Student loans in Australia – Invest in your future potential
If you’re looking to secure your future in Australia, the hefty costs can sometimes weigh heavily on your student experience. Parents and guardians may not always be able to help you juggle the study expenses or handle cash flow issues. However, a student personal loan levels the playing field and enables you to stand on your own two feet, whether you’re a fresher or headed towards post-grad.
But before you take this route, use our student loans guide to educate yourself about available options and how to choose the right one for you.
What are student loans, and how do they work?
Due to personal loans having a plethora of uses, they can also double as a student loan. In this case, the borrowed money is simply fashioned to pay for expenses associated with higher education. That means your student loan will come with all the features common to personal loans.
For instance, once you borrow the amount you need, you’ll have to make repayments over a specified period. You’ll also need to pick up the tab for borrowing costs, including interest and other fees and charges such as establishment fees.
What can I use a student loan for?
Aussie students generally spread their lump sum over the following study and living expenses:
- Tuition fees or course fees
- Textbooks and other course material
- Various learning equipment, including computers
- Accommodation and rentals
- Groceries and other household items
- Utility bills
It’s generally best not to splash out on non-essentials, such as alcohol or expensive clothing, since each penny you spend tips you further into debt.
Secured vs unsecured student loans
Most student loans are unsecured. That means you’ll be able to borrow money without using any personal assets to guarantee the debt. Alternatively, you can apply for a secured loan which earmarks your car, property, or high-value asset for repossession if you default. It’s fairly standard to have higher rates for unsecured personal loans since they pose more risk to the lender than secured personal loans.
Fixed rate vs variable rate student loans
Student loans can also be classified by interest rate type. Taking out a fixed-rate loan means the lender charges you the same rate regardless of what’s happening to market rates. With a variable rate loan, the lender may take their cue from market rate changes and slash or inflate your rate accordingly.
On the whole, fixed rates are great if you want to avoid unplanned increases to your repayments. But you can also opt for a variable rate on the off chance that market rates will dip as predicted. That way, you can bag a lower rate and more savings.
Other types of student loans available in Australia
- Guarantor or joint applicant loans. You can enlist the goodwill of a family member or friend when you need help securing a loan, particularly if you have a low or bad credit score. The lender only approves if the guarantor agrees to assume responsibility for the entire debt should you fail to repay. With joint applications, you have a co-borrower who shares the funds with you, and you’re both responsible for repayments from the get-go.
- Peer to peer loans. P2P loans are a form of marketplace lending where you shop around for a loan from private individuals (investors) as opposed to banks or credit unions.
- Car loans. With a secured or unsecured student car loan, you can stump up for a new set of wheels for extra convenience when out and about.
- Specialised loans. Some Australian lenders offer unique financial products designed specifically for medical students, including those studying dentistry. These usually come with lower costs once you prove your medical student status during the application process.
How do I choose the right student loan for my needs?
When it comes to prepping for a student finance application, consider the following notes before making your final selection:
- Interest rates and fees. As a student, you’re probably familiar with bargain hunting and shopping for the best deals. A low interest rate is your first ticket to paying less. So it pays to look at the advertised rate and the comparison rate, which combines all standard loan costs.
- Amount. Keeping a tight budget is all well and good, but make sure you’ll be able to borrow enough to at least stay on top of things. On the other hand, don’t rack up debt you don’t need. Fortunately, most lenders only approve you for a loan amount that matches your household income and, therefore, your ability to repay.
- Term. A flexible loan term helps you with manageable repayments that won’t stress your budget. Find out if the option you’re going for affords you enough repayment time. Generally, terms vary between one and five years.
- Repayment options and flexibility. Your repayment schedule options vary between weekly, fortnightly, and monthly. Which offer has the most suitable choice for you? Additionally, can you make early repayments, preferably without paying a penalty?
- Credit provider. Always check if the student loan company you’re dealing with is reputable and above board.
- Additional benefits. Some lenders offer freebies, discounts, and even financing for overseas or short courses. Others provide funding in instalments as well as online accounts for better debt and money management. These perks can greatly improve your student and borrowing experience.
Am I qualified to apply for a student loan?
Credit providers generally spell out the following eligibility criteria for their student financial products:
- Minimum age of 18 years, unless there’s a guarantor
- Australian or permanent residency
- Minimum annual or monthly income (this varies)
- A good credit rating
However, it’s best to scope out your preferred lender’s specific requirements to make sure they’ll take your application on board.
Are there any international student loans available in Australia?
If you’re on a learning visa, you might not be able to get your foot in the door of a student loan company. However, you can win approval from some private lenders if you have a valid working or business visa. While it is true that domestic students have more loan options, there are also avenues you can explore as an international student. For instance, you can find out what your university offers in terms of education loans or scholarships.
Student personal loans vs government loans
Aside from Centrelink student loans, Australian students can also benefit from some government loans and subsidies. For instance, there’s the Higher Education Loan Program or HELP for short, which covers the cost of tuition for students. Other programs like the Vet Student Loans also exist, but you’ll need to be eligible. Keep in mind that while government student loans generally have lenient repayment terms, you immediately have to start working on your repayments if you borrow a personal loan from a financial institution.
Should I apply for a student personal loan? – Pros and cons
Funding your studies will likely cost a pretty penny, and this is a universal challenge many students face. As mentioned earlier, a personal loan can break down doors for you, but should you go for it? Review these pros and cons before you take the last step to your application:
Pros
- It might be the only option if your savings or the Bank of Mum and Dad are not enough.
- You get to cement your future financial security with quality education you might not have otherwise afforded.
- They often have competitive rates and flexible repayment terms compared to credit cards and payday loans
- Even if your income or credit score is not up to the job, you can still apply as long as you find a suitable guarantor.
- The requirements are less strict, and you’ll likely come across discounts and waivers.
Cons
- If your qualifying credentials (income and credit rating) are subpar, you might have to pay a higher rate and borrow less.
- It’s easy to spiral into debt if you choose longer terms or borrow more than you can afford since both these choices incur more interest.
How to apply for a student loan online
- Compare student loans. Use our product table above as a comparison tool to quickly mark out the best option for your budget and needs.
- Use our student loan repayment calculator. Enter different amounts and terms until you single out a repayment that clicks with your current budget.
- Check requirements. This avoids wasting time, and also remember that a rejected application can negatively impact your credit history.
- Apply. Click the “Go to Site” button for your chosen lender so that you can apply on their website.
Popular personal loans searches
View all search queries
