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When shopping around for lending options for a major project or immediate financial need, a personal loan might be on your list. And besides the interest rates and terms, the loan amount is a large determining factor in which option you decide to go with.

So how much can you get for a personal loan? Whether you’re looking for a large personal loan or a small one, the lending criteria is the same. Let’s take a look at how much lenders typically offer, what factors play into the size of a personal loan that you can get, and when it makes sense to get a personal loan.

How Much Do Lenders Offer?

How much can you get for a personal loan? Amounts vary by lender, but typically start as low as $600 and go as high as $50,000. Some lenders, including SoFi, offer personal loans up to $100,000.

The amount you actually get approved for depends on a handful of criteria, which we’ll dig into below.

Recommended: Can I Increase My Personal Loan Amount?

What Determines How Big of a Personal Loan You Can Get?

The amount a lender offers and the amount you qualify for aren’t always one and the same. There’s a handful of financial and credit criteria that can impact the loan amount, rates, and terms. Let’s look at the main factors:

Credit Score

In general, the higher your credit score, the larger the loan amount, the more favorable the terms and interest rates. On the flip side, the lower your credit score, the smaller the loan amount, and the less favorable your terms and interest rates.

Lenders usually have credit score requirements. The minimum required credit score for a personal loan varies but can start at 580. To get the best terms and rates, you usually need a credit score of at least 640.

Recommended: Can a Personal Loan Hurt Your Credit?

Debt-to-Income Ratio

Your debt-to-income ratio (DTI) is your monthly debt payments divided by your gross monthly income. It’s expressed as a percentage. For example, let’s say your monthly income (before taxes, withdrawals, and other deductions are taken out) is $5,000, and your total debt obligations are $2,000. In that case, your DTI is 40%.

For the most part, lenders would like to see a DTI no higher than 35% to 40%. But if you have a high credit score, you might get approved with a slightly higher DTI.

Lender Amount Limits

The amount you can borrow may be limited by how much funding you can receive from your lender. Let’s say your credit is stellar, you have low DTI, steady employment, and a good income. But if the lender’s max personal loan amount is $50,000, then the most you can potentially borrow is $50,000.

Applying as An Individual or Jointly

If you’re applying for a personal loan with another applicant and their credit is strong, you might be eligible to borrow more money. However, not all lenders let you apply jointly, so you’ll want to check beforehand.

Income and Employment History

How much you can borrow also depends on your income and employment history. If you bring in a certain amount of money and have steady work for the last few years, that could boost the approval amount.

Some lenders may give more weight to your income and employment history. In turn, you might be able to get a higher loan amount with a lower credit score and a higher debt-to-income ratio.

Collateral

Not all personal loans require you to provide a valuable asset, such as your home or car, to back up the loan. But if you’re looking into a secured loan, you might be able to get a higher max amount on your personal loan than if you went the unsecured loan route.

Offering collateral and getting a secured loan means you could get a bump in your personal loan amount. Remember, not all lenders offer secured personal loans. If a lender does offer both secured and unsecured loans, you can compare quotes from the same lender for either option.

Loan Purpose

A lender might only allow you to use the loan for certain purposes. For instance, some lenders specialize in credit card debt consolidation loans. Lenders that offer greater flexibility might have limits on how much you can borrow depending on the loan purpose.

For example, the limit on using the loan proceeds for childcare expenses and large purchases might be different than if you’re planning to use the funds toward a major home improvement project.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi Personal Loans come with no-fee options, and no surprises.

Calculating How Much You Can Borrow

Determining how much you can borrow requires you to know your financial situation, how much you’d like to borrow, and what you can reasonably afford to pay off on a regular basis.

To start, jot down the repayment term and rate you anticipate receiving. If you get prequalified, that can give you a fair estimate on your loan amount.

Next, you’ll want to figure out the following numbers:

•   Income before taxes.

•   Additional income you get on a regular basis (i.e., rental property income, alimony, disability benefits).

•   If you’re filing jointly, you’ll also need to include the other applicant’s income.

•   Tally up your existing debt. This might include credit card debt, other personal loans, a car loan, or student loan debt.

That can help you figure out how much you can afford for your monthly payment.

How to calculate your borrowing power

If you’re mulling over the possibility of debt consolidation, you can use a handy personal loan calculator to gauge how much you’d save on interest or how much your monthly payment will be lowered by rolling over your existing debt to a new one.

