There are more ways to pay for college that are more favorable for borrowers than a personal loan. While personal loans for students might be an option, they're not necessarily the best option for most people.

Using a Personal Loan for School

The cost of a college education is continuing to rise. For some potential students, using a personal loan to pay for school might be the determining factor between attending and leaving college behind.

Some lenders restrict using a personal loan to pay for tuition and related costs. But you might be able to use a personal loan to pay for other school costs that aren’t directly tied to tuition. For instance, you might be able to pay for supplies (like a computer or desk), transportation (like bus fare to and from campus), or child care (like daycare or a babysitter).

But personal loans don’t offer the same benefits or protections as student loans—both federal and private. Personal loans require repayment right away, while most student loans offer a grace period while you’re still in school. A personal loan should be one of your last options to pay for school-related expenses, and you should exhaust all other funding choices first.

Pros and Cons of Using a Personal Loan for School

Pros

• Can use them throughout the year: Personal loans don’t have deadlines for when you need to apply for them like federal student loans do. You can get one when you need it, even if it’s midway through the semester.
• Fast funding: Most of the time, you can get funds disbursed into your bank account within a day or two of getting approved. 
• Money goes to you—not school: Most student loans pay your school directly, and if there’s extra, that money goes to you. Personal loans go to you first.

Cons

• Expensive payment option: Personal loans tend to have higher interest rates than student loans (both federal and private). They also have shorter repayment terms, which makes monthly payments higher compared to other funding types.
• Strong credit required: If you don’t have good credit or much credit history to your name, you might not qualify for a personal loan. If you still need one, you may need to get the help of a co-signer, who applies with you to offset any credit risk.
• No protection or forgiveness: Federal student loans offer a ton of benefits and protections, including deferment and forbearance, income-driven repayment (IDR) plans, and forgiveness options, like Public Service Loan Forgiveness (PSLF). While some personal loan lenders offer a hardship program, qualification is on a case-by-case basis, so your lender might not approve you depending on your situation. This could make repayment difficult.

There are several different ways to pay for school and some require more work on the front end, while others require more work on the back end.

Funding Type	Credit Check?	Interest Rates	Repayment Period	Requirements
Scholarships and Grants	No	N/A	N/A	Set by each organization
Federal Student Loans	Not usually	Lowest among these borrowing options	10 to 30 years; starts after grace period	Complete the FAFSA
Private Student Loans	Yes	Varies based on credit history	Usually up to 15 to 20 years; starts after grace period	Set by lender
Personal Loans	Yes	Varies based on credit history	Usually up to 5 years; starts right away	Set by lender

Options for Getting a Personal Loan for School

There are a few different places to get a personal loan for school, including:

• Banks: You can see if your bank offers personal loan options that can be used to fund your college education, or at least help you cover education-related expenses. Your bank might be more likely to approve you if you’re already a customer. But you can also compare options to other banks in your area.
• Credit unions: Credit unions offer the same products as banks but tend to be more lenient to those who need it. They usually work with customers regardless of their credit standing, which might be a good option for borrowers who don’t have a strong credit history.
• Online lenders: Several different online lenders offer personal loans with a variety of requirements between each of them. You might have an easier time comparing online lenders than other types of lenders, as they typically offer pre-qualification and a quick application. 

How Do People Use Personal Loans?

venuscurves.commissioned a national survey of 962 U.S. adults between Aug. 14, 2023, to Sept. 15, 2023, who had taken out a personal loan to learn how they used their loan proceeds and how they might use future personal loans. Debt consolidation was the most common reason people borrowed money, followed by home improvement and other large expenditures.

Alternatives to a Using a Personal Loan for School

Personal loans might be one way to pay for school-related costs, but it should be considered after you’ve exhausted all other options, including scholarships and grants, federal student loans, and private student loans.

Scholarships and Grants

The more free money you can get through scholarships and grants, the less you’ll need to borrow from other sources, including student loans and personal loans.

Federal Student Loans

When you complete your Free Application for Federal Student Aid (FAFSA), you may qualify for federal scholarships and grants, but you'll also receive federal student loan offers. These loans tend to have the lowest interest rates, longest repayment terms, favorable repayment options, and the possibility of student debt forgiveness. If you need to borrow money for school, this should be your first choice.

Private Student Loans

These types of loans come from private lenders, like banks, credit unions, and online lenders. Federal student loans come from the United States Department of Education. You can take out a private student loan any time throughout the year if you need to. So if there are still funding gaps, you can apply for a private student loan. Like personal loans, these require a hard credit check. If you lack a sufficient credit history to stand on your own, you may need a co-signer for a private student loan. Many private student loan lenders offer some benefits that personal loans don't, including longer repayment terms and a six-month grace period after you leave school.

	Personal Loans	Federal Student Loans
Loan Type	Typically unsecured	Unsecured
Interest	Determined by your credit score and history	Set by the federal government; same for everyone
Repayment Terms	Short, usually upwards of five years	Upwards of 30 years for some options
Eligibility	Based on income, credit history, and purpose	Must complete FAFSA or requirements set by lender
Use	Almost anything, with some restrictions (based on lender)	School-related costs only

The Bottom Line

A personal loan can be a useful tool to help you pay for a higher education, particularly in regards to college-adjacent expenses. However, in most cases, you'll likely be better off trying to secure funding from more traditional sources, specifically scholarships, grants, and student loans. After you've exhausted all of your other options, then a personal loan could be a good option for filling in any remaining gaps.