Using a Personal Loan for Tuition and Educational Expenses
When it comes to financing higher education, the cost can feel overwhelming. With a little planning, though, you’ll be able to navigate your way through.
Can I use a Personal Loan to pay for school?
It’s smart to always pursue what is referred to as “free money” first; in other words, look for financing made available via scholarships and grants. Ask the financial aid office, check your local library or do some research online to uncover scholarship and grant opportunities. Federal loans are often the next best bet, as they typically carry lower interest rates. You may also be able to find an on-campus job, either through a work-study program or not, to help defray some of the costs of your education.
Once your free and lower-cost options are exhausted, an Education Personal Loan may be the solution you need. With fixed rates and flexible terms, a Personal Loan can help you fill the funding gap without insurmountable debt after graduation. Education personal loans typically carry a lower interest rate than other funding options, including credit cards. This is important because the lower the interest rate, the less money you are spending on interest charges. More of your monthly payment is actually going towards the balance. Furthermore, the interest rate on a personal loan is fixed, meaning your monthly payment won’t fluctuate, as long as you don’t accrue any late charges.
In addition, Education Personal Loans usually have flexible, fixed terms. The length of the term will depend on your financial institution. At MHV, our education personal loans carry terms up to 60 months, giving you the ability to find a payment that you can manage within your budget.
Estimate your monthly payment using our Education Personal Loan calculator.
How do I pay for school?
Here are four simple tips to help get you started on financing your higher education.
Free Money. Search for college scholarships and grants, which cost you nothing and do not have to be repaid.
Consider Options. Before applying for an education personal loan, be sure you have exhausted all sources of free and low-cost financial aid, including scholarships, grants and federal direct student loans.
Calculate Costs. Think about all of the costs associated with higher education, including books, fees, travel expenses and dorm supplies. Does the money you received from scholarship and lower-cost solutions cover it all? If not, how much will you need to cover with an Education Personal Loan?
Apply. You can quickly and easily apply right from our website!
What can I use my Education Personal Loan for?
The funds from your Education Personal Loan can be used for just about anything you’ll need to pursue your education, without piling on higher rate credit card debt. Before you apply for your loan, think about all of the expenses involved in your schooling. Do your other funding options cover them all? If not, come up with an amount that you will need to fill that funding gap. Think about costs like:
Do I qualify for an Education Personal Loan?
Lenders will often look, at the very least, at your credit score and your debt-to-income ratio (DTI) before deciding to lend to you. Your credit score is a mathematical analysis of how likely you are to repay your loan on time. Your score factors in things like how many loans or credit cards you have, how well you pay your bills on time, how much of your available credit you’ve used and how old your oldest credit or loan account is. All of these factors are weighted and combined to assign you a score. It is very important to have a good understanding of what your credit score is before you begin the process of applying for a Personal Loan. If your score isn’t high enough, there are steps you can take to work on improving it.
DTI measures how much debt you currently have relative to your income. A DTI that is too high suggests you may be spread too financially thin to be able to make the payments on your personal loan. Even if you have a good credit score, a high DTI can cause some lenders to deny your application. Using a monthly budget tool is a great way to manage your finances and keep your debt at a manageable level.
For more information on understanding your credit, watch our brief explainer video here.
Is an Education Personal Loan right for me?
Keep in mind that there are some differences between Education Personal Loans and student loans, the biggest of which is the deferment options available on student loans. Student loans will typically allow you to defer payment, or make interest-only payments, until after you graduate college. With an Education Personal Loan, though, you will be required to start making your full monthly payments right away. Also remember that an Education Personal Loan is a financial commitment; the funds should be used for those things that you really need for your education. It may be tempting to use your loan to deck out your dorm room or apartment, but doing so may not be worth financial commitment. Borrow only what you need for your education.
Paying for your education doesn’t have to be an overwhelming concept. Invest the time in doing research on scholarships, grants, federal loans and when and how to file your financial aid paperwork. Use the financial aid office, your library and other professionals to help you plan for the expense.
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for more tips and information on paying for college!
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