Otherwise, you can punch in basic numbers, such as the loan amount, interest rate, and repayment term, to figure out what your monthly payment shakes out to.

Recommended: Pros and Cons of Personal Loans

Does a Personal Loan Make Sense?

Personal loans do have the word “personal” in them. So whether it makes sense for you to take out a personal loan depends on your unique situation and circumstances.

Here are some scenarios where getting a personal loan might be a good idea:

•   You need a large sum upfront. If you need a chunk of cash for a big-ticket purchase or to fund a home improvement project, a large personal loan can provide you with the money to cover a purchase.

•   You have a good credit score. The higher your score, the higher the loan amounts, and the better your rates and terms will most likely be.

•   You’re using the funds for something you really need. If you need the money to cover a financial shortfall, unexpected emergency, or much-needed home remodeling project, it could be a sound move to take out a personal loan.

•   You need the money quickly. The processing and funding times for a personal loan can be a lot faster than other funding choices, such as a home equity loan or HELOC.

•   You want to consolidate high-interest debt. If you qualify for a lower interest rate, lower monthly payments, and more flexible repayment terms, it could make financial sense to take out a debt consolidation loan.

Now, let’s walk through instances when a personal loan may not make sound financial sense:

•   You can’t keep up with monthly payments. If you’ve looked at your situation, do the math, and realize that you’ll have a hard time staying on top of your monthly payments, then a personal loan might not be the right choice for you at the time.

•   You have time to save for your major purchases and goals. If you aren’t in a financial pinch and don’t need the money right away, you might be better off saving instead.

•   You don’t need to take out a large amount of money. Unless you have good reason to take out a sizable amount of cash, then it probably doesn’t make financial sense to get a personal loan. Other options, such as a personal line of credit, might be a better move.

Alternatives to Personal Loans

If you’re on the fence about taking out a certain type of personal loan, know that other options exist. Here are other routes to take:

Credit card. If you’re already shouldering a lot of credit card debt and are paying a lot in interest fees, this might not be the best choice for you. But if you need to borrow a small amount — and can reasonably pay off your balance in a short amount of time — then a credit card provides easy access to funding.

Personal line of credit. Don’t need a lump sum upfront and anticipate needing to tap into funds for different purposes? Then a personal line of credit, which is similar to a credit card, might be a better fit.

Peer–to-peer loan. If you’re struggling to qualify for a personal loan with a traditional lender, you might have better odds of getting approved for a peer-to-peer (P2P) loan. Instead of being funded by a financial institution, P2P loans are funded by individuals who serve as investors and are loaning the money. The lending criteria for P2P loans tend to be less stringent than traditional loans.

Home equity loan or home equity line of credit (HELOC). If you’re a homeowner who has built equity in your home, you could qualify for a home equity loan or home equity line of credit (HELOC). Because you are offering your home as collateral, you typically can qualify for higher loan amounts. Plus, home equity loans or HELOCs tend to have less stringent lending criteria.

If possible, consider waiting to take out a personal loan until you’ve worked on building your credit, reduced your debt loan, are earning a higher income, or have a more stable employment history.


💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

The Takeaway

How much of a personal loan you can get depends on a handful of factors, such as what’s available from the lender, your credit score, debt-to-income ratio, and employment history. Plus, it’s important to get your head around what you can reasonably afford to pay each month.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

FAQ

What is considered a large personal loan?

Most lenders offer a maximum personal loan amount of $40,000 to $50,000, and some lenders, including SoFi, offer lending amounts of up to $100,000. But just because a lender offers that doesn’t mean you’ll get approved for it. You’ll also want to be mindful about not taking on more than you need.

How much is too much to ask for a personal loan?

There’s no specific number that constitutes “too much” for a personal loan. That said, an amount might be considered too high if you don’t have a good reason to take out that much money and if you aren’t able to afford the monthly payments.

Does the size of a personal loan affect a credit score?

As your personal loan payments are reported to the three major credit bureau agencies, the size of your personal loan can impact your credit. Your payment history is the largest contributing factor, but loan size can also influence your score.

