Should I use a personal loan or a student loan for college tuition?

Why federal student loans win: Rates: Federal Direct Subsidized and Unsubsidized Loans (2024-25): 6.53% for undergrad, 8.08% for graduate unsubsidized. PLUS Loans: 9.08%. These are fixed for the life of the loan. Most personal loans for a 650-score borrower are 15%-25% APR - 2x to 3x higher. Income-driven repayment (IDR): federal loans offer plans that cap payments at 5%-10% of discretionary income, with forgiveness after 10-25 years. Personal loans have no such option. Public Service Loan Forgiveness (PSLF): federal loans qualify for forgiveness after 10 years of public sector employment. Personal loans do not. Deferment and forbearance: federal loans offer generous deferment for at least 6 months post-graduation and additional forbearance options. Personal loans have limited forbearance options.

Private student loans vs personal loans for tuition: Private student loans (Sallie Mae, Discover, College Ave) are typically better than personal loans for education because: rates are similar (5%-15% APR), but many offer deferment while in school. Terms extend to 10-20 years vs 7 years maximum for personal loans, reducing monthly payments. Some offer income-based repayment riders.

When personal loans might make sense: Borrowing above the federal loan limit ($27,000/year for dependent undergrads). Gap funding for a non-degree program (bootcamp, certification) that is not Title IV eligible. Room, board, and living expenses not covered by student aid - personal loans are flexible on use. In these cases, compare private student loan rates directly against personal loan rates, as private student loans often have comparable or better rates.