All You Need to Know About Loans for Students in Australia

As a student in Australia, keeping track of your money can be hard. The costs can add up quickly, from tuition fees to rent. 

Luckily, a few different types of short-term loans can help you pay these costs. So continue reading this article to learn more about them.

What this article covers:

What Are the Eligibility Requirements for Loans for Students in Australia?

A student loan in Australia can be a valuable source of financial assistance for students who want to pursue their education. However, knowing the eligibility requirements is important before applying for this loan. 

Be Enrolled in an Eligible Course 

You must be enrolled in a course that qualifies at a recognised school. Most lenders will only give loans to full-time students, but some may offer loans to students who only go to school part-time. The course must lead to a qualification, like a degree, diploma, or certificate.

loans for students

Australian Citizenship or Permanent Residence 

To be eligible for a small loan for students, or any student credit loan for that matter, you must be an Australian citizen or permanent resident. Some banks may also offer loans to New Zealand citizens or holders of a humanitarian visa.

Age

Generally, most banks and private lenders will only offer student loans to students who are 18 years old and above. But some banks may require you to be at least 21 years old before you can apply for a loan.

Income

When you apply for a student loan, some lenders may ask for proof of income, but this isn’t always necessary. Sometimes, even money from part-time or casual work, scholarships, or government allowances should suffice. There are lenders that’ll also grant low income loans, loans for job seekers, and loans for self-employed, which you could use for supporting your studies.

personal loans for students

Student Loans from Traditional Lenders

Traditional lenders offer some convenient and quick options for students, and we highlighted two options that you could consider:

Unsecured Personal Loans for Students

Unsecured personal student loans are a common type of bank loan that many students in Australia consider when they need financial assistance. These loans can help you cover various expenses, including tuition fees, textbooks, accommodation, and living expenses.

Pros:

  • Easy to Get: If you have a good credit history, it’s often easy to get a personal loan. Banks and other financial institutions usually need basic information, like how much money you make, your credit score, and whether you have a job.
  • Fixed Interest Rates: Most personal loans have fixed interest rates, meaning the interest rate stays the same throughout the loan’s term. With fixed rates, it’s much easier to budget and plan because you know exactly how much you must pay each month. 

Cons:

  • High Rates: Interest rates are usually higher for personal student loans than other loans. The interest rate can change based on your credit score and other factors, but it’s usually higher than the rates for other loans.

Secured Personal Loans for Students 

A secured personal student loan is another kind of loan that students in Australia can get from a bank. Secured personal bank loans for college help students pay for things like tuition and books. Note that this loan needs collateral.

Pros:

  • Lower Rates: Secured student bank loans for college often have lower interest rates than personal loans. They also have longer repayment terms. Some secured personal loans don’t require repayment until you complete your studies and earn a certain income.

Cons: 

  • Restrictive: These loans may restrict how you can use the funds.
  • Co-Signer Requirements: Some student loans require a co-signer, such as a parent or a guardian, which can be difficult for students who don’t have someone who can fulfil this role. 

personal student loans

Student Loans from Private Lenders

If you’re looking to avoid getting a student loan from a traditional lender, then you might want to look into some options by private lenders. 

Let’s see two convenient options that might cover all your student expenses and can be less painful than dealing with a traditional lender:

Peer-To-Peer Loans

Private lenders can also provide capital student loans. Students submit their applications for the loan on a website that facilitates peer-to-peer lending; the loan is financed by investors interested in earning interest on the money they invest.

Pros:

  • Low Interest: Peer-to-peer loans come with low interest, and the application is lightning-fast.

Cons:

  • Credit-Centred: Peer-to-peer loans may still offer worse interest rates for people with subpar credit.

Parent Loans

Parents may get assistance from some private lenders in the form of loans to pay for their children’s education. These loans may need a co-signer and may be used to pay all costs associated with furthering one’s education.

Pros:

  • All-Encompassing: Parent loans in Australia can easily cover most student expenses.

Cons:

  • Co-Signer Requirements: Parent loans often require a co-signer and come with higher interest.

loan for students

Wrapping Up 

Several types of student loans are available to students in Australia, each with pros and cons. Personal loans from traditional lenders are versatile but can be expensive, while options from private lenders can be a great alternative if you know what to look for. 

As a student, it’s important to carefully consider your options and choose the loan that best fits your needs and budget.

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