Compare personal loans for students

Student loans are a type of loan designed to help students, including international students, in Australia with their educational expenses. Just like a regular personal loan, a student loan allows you to borrow money that can be used for eligible purchases related to your education. You then pay back the loan amount plus interest to the lender in regular installments over a set period.

Lenders make money by charging interest and fees on loans, and they usually offer the most appealing rates and fees to customers with excellent credit scores. As a student, it's unlikely that you have established enough credit history to have an excellent credit score.

Securing a loan as a student can present its fair share of challenges. Even though you might relish in discounts when it comes to entertainment and shopping, obtaining approval for a loan is an entirely different ballgame. However, there are actionable steps you can proactively take to enhance your credit score before seeking approval for any credit products. By doing so, you may position yourself in a more favourable light among lenders and potentially increase your chances of obtaining the financing you need.

When it comes to higher education, expenses can start cropping up left and right. That's when many students consider taking out personal loans to help handle these costs. These loans can be a lifesaver for covering everything that comes with getting an education.

Student loans can be used for a wide range of purposes, including the following:

• Tuition fees
• Additional course fees
• Stationary
• Living expenses, such as rent and bills
• Travel expenses for field trips or study abroad programs
• Laptops and other necessary devices and school supplies
• Textbooks, study materials and other learning resources

Keep in mind that the specific terms and conditions of student loans can vary significantly depending on factors like the lending institution and the type of student loan you're seeking.

Furthermore, it's essential to keep in mind that student loans usually come with restrictions on how you can use the money. Unlike personal loans, which generally offer flexibility in spending, student loans are typically earmarked for educational purposes. It's a smart move to carefully go through your student loan agreement to understand what expenses are considered eligible, preventing potential issues in the future.

In a broader sense, a personal loan might be the better choice if you need funds for purposes other than education. For instance, if you're looking to cover more than just your tuition fees, a personal loan could be the way to go. On the flip side, student loans often come with lower interest rates compared to personal loans and may offer extended repayment periods, allowing you to focus on your education without the immediate pressure of repayments.

In Australia, student loans are not limited to university students. Most personal loan providers in Australia offer student loans to those studying at university, TAFE and other higher education institutions, such as private colleges and short course providers.

The Australian government provides two main types of student loans: the Higher Education Loan Program (HELP) and the Vocational Education and Training (VET) student loan.

Higher Education Loan Program (HELP)

This loan program covers various higher education courses, including university degrees, diplomas, and advanced diplomas offered by approved tertiary education providers. It includes the following loan schemes:

• HECS-HELP: This loan program is available to eligible students studying Commonwealth supported places in university bachelor's or postgraduate courses. HECS-HELP allows students to defer payment of their tuition fees and repay the loan through the tax system once they reach a certain income threshold.
• FEE-HELP: Assists eligible fee-paying students in higher education courses. Unlike HECS-HELP, FEE-HELP is for students who pay full tuition fees upfront and want to defer their payment through a loan.
• OS-HELP: This loan program provides financial assistance to eligible students undertaking study abroad or exchange programs as part of their Australian higher education course.

Vocational Education and Training (VET)

This loan program applies to eligible students studying vocational education and training courses offered by approved VET providers. VET student loans replaced the former VET FEE-HELP program. It allows students to defer their tuition fees and repay the loan once their income reaches a specific threshold.

It's important to note that eligibility criteria and loan limits may apply to these student loan programs. Students should contact their chosen educational institution or the Australian government's StudyAssist website for detailed information on loan availability, repayment obligations, and eligibility requirements for specific courses and qualifications.

Before applying for a student loan, it might be worth exploring some other options that may be available to you. Some Australian students may be eligible for certain types of government loans or other financial assistance schemes to help cover education expenses. 

Student loans for university

If you have been offered a Commonwealth supported place (CSP) in a university degree, you will generally be eligible for a HECS-HELP loan from the Australian government. A HECS-HELP loan is a higher education program that covers the upfront cost of tuition, allowing students to study now and pay off their tuition later. 

Keep in mind that while a HECS-HELP debt won't necessarily accrue interest, it's still subject to inflation and is a liability that has requirements in terms of how and when it is to be paid off. 

Student loans for TAFE

A VET Student Loan (VSL), formerly VET FEE-HELP, is similar to a HECS-HELP loan in that it assists with the cost of tuition fees. The way in which they differ is that VSLs are offered to students undertaking vocational education and training (VET) courses, such as TAFE courses, as opposed to university degrees.

Centrelink payments

Centrelink is a government agency that provides social security payments and services to Australians. Eligible students, trainees and apprentices may be eligible for financial assistance with everyday costs of living, as well as some study expenses, through Centrelink.

The main income support payments offered by Centrelink to those studying or training are Youth Allowance, Abstudy or Austudy, each of which have separate eligibility requirements. Those eligible may also be approved for Rent Assistance, which is an additional payment that can be used towards the cost of rent.