Photo credit: iStock/Ridofranz

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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By now, you’ve probably already calculated how much of a personal loan you can get. And you likely have a solid understanding of the personal loan requirements to get approved. You may be wondering about the next step in the process: how to get a personal loan.

Applying for a loan can be relatively simple, as long as you understand the options available to you, meet the lender’s requirements, and have the necessary paperwork in order ahead of time. Here’s what you need to know.

1. Prequalify for a Personal Loan Through Multiple Lenders

The first step in applying for a personal loan is to get prequalified. You can get a personal loan from a few different sources, including a bank, credit union, or an online lender. Each has its pros and cons.

Personal Loan from a Traditional Bank

One drawback of getting any type of personal loan from a bank is that it can take longer to be approved compared to an online lender. However, banks have greater lending power, so you might be able to get a larger loan. Plus, many banks will not charge an origination fee.

Personal Loan from a Credit Union

Credit unions are likely to offer the lowest APRs and have low fees to boot — two advantages if you’re already a member of one. However, there are potential tradeoffs. Smaller credit unions tend to have limited digital offerings compared to national banks, and it may take borrowers longer to get approved for a personal loan.

Personal Loan from an Online Lender

With an online lender, your personal loan application is approved and managed entirely online — there is no opportunity to sit down with a loan officer. Depending on whether you’d prefer to apply for a loan online vs. in person, this could be either an advantage or a disadvantage.

If you visit an online loan aggregator site, you can apply for preapproval and receive multiple loan options. From there, you can easily compare the rates and terms, but be sure to confirm the fees and charges.

Does Preapproval Hurt My Credit Score?

In order to be preapproved for a personal loan, a lender will check your credit history. Typically, the lender will only perform a “soft” credit inquiry, which will not affect your credit score. A preapproval determines if you’re eligible for a loan before you formally apply.

Applying for a loan triggers a “hard” credit inquiry, which could pull down your credit score because you have applied for additional credit.

You can check with a lender to find out what type of check they will do to preapprove you for a personal loan.

Recommended: Personal Loan Glossary: Loan Terms to Know Before Applying

What Do I Need to Prequalify for a Personal Loan?

To qualify for a personal loan, you will need to first determine how much you want to borrow and how much you can afford to pay each month to pay off the loan. How much you can pay each month will determine the term (length) of the loan.

How much you want to borrow will depend on what you want to use the money for. While there are few limitations on how you spend the personal loan funds, it’s wise to borrow as little as possible because you will be paying interest on what you owe.

When you fill out the application, the lender will ask you for personal information. Typically, this includes:

•   How much you want to borrow and for what purpose

•   Proof of your net income and assets

•   Your contact information and social security number

2. Compare Your Options

Getting preapproved from various lenders is critical if you want to try to get the best rates and terms. The preapproval will show you the amount of the loan you qualify for, the APR, term, and any origination fees. By comparing multiple lenders, you can find the loan that will cost you the least. Be sure to check all the fees that may apply.

If you’re trying to get better loan terms, you may want to explore adding a cosigner who has a good credit score. Doing so may help the lender view you as less of a risk, and they may be inclined to offer you a lower interest rate. However, keep in mind that if you make late payments or default on the loan, the cosigner’s credit will suffer, as will your own.

3. Gather Required Documents

Before you sit down to fill out an online application or visit a bank or credit union, gather all the documents you will need. These will likely include:

•   ID, such as your driver’s license or passport

•   proof of address, such as a recent utility bill

•   proof of employment and earnings (paystub)

•   your social security number

•   your education history

4. Apply for a Personal Loan

Once you have all your documents on hand, you are ready to fill out either an online or in-person loan application. If you are applying online, you will be required to scan the documents and upload them with the application.

Recommended: Exploring the Pros and Cons of Personal Loans

How Long Does It Take to Get a Personal Loan?

The amount of time it takes for your loan application to be approved and processed depends on the lender. Online lenders tend to be the fastest. Submitting the application online only takes a few minutes, provided you have all your documents on hand, and approval can take one or two business days. You can expect to see the funds deposited into your bank account within one to three business days of approval.

Banks and credit unions, on the other hand, tend to be slower. You may need to apply for a loan in person and, depending on your relationship with the institution and your financial history, getting approved could take one to three business days. You might need to wait three business days or more to receive the funds.

Does Everyone Get Approved for a Personal Loan?

