You may have used federal or private student loans to cover tuition, housing, textbooks, and other higher-education expenses. Unfortunately, you may still need additional funds to survive for the remainder of the semester or cover a financial emergency.

Credit cards could be an option, but a personal loan may be better. They often come with far lower interest rates than credit cards, and some lenders offer fast funding to help you get back on track right away. Still, before deciding if a personal loan is right for you, there are drawbacks to consider. Some online personal loan lenders offer services specifically for students.

Students and personal loans

Personal loans and student loans can help you survive financially while in college. However, having both could be dangerous if it’s time to repay what you owe and your income is low.

With federal loans, you may qualify for income-driven repayment plans. Private lenders aren’t always as generous, though. If you fall behind on your loan payments, you risk damaging your credit rating, regardless of your loan type.

Personal loans are different 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.
  • 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 don’t have the same stringent eligibility criteria.
  • Usage: You’re free to use personal loans however you see fit. But federal and private student loans should only be used for higher education expenses, including tuition, fees, books, housing and supplies.
  • Funding: Personal loans are deposited into your bank account, and student loans are sent to the school’s financial aid office.

Ultimately, student loans are ideal if you seek funds to cover college-related expenses. But if you need a more flexible funding option to pay for other types of expenses, a personal loan may be best. Keep in mind that many lenders will require a cosigner if you don’t have a steady source of income and a good or excellent credit score.

Companies offering personal loans to students

You may qualify for a personal loan as a student through these fintech startups, even if you aren’t currently employed or have little to no credit history.

MPOWER Financing

Fintech startup MPOWER Financing caters to high-potential students who generally aren’t eligible for loans through traditional banks. It offers fixed-rate loans to over 190 nationalities, including Americans, who are attending an approved school in the U.S. or Canada without the need for collateral. You also don’t need a cosigner or credit history to qualify.

Loan amounts range from $2,001 to $100,000 (total), and interest rate discounts of up to 1.50 percent are available. After the loan is approved, funds are sent directly to the university. You’ll make interest-only payments while in school and six months following graduation.

If you wish to pay your loan off early, there are no prepayment penalties. Even better, loan payments will report to the credit bureaus to help you establish your credit history.


KoraCash is available to students and recent graduates with a .edu email address. You should also be at least 18 years of age with a valid Social Security number and acceptable credit history.

It’s offered through fintech startup Kora, and you could qualify for up to $2,000 with a loan term not exceeding 12 months. Loan payments are reported to the major credit bureaus — Experian, TransUnion and Equifax — to help you start building a positive credit history.

Kora currently lends in Arizona, Arkansas, California, Florida, Illinois, Iowa, Maryland, Michigan, Minnesota, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Utah, Washington and Wisconsin. If you don’t reside in one of these states, it’s best to pursue other options.

Other personal loan options

If you’re unable to qualify for a personal loan on your own, consider getting a cosigner to strengthen your approval odds. You can also ask your parents or another relative to take out a loan on your behalf or lend the funds to you directly.

Home equity loans and home equity lines of credit are another option to secure the funds you need if you own a home. But they can be risky as your home is used as collateral. Furthermore, it can be challenging to get approved if your income or credit score is low.

Advantages and disadvantages of getting a personal loan as a student

You may qualify for a personal loan as a student, but it may not be a smart financial move. Consider these benefits and drawbacks before moving forward.


  • Fast funding times: It could take some time for student loan proceeds to be disbursed to you, but most personal loan lenders offer fast funding times.
  • Lower interest rates than credit cards: The average personal loan interest rate is 10.82 percent, compared to the average credit card APR of 19.93 percent.


  • More expensive than student loans: If you can get a federal student loan, you could get a better interest rate than you would with a personal loan. The interest rate on Direct Subsidized and Direct Subsidized federal student loans is currently 3.73 percent and 5.28 percent for undergraduate and graduate students, respectively. You’ll pay between 1 percent and 13 percent for a private student loan.
  • No deferment: You’ll start repaying personal loans the following month, but most student loan providers give you the option to defer payments until after graduation.
  • Your assets could be at risk: If you get a secured personal loan, you risk losing your assets if you fall behind on monthly payments.

Bottom line

If you’re experiencing financial hardship, 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. Depending on your situation and how you plan to use the money, a student loan or other funding source could be a better fit.