As is the case with most financial products, eligibility for student loans in Australia will ultimately be determined by the credit provider. 

Most lenders will require borrowers to meet the following criteria at a minimum:

• Be 18 years or older
• Be an Australian citizen, permanent resident or eligible visa holder
• Be employed on a permanent (full-time or part-time) basis

Many lenders may also require borrowers to earn a minimum annual income, have a good credit rating, and meet other eligibility criteria, such as citizenship or visa status, residency requirements, enrollment in an approved course or institution, and meeting specific study-load requirements.

It's important to note that each loan program has its own terms and conditions. It may be worth checking your preferred lender's eligibility criteria or consider reaching out to them directly to obtain more information.

Furthermore, it's essential to consider the potential consequences of taking on a student loan, including the obligations of repayment and the accumulation of interest. It may be sensible to carefully review the information provided by the loan programs and consult with the educational institution or a financial advisor to gain a comprehensive understanding of the eligibility requirements and potential outcomes before initiating the application process for a student loan in Australia.

There are study assistance loan options available for non-Australian citizens. However, to access a Commonwealth Supported Place (CSP) and/or a Higher Education Loan Program (HELP) loan, you must fulfill specific eligibility criteria based on your visa and residency status. It is important to inform your educational institution whenever there is a change in your citizenship or residency status while you are studying in Australia. For detailed information and guidance, you can visit the StudyAssist website, which is maintained by the federal government.

To determine if you are eligible for a student loan, particularly if you are a temporary resident like an international student, it is essential to carefully review the eligibility requirements outlined by your preferred lender. This thorough examination will help you understand if the lender provides financing options for individuals in your specific situation.

Even though some lenders may offer personal loans to international students, the interest rates charged on these loans might be higher. Lenders often consider temporary residents as riskier borrowers. Moreover, as a student, you might not have many (or any) valuable assets or a high income to reduce the risk perception for the lender. Depending on the lender you’re considering, having a guarantor co-sign the personal loan application with you could help you qualify for a personal loan.

Another option that you may have as an international student is checking whether your university extends any kind of financing help to students. Many Australian universities offer both short-term and long-term loans to international students, helping them cover their education and living expenses in the country.

In Australia, there are generally no specific age limits for individuals to be eligible for student loans.

Most lenders don't specify an upper limit in regards to the age of eligible student loan borrowers. But, it's important to familiarise yourself with the terms of your preferred loan product before you begin the application process, as each product will have different requirements.

It's worth noting that there may be age restrictions or limitations on certain scholarships, grants, or other financial assistance programs available to students in Australia.

Generally, the only age restriction placed on student loans is that the borrower is at least 18 years of age. This restriction applies to any kind of credit product.

If you've never taken out a credit product under your name before, including a credit card or even a mobile phone plan, there's a chance you won't have anything recorded on your credit history and in turn don't have a credit score. 

This can sometimes make it more difficult to get approved for a loan as the lender can't determine what kind of borrower you are and what level of risk you pose. However, there are ways you may be able to work around this, including using a guarantor.

Having a family member or friend act as a guarantor involves having them co-sign the loan agreement and accept responsibility for the repayments if you were to default. Basically, a guarantor acts as a type of security, making it less risky for your lender to loan you funds and more likely you may be approved for a loan with little to no credit history.

In Australia, guarantors are not typically required for student loans. However, it's important to note that private lenders may offer alternative student loan options outside of government programs. These private lenders might have their own policies regarding guarantors.

If you are considering a private student loan, you may want to review the specific terms and requirements of the lender to determine if a guarantor is needed or allowed.

Many private schools in Australia expect school fees to be paid upfront, either term by term or annually, and this can be a huge burden on families. In some cases, a personal loan could be an appropriate solution, but only if you have the financial means to pay back the loan on time.

Several banks and lenders offer personal loans to cover school fees, but the cost and terms can vary significantly, so it’s a good idea to carefully compare what’s on offer across Australia before signing up to a personal loan.

To find a personal loan that suits your financial needs the best, it’s important to compare the following things:

• Interest rates – are they fixed or variable?
• Fees – how much are the upfront and ongoing fees?
• Repayment options – can I make payments weekly, fortnightly, monthly, and can extra repayments be made without penalty?
• Features – is there a redraw facility and fully-drawn advance?
• Customer service – is it all online or can I also get customer service over the phone and at a branch?

RateCity.com.au has an easy-to-use comparison tool to compare dozens of loans from a wide range of Australian lenders, so you can find one that will best help you pay the school fees.

How much can I borrow for school fees?

Every lender in Australia sets its own limit on personal loans, but generally personal loans vary between about $1,000 and $100,000.

Your own financial situation will heavily determine how much a lender is willing to let you borrow in a personal loan for school fees.