Not everyone is approved for a personal loan. Lenders consider your credit score, payment history, income, and debt-to-income ratio when deciding whether to approve someone for a personal loan.

Credit Score

The higher your credit score, the lower your interest rate will be. This is because if your credit history is good, the lender considers you low risk. A high interest rate is what protects a lender from the risk of lending to someone who might default on the loan. A score of 640 or more is generally considered enough for a borrower to potentially qualify for a loan from some lenders. If your credit score is low, consider bringing on a willing cosigner with a better credit score.

Payment History

How you’ve managed loan payments in the past is something that a lender will consider. If you have paid off loans on time and made timely credit card payments, the lender may not consider you high risk and could be more likely to approve your application. If you have a history of late payments, however, you might find it more difficult to get approved for a loan.

Income

Lenders want to make sure you can pay back what you borrow. They’ll look at your income to make sure it is steady and that you can afford to make the payments each month. Some lenders might request your W-2 tax forms, bank statements, or recent pay stubs. Others could require verification from your employer of stated income and to confirm current employment.

Debt-to-Income Ratio

Your debt-to income (DTI) ratio shows how much you are already paying toward debt each month and is an indicator of how well your current income can cover an additional monthly loan payment. If you have no spare cash left over after paying existing debts, such as credit cards and mortgage, you likely cannot make the payments on a personal loan. A DTI ratio of 35% or lower is considered favorable for a personal loan.

What Do You Do If You Are Denied a Personal Loan?

There could be many reasons your loan was declined. Your credit score might not be high enough, your DTI ratio could be too high, or perhaps you failed to provide the right paperwork. Find out why your loan was denied so that you can fix the problem.

If your loan application is declined,you can receive a free copy of your credit report. Check that the information on the report is accurate. See if you can boost your credit score by opening new accounts that report to the credit bureaus (if you’re trying to establish your credit), maintaining low balances, and making on-time payments.

Note that applying too often for new loans or accounts triggers hard credit checks, which can lower your credit score. Another option is to find a cosigner. A cosigner with a good credit rating might help you to secure a personal loan with a favorable rate.

If you have a high DTI ratio, you might have to pay down some of your existing debt in order to receive a loan with good rates. Alternatively, you might consider taking out a smaller personal loan and supplementing the rest from other sources.

💡 Quick Tip: Generally, the larger the personal loan, the bigger the risk for the lender — and the higher the interest rate. So one way to lower your interest rate is to try downsizing your loan amount.

The Takeaway

When it comes to applying for a personal loan, you have a few different sources to explore: banks, credit unions, and online lenders. Each has advantages and disadvantages.

To find the best loan rates and terms available to you, consider getting preapproved from multiple lenders and seeing which loan will cost you the least. You’ll also want to gather essential documents before you fill out the application. This may include your ID, proof of address, proof of employment and earnings, social security number, and education history. If your loan application is declined, find out what the issue was so you can fix it. The solution may involve boosting your credit, lowering your debt-to-income ratio, or taking out a smaller personal loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

FAQ

Does everyone get approved for a personal loan?

Individuals may be denied a loan from a lender because they do not meet the requirements. A lender will consider your credit score, payment history, income, and debt-to-income ratio when deciding whether to qualify you for a loan. You also are required to submit documentation, such as proof of identity, residency, income, and your social security number.

What do you do if you are denied a personal loan?

If you are denied a personal loan, find out the reason why. Lenders are required to issue an adverse action notice informing you why you were denied. The most common reasons are a low credit score, a poor payment history, a high debt-to-income ratio, insufficient income, or failure to provide the right documents. If your credit score is too low, check your credit report for inaccuracies. Then, you might have to take steps to improve your score.

If your debt-to-income ratio is too high, try to pay down some of your debt. Other options are to apply for a smaller loan, find a cosigner with a good credit score, request a cash advance from an employer, or ask family or friends.

How long does it take for a personal loan to be processed?

A bank or credit union might take up to a week to deliver funds to your account. However, online lenders deliver funds within one to five days once you are approved.

Photo credit: iStock/PeopleImages

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Although many people haven’t heard of these policies, borrowers can get insurance coverage for a personal loan. In the event you get injured, sick, lose your job, or die, the insurer will make loan payments for you.

