College fees are not going to get any cheaper and more affordable anytime soon. Attending a public university for four years costs students and parents an average of $8,800. It’s even higher for private non-profit universities. With all these fees, it is understandable why majority of students take out a student loan. Aside from student loans, there are also other loans that you can take out to help pay for your college fees.
Student Loans vs. Personal Loans
When it comes to student loans, federal loans are always the better options. This was discussed in detail in our previous articles. However, if you are looking for other options aside from student loans, you can try personal loans.
It is still true that private student loans have better interest rates than personal loans. It is advisable to look into federal student loans first before you proceed with secondary options such as private student loans and personal loans.
The average interest loans for private student loans could be as low as 3.9% percent. However, this can go up to 18% depending on your provider and your credit score. On the other hand, we have personal loans that have an average interest rate of 10.31% APR for a 24-month loan.
Student loans and personal loans also differ in payouts. For student loans, the money is usually paid out directly to your school. It rules out the possibility of getting tempted to use the money for other things.
Personal loans are different. The money you loan get paid out directly to you. Which means it is easier and quicker to get the money. However, it makes it more tempting to use the money for other stuff, which in return can result in you taking out more than you need.
When it comes to repayment plans, both options offer a wide variety of terms. This depends on your lender. However, both also comes with its own set of differences. For instance, a lot of private student loan providers offer repayment features that are more beneficial to students.
In student loans, you are not required to pay your loan until after you finish school and get a job. In personal loans, you are expected to start paying immediately.
Both options come with its own set of pros and cons. Most of the time, private student loans and personal loans are used to bridge the gap that federal student loans cannot pay for. If this is the case, it is important to do your research on which option may be best for you. Private student loan providers and personal loan providers provide different options when it comes to interest rates, repayment plans, taxes, and more. It is important to speak with each provider to see which one works best for you. This way, you can start planning for your repayment as early as possible.