suit your circumstances. Get started with a free quote today!
What are personal loans for students and what do they cover?
A personal loans for students – also known as an educational expenses loan – is a personal loan product designed to provide financial support to help you cover costs you might face when undertaking further or higher education. While you may be eligible for government assistance in the form of a HECS-HELP or FEE-HELP loan or have been offered a Fee-Free TAFE or VET place, these only cover tuition fees – leaving you responsible for paying your other education-related and living costs. These can include:
- Textbooks and other study materials
- Laptops and computers
- Student accommodation
- Food and bills
- Transport
- Clubs and extracurricular activities
You can also use a personal loan to cover the fees for courses where government assistance is not available or you are not eligible.
Student loans work the same as any other personal loan. They provide you with a fixed amount of money, usually between $2,000 and $75,000, which is provided as a lump sum. You must then repay the borrowed amount in regular instalments over a set period of one to seven years, with fees and interest incurred along the way. While you might take out the loan for the purpose of paying for your education, there are generally few restrictions on how you use the funds and you can spend the money any way you choose.
How do I get a student personal loan?
When applying for a personal loan, you will have to meet certain criteria. Typically this involves:
- Being at least 18 years old
- Being an Australian citizen or permanent resident
- Earning or receiving a certain amount in income each year
- Meeting credit score requirements
As a student, especially a younger one in full-time education, you may struggle to meet the latter two requirements. Consequently, your borrowing options may be more limited – as lenders perceive you as a higher risk, they may only approve you for smaller loan amounts with higher interest rates, if at all.
One way to get around this is to take out a personal loan with a guarantor. With this type of loan, someone, such as a parent, agrees to guarantee the payment of your loan. This means that if you fail to make your repayments, your guarantor will take on the responsibility until it is fully paid. It’s important to be aware that you will need to start repaying your personal loan as soon as you take it out and won’t be able to postpone repayments until the end of your studies.
Other ways to improve your chances of approval include:
- Exhibiting good financial behaviours: lenders will want to see that you're financially responsible, save regularly and don’t overdraw your account. This is particularly important if you have no credit history.
- Requesting a smaller amount: the less you borrow, the more affordable the repayments will be. As such, make sure you apply for only the amount you need.
- Providing security: secured loans present less risk to the lender, so are easier to get to get and have lower interest rates. They require you to put up a major asset (like your car), though, which can be repossessed if you miss repayments.
How else can I cut costs as a student?
Being a student often means managing a tight budget. To help you make the most of your finances, here are some additional cost-cutting tips:
- Set a budget: create a budget and track your expenses to ensure you’re spending within your means.
- Choose a subsidised course: Commonwealth Supported Places (CSPs) are government-subsidised university courses available to eligible domestic students. CSPs generally have lower tuition fees compared to full-fee-paying courses, making higher education more affordable.
- Apply for government assistance: while HELP loans only cover tuition, you may also be eligible for government assistance programs such as the Youth Allowance, Austudy or ABSTUDY. These programs provide financial support to eligible students to help cover living expenses while studying.
- Look at scholarships: research scholarships offered by universities, government, private companies and nonprofit foundations. There is a wide array of scholarships available for various criteria, including academic achievement, financial need, extracurricular involvement and specific fields of study.
- Work part-time: working part-time while studying can help you cover living expenses and reduce reliance on student personal loans. Look for part-time job opportunities on or near campus that offer flexible hours to accommodate your class schedule. Consider positions in retail, hospitality, tutoring, or administrative roles within the university.
- Investigate university loans: some universities offer long-term, loans or financial assistance programs to help students cover educational expenses and accommodation costs. Unlike other forms of finance, there loans may also be available to international students.
Can I take out a personal loan to cover my child’s school fees?
Educational costs aren’t limited to further education. You can also take out a personal loan to help cover your child’s school fees or any other costs related to their learning. Whether your child is in public schooling or being educated in the private system, the cost of education in Australia is on the rise. It now costs an average of $92,710 for 13 years of government schooling, $195,074 for Catholic schools and $316,944 for independent schools – which works out at around $7,132, $15,006 and $24,380 a year respectively.
Many schools will offer payment plans to allow parents to spread costs like tuition fees across the year. However, if you’re struggling to pay school fees in the short term, require a device for schoolwork or need help covering back-to-school costs like uniform, a personal loan can help you bridge the gap. The process is quick, easy and entirely private – the school will not be alerted that their fees are being paid with a personal loan and you are under no obligation to tell them.
Types of personal loan
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The pros and cons of student personal loans
PROS
Immediate financial support
You could receive funds to cover essential educational and living expenses within 48 hours of applying.
Flexible use
Personal loans don't typically specify what you have to spend the funds on, leaving you free to spend it as you choose.
Credit building
Repaying your loan on time can help to build your credit score, which will help you down the line when you next apply for finance.
CONS
Interest and fees
You will have to pay interest and in some cases additional fees on your personal loan, which can significantly increase the cost.
Repayment pressure
You will have to make regular repayments from the start, adding financial pressure while studying.
Limited eligibility
Students with limited income or credit history may face higher interest rates or smaller loan amounts, or could have their application denied.
How do I choose the right student loan?
Fixed or variable interest rate
It's worth thinking about the type of loan you're after before locking in a deal. In most cases, personal loans will come with fixed interest rates, so you'll know exactly how much you’ll pay over the loan term. However, you may encounter some lenders who offer variable rates on their personal loans also, albeit far less frequently. Fixed rates are usually the best for students, as they bring financial certainty which enables you to budget more accurately.
Payment flexibility
You should prioritise the ability to pay your loan off at a rate which suits your needs. As such, you should look for lenders who enable you to pay on a schedule which suits your personal income situation (either monthly, fortnightly or weekly).
Available loan terms
Of course, you should ensure your lender offers the length of term you're most comfortable repaying. While personal loans go up to seven years in length, students are more likely to be borrowing over five years or fewer. Don't compromise your comfort if it means you may struggle more in the future.
Minimum and maximum borrowing amounts
Additionally, you should ensure you're actually able to borrow the amount you need. Some lenders will raise their minimum loan amounts up to $5,000, restricting your ability to borrow smaller amounts. If you're looking for a loan on the larger end of the scale, the same applies.
Repayment flexibility
You should also, wherever possible, look to secure a loan which affords you the ability to make additional repayments and complete your loan term ahead of schedule. This flexibility holds the key to potentially saving you hundreds of dollars overall, if not more.
Common questions about personal loans for students
Helpful personal loan guides
Still looking for the right personal loan?
Personal loans come in all shapes and sizes, so read more about the ways you can use them, as well as how they might work for you.