How long will I have to pay back a student loan school fees?

The term of personal loans tend to range from one to 10 years. If you get a personal loan that allows early repayment, it might be a good idea to pay off the loan ahead of schedule, so you can pay less in interest.

RateCity’s comparison tool lets you change the term of the loan to see how that affects your interest charges on repayments.

How can I apply for a student loan for school fees?

Firstly, you need to make sure you are eligible. Each financial institution has its own list of criteria but generally you’ll need to prove the following five things:

1. You are at least 18
2. You an Australian resident or citizen
3. You’re employed
4. You receive a regular income into a bank account
5. You have a fair credit history (although some lenders will accept a bad credit history)

Secondly, you will be required to provide the following:

• Mobile phone number and email address
• Driver’s license or Medicare Card or passport
• Three months’ worth of bank statements

Some lenders may also require additional documents and information.

If you are self-employed, you will also need to show your latest tax return for proof of income, but be aware that not all lenders offer personal loans to the self-employed.

If I have a bad credit history, can I still get a loan for school fees?

The short answer is yes.

There are a number of lenders who will give loans to customers with a bad credit history. However, usually you will be required to prove that you have a regular income deposited into a bank account, and that this is sufficient to repay the personal loan you are taking out for school fees.

In order to make an informed decision before applying for a student loan, it's important to weigh up the potential pros and cons.

Before you begin shopping around for a student loan, there are a number of factors you'll need to consider in order to find the most suitable loan options for you. Here are some of the most important features to evaluate:

Secured vs unsecured

A secured loan allows you to put down an asset, such as a car or equity in a home, as security on your personal loan. This usually results in a lower interest rate as you’re generally seen as a less risky borrower. However, it is more common for student loans to be unsecured. Unsecured loans don't require the borrower to put down an asset as security, but usually come with a higher interest rate.

Interest rates

One of the first features that many consider is the loan's interest rate. The interest rate will determine how much you will pay in interest charges over the life of the loan. You will also typically need to choose between a fixed interest rate that stays the same throughout the loan term, or a variable rate that can fluctuate with the market. Fixed rates may provide more certainty, but variable rates often provide more flexibility.

Comparison rates

Comparing different comparison rates can give you a better idea of the total cost of a loan, as they include both the interest rate and standard fees as a percentage figure. Keep in mind that some fees may not be included in the loan's comparison rate.

Tranche funding

A convenient option offered by some lenders, allowing you to receive your funds in multiple instalments over the duration of your loan, rather than receiving a single lump sum payment. If this flexible disbursement method aligns with your needs, it is advisable to discuss it with your preferred lender to determine if they provide this feature.

Repayment schedule

When it comes to repaying your student personal loan, many lenders offer the flexibility to choose your repayment schedule. You can select either fortnightly or monthly repayment options, enabling you to plan your budget effectively and accommodate your financial circumstances.

Loan term

This refers to the duration within which you are required to make repayments towards your loan amount. Typically ranging from two to five years, opting for a longer loan term can result in more manageable and affordable repayment amounts. However, a longer loan term often entails higher total interest payments. On the other hand, choosing a shorter loan term may lead to higher repayment amounts, but it can also mean spending less on interest charges over time. Selecting the most suitable loan term depends on your individual financial situation and preferences.

While shopping for a student personal loan can sometimes feel overwhelming, RateCity has a number of comparison tools that may take some of the hassle out of the process.

Comparison rate table

RateCity's comparison tables, like the student loan comparison table on this page, allows you to compare apples to apples. Simply use the filters to narrow down your search to the loan products that best suit your needs.

Personal loan calculator

RateCity's personal loan calculator can give you an estimate of how much your student loan repayments may cost based on your preferred borrow amount, interest rate and loan term. It can also provide you with an estimate of the total cost of the loan and total interest payable.

Real Time Ratings™

Real Time Ratings™ is a world-first rating system that ranks personal loans based on your individual lending requirements. It gives each personal loan a score out of five stars, based on loan costs and flexibility.

While Australia has a well-established student loan system in place, it’s possible that you may find the need for additional financial assistance to cover your day-to-day expenses as a student. Everybody’s circumstances are different, which is why it’s important to understand the available student loan options and their eligibility criteria to make an informed decision that aligns with your specific needs.

Lenders typically offer two types of personal loans – secured and unsecured. Secured loans are typically less common for students since they often lead modest lifestyles with minimal belongings. Most personal loans for students are generally for smaller amounts and may charge higher interest rates due to the absence of collateral. However, these loans may offer flexible repayment terms, allowing students to better manage their expenses while studying. However, you may consider the option of a secured personal loan as a student, if you plan to buy a car or perhaps even a computer, by using the asset as security for the loan.

If you’re looking for financial support as a student, speaking to a financial counsellor could help. Most educational institutes offer free financial counselling services to students, enabling them to make informed financial choices.