Personal loan protection insurance is available to borrowers for specific situations that prevent them from repaying their loan. Although costs vary and raise your monthly expenses, loan insurance can help you out in a tight spot, protect your credit, and prevent the financial burden from falling on your family. Read on to learn if loan insurance may be right for you.

What Is Loan Insurance?

Loan protection insurance is coverage borrowers can purchase for various loans — such as personal loans — to guard against situations where the borrower can’t repay the loan. Typically, personal loan insurance covers the borrower when they suffer a disability, injury, job loss, or death. The personal loan protection policy pays a prearranged amount to satisfy the borrower’s balance.

Is Personal Loan Insurance Required?

Personal loan insurance is not mandatory when you obtain a personal loan, and a lender can’t refuse to give you a personal loan because you don’t insure it. However, if you get a secured loan, you may have to insure the collateral you put up. Borrowers with unsecured loans won’t have these concerns, although they will likely have a higher interest rate.

If a lender ever tells you they won’t provide you a loan unless you purchase loan insurance from them, know that you have options. You can report the lender to your state’s attorney general, insurance commissioner, or the Federal Trade Commission.

How Much Is Insurance on a Loan?

You can pay for loan insurance either through a one-time payment or monthly premiums. Your premium will vary based on several factors. First and foremost is the loan balance, with bigger loans incurring higher insurance costs. Paying your premium with an upfront lump sum can decrease the cost.

Your coverage will also determine personal loan insurance costs. For example, you might purchase a $15,000 policy for a $20,000 loan because you have $5,000 in savings. This protection would cost less than a $20,000 policy.

Your location and lender will also influence how much your personal loan insurance costs. Therefore, it’s recommended to shop around for personal loan lenders, just as you would when looking for a new bank or investment firm.

What Are the Benefits of Personal Loan Insurance?

Personal loan insurance helps when you can’t repay your loan. Here are the specific ways a personal loan protection policy benefits you:

Prevent Delinquency or Default

If you suffer a severe injury that prevents you from working, any lost income could result in missed payments. If you have personal loan insurance, it will repay the loan, and you won’t need to worry about delinquent (late) payments or default (failure to repay the loan).

Protect Your Credit Score

Late payments and defaulted loans are reported to the credit bureaus, and that can negatively impact your credit report, causing your credit score to drop. A low credit score can hurt your chances of qualifying for competitive interest rates. You don’t need to worry about late payments and default if you have personal loan insurance, so you can feel confident your credit score won’t be damaged if you’re not able to pay the loan.

Protect Your Dependents and Coborrowers

Similar to life insurance policies, personal loan insurance can help your beneficiaries so your family won’t have to pay off the loan if you cannot. You can purchase a plan that covers coborrowers as well, protecting spouses, loved ones, and business associates from the financial burden.

Recommended: Types of Personal Loans

Types of Loan Insurance

Loan insurance goes beyond personal loans. You can purchase coverage for the following loan types:

Business Loans

Business loans can help small business owners get their companies off the ground or sustain operations. These loans can fund equipment purchases, scaling efforts, or fund payroll. As a result, they are crucial for small businesses in getting established or enduring a market downturn.

Business loan insurance will pay out if the owner or a crucial employee can no longer work. This policy names the lender as the beneficiary and repays the loan on the borrower’s behalf. Business loan insurance can keep a company afloat if it is struggling due to slowed operations and a hefty financial obligation.

Personal Loans

A personal loan is a flexible financial tool that a borrower can use for many purposes. For example, common personal loan uses include repaying high-interest debt or remodel your kitchen.

Personal loan insurance protects the borrower in case they can’t repay the loan due to a serious life event. You may want to consider purchasing insurance for a high-balance personal loan if your dependents and beneficiaries can’t afford to pay it without you.

Recommended: What Is a Personal Loan?

Student Loans

Student loans cover the cost of higher education. Borrowers can take out student loans from either the federal government or private lenders (or both), but these loans have different terms and conditions, and it’s important borrowers know the difference.

Federal student loans are canceled if the borrower dies. Similarly, Direct PLUS loans are canceled if the parent or student dies. As a result, insurance is usually unnecessary for federal student loans.

Private lenders don’t typically discharge student loans when the borrower dies. Instead, they may pursue family members, cosigners, or anyone mentioned in the contract for repayment. Therefore, student loan insurance can be a good investment if you’re concerned about resolving unpaid balances for borrowers who die or become disabled.

