Student Loans

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Understanding Student Loans

Student loans are a type of personal loan borrowed from the government or a private lender to help eligible students pay for college. They are used to pay for education-related expenses, such as tuition, textbooks, and accommodation.

Student loans are different from grants and scholarships.  Loans are always paid back, whereas grants and scholarships are not. Student loans are also different from work-study programmes, in which students are paid to work on campus.

Compared to other personal loan types, student loans can provide various benefits. For specific student loans, for instance, some lenders may offer cheaper interest rates and waive some costs.

How do student loans work?

Loans to students work very similarly to other personal loans. They give customers access to a fixed amount of credit in one lump sum. They require monthly repayment, with other fees and interest accrued along the way.

Student loans sometimes have more lenient eligibility standards since they recognise that most students wouldn’t meet the typical criteria for personal loans. They are often more forgiving when it comes to a candidate’s income and credit history. This means you can get one even if you just work part-time and have never had a loan before. Some lenders also accept parental guarantors for student loans.

While student loans are frequently the same product as any other personal loan, they may differ in one important way: their eligibility criteria.

Student personal loans features & benefits

Flexible loan options

Most lenders provide flexible personal loans for students between $2,000 to $15,000. The loan is adjustable to fit your pay cycle with a repayment period of 2 to 7 years in fixed monthly instalments. Additionally, you can also choose between a fixed interest rate or a variable interest rate. 

With a fixed rate, your monthly repayments will remain the same for the length of the loan, so it would be easier to budget for the duration of your loan. Variable rates, on the other hand, can fluctuate over time as they are based on a benchmark interest rate that changes periodically.

One lump sum funding

You will be able to get the funds all at once, which can be used to pay for your tuition fee, other school fees, or living expenses.

No security needed

An unsecured personal loan offers more flexibility as you do not need to use a valuable asset (such as a car) as security to be approved for a loan. Unsecured loans tend to have a higher interest rate than secured financing but can be easier to obtain.

Quick approval

The application process for student loans is quick and straightforward as long as you meet your lender’s eligibility criteria. Lenders will ask for your proof of income and may also ask for your most recent bank statement to check if you can afford to repay the amount you want to borrow. If approved, the funds can be deposited into your account the same business day after approval. The time taken to receive the funds will depend on the lender and your bank provider.

How to apply for a student personal loan

The application for a student personal loan is simple. Everything is done online and just takes a few minutes to complete. All you need to do is fill out the application form and select your loan amount. We’ll take care of the rest.

In general, you must be able to demonstrate the following to qualify for a student loan:

  • You are at least 18 years of age.
  • You are a permanent resident or a citizen of Australia.
  • A regular income
  • An internet banking account
  • You earn enough money to cover your loan payments (typically at least $20,000 p.a.)

Note that the eligibility criteria for personal loans will differ from lender to lender. Some lenders will also allow for parental guarantors on loans for eligible students.


How does the repayment of a student loan work?

Repayment periods for personal loans can range from 2 to 7 years after the loan was given. However, the amount you borrowed would still be a factor. Lenders will take the loan repayment amount directly out of your bank account monthly. All you need to do is make sure you have enough money on the specified days.

You may also have the option to repay your loan early. But if your loan has a fixed interest rate, there may be an early repayment adjustment fee. Make sure to inquire about this option first before signing your loan agreement.

How do I choose the right student loan?

It might be tough to choose the correct student loan, so compare these factors with each lender when looking for private student loans to get the best student loan for you.

Interest rates 

The interest rate you pay, as well as whether it is fixed or variable, affects how quickly your debt grows and the total cost of borrowing. Lenders disclose interest rate ranges, but the actual rate you’re offered is determined by your credit score and other financial factors. Some lenders provide prequalification, which allows you to verify your interest rate and loan conditions without negatively impacting your score. It’s good to obtain a prequalification offer if one is available so you can calculate your loan costs and compare options.


Fees raise your overall borrowing cost, so request a copy of the charge schedule and determine whether any apply to you. Some private student loan lenders charge minimal costs or base your fees on your creditworthiness. Pay attention to the following fees:

  • Application fee: Some private lenders demand a nonrefundable application fee.
  • Origination fee: Origination costs are often determined as a percentage of your loan amount and deducted from the loan proceeds, implying that you will not get the entire loan amount. 
  • Late payment fee: If you skip a monthly payment or submit it late, the lender may charge you a late payment fee. These are often computed as a percentage of the amount owed, with a cap on the amount.

Eligibility requirements

Before applying for a private student loan, be sure you’re likely to qualify to avoid several hard checks on your credit. Each lender has its qualifying conditions, however, they will often check for:

  • Credit history: Your credit score and the information included in your credit reports might influence your eligibility for a private student loan and, if approved, the interest rate you get. If the lender requested a co-signer, they will make the repayments if you’re unable to. A good credit score reflects your overall financial health and will give the lender understanding of your repayment capabilities. A good credit score on Equifax is 622.
  • Income: Some lenders will require you to provide proof that you or your co-signer have the income to repay the loan. They may also calculate your debt-to-income ratio to check how much of your income goes to debt repayments monthly.

Repayment terms

Compare loan repayment conditions and, if feasible, select the shortest loan term accessible to you. While a shorter loan period would most certainly increase your monthly payments, you will pay less total interest than with longer-term loans.

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Student or Education Loans FAQs

Are student loans a good thing?

Yes. In general, loans to students are good debt since they offer financial support for students who would be unable to attend college. Most student loans also carry low fixed interest rates and offer flexible repayment options that can accommodate the borrower’s situation

What are the dangers of student loans?

You can be at risk of falling into financial debt if your repayments become too costly for you to afford. Additionally, deferring payments will mean paying more interest charges.

How much can I borrow?

Most lenders offer students flexible personal loans ranging from $2,000 to $15,000.

Is it hard to get student loans?

No, it can be easy to get student loans. You can apply online, or you can call one of your lender’s representatives and they can walk you through the process and make sure you get what you need. Personal loans are simple to apply for, and the process will only take you a few minutes. If approved, you may be able to get the loan amount the same day or the following working day, depending on the lender’s criteria and the requirements you presented.

How many years do you have to pay off a student loan?

A student personal loan is flexible and may be repaid within 2 to 7 years in fixed monthly instalments. You can also decide between a fixed interest rate and a variable interest rate.

How do I know if a loan is affordable?

The interest rate and/or annual percentage rate (APR)  is one of the most important aspects to consider when choosing the best loan. Lenders may provide both short- and long-term personal loans, while certain lenders may provide a longer loan period. However, a longer term is not always preferable. A long-term loan may result in cheaper monthly payments, but it may also result in higher interest payments over time.

I’m an international student - can I still get a loan?

Yes. If you’re an international student, you can only get a loan from your university or private banks. The eligibility criteria will depend on the financial institution you’re getting the loan from. 

The eligibility criteria for getting a university loan:

  • You need to have an Australian visa.
  • You should not be in the first and final semester.
  • You should be a full-time and regular student at the university. If you’re enrolled in a distance education course, you will not be eligible for a loan.
  • You need to have a solid academic record. You need to get at least 18 credits every semester or 36 credits per academic year.
  • You need to be able to finish your course on time and earn good grades.

The eligibility criteria for getting a student loan at a private bank:

  • You need to have an Australian visa.
  • You need to be an Australian resident.
  • You need to have an account with an Australian bank.
  • You need to have a regular source of income. 
  • You need to enroll at one of the universities approved by your bank.
  • You need to have a strong financial standing to be able to return the loan on time.
  • You need to provide security in the form of land or building, or a bank deposit made in the student’s or parent’s name.
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