Home Loan

A mortgage loan, also called a home loan, is likely your highest debt balance, and the idea of not being able to repay it because of injury, illness, or death is scary. Mortgage protection insurance is for a specific balance your beneficiaries will receive if something happens to you.

For example, if you have $150,000 left on your mortgage, your policy will be for that same amount. If you pass away with $100,000 left, your coverage will pay the balance and transfer the leftover $50,000 to your family.

When applying for mortgage protection insurance, there are fewer health-related questions and standards than for life insurance, so it’s easier to get approved. However, wider accessibility comes with a higher premium cost.

Mortgage protection insurance policies come in all shapes and sizes. You might have coverage solely in the event of your death, or you can limit the payout to your mortgage balance to reduce costs. These policies vary depending on the lender and product type. It’s important to thoroughly understand the policy before committing so you understand exactly what you’re paying for.

Reasons for Getting Loan Protection

Loan protection insurance allows you to safeguard your finances when unexpected crises occur. For example, it ensures that loan repayment won’t be a burden if you’re struggling with illness or unemployment. Similarly, your family won’t have to repay your debts if you die. But it’s important to understand the coverage to determine if it suits your needs.

While loan protection is usually optional, its primary advantage is that it offers borrowers some peace of mind. It allows you to focus on your recovery or job search instead of worrying about meeting loan obligations and maintaining financial stability.

There are other kinds of insurance that are not directly tied to your financial products but can still help pay off debts if you get injured, have a long-term illness, or die.

Disability Insurance

You can also include disability as a condition for your loan insurance. While some policies only cover the borrower’s death, you can add disability to expand your coverage. Doing so means you’ll receive financial relief if you can no longer work due to an illness or injury.

Life Insurance

Your life insurance policy offers a payout if you die. However, it can specifically insure your personal loans and lines of credit if you have high balances. The advantage of the limited coverage is you don’t have to pass a medical examination as you would with a traditional life insurance policy. The drawback is the policy will be more expensive.

Pros and Cons of Loan Protection

Here is a comparison of the pros and cons of loan protection insurance:

The Takeaway

Loan insurance for a personal loan covers scenarios where you become disabled, unemployed, or deceased. This coverage allows you to maintain strong credit instead of missing payments. In addition, it protects your loved ones from unexpected debt. As a result, purchasing insurance when taking out a personal loan can grant peace of mind and help you focus on what matters most.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

FAQ

What is loan insurance?

Loan insurance is a policy from a lender providing a payout to cover your loan if you can’t repay it. You can purchase coverage for situations where you become disabled, lose your income, or die.

How much is insurance on a loan?

The cost of a loan insurance premium depends on multiple factors, such as the loan size, the lender, your location, and if you pay the premium in one shot. In addition, your insurance may have an interest rate, increasing its cost.

What is the benefit of personal loan insurance?

The advantage of personal loan insurance is that your loan will be repaid even if you lose your income or die. As a result, you don’t have to worry about a situation where your loved ones must dig their way out from under your debt. In addition, you’ll preserve your credit score because you won’t fall behind or default on the loan.

Photo credit: iStock/Pekic

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Cosmetology school teaches learners about the application of ingredients and chemicals of beauty products as well as how to care for clients’ hair, nails, skin, and more. Cosmetologists can study a single beauty area or specialize in a range of areas. In general, cosmetology school takes less than two years to complete, but it depends on whether you choose to attend school full- or part-time, your state requirements, and the program and school you choose to attend.

Paying for cosmetology school may involve obtaining a mix of grants, scholarships, work-study, and cosmetology loans. You may also choose to pay for school with money you’ve saved.

Read on for more information on how to pay for cosmetology school. We’ll focus on aid that must be repaid (student loans) and will also touch on other types of aid that do not need to be repaid — grants, scholarships, and work-study.

What to Consider When Choosing a School for Cosmetology

It’s a good idea to visit community colleges or cosmetology school campuses prior to choosing the right cosmetology school for you. In general, it’s a good idea to interview an admissions representative or other professional about graduation rates, loan default rate, job placement rate, and school costs. The answer to these questions can give you a good indication of the quality of the school and whether the school might be a good fit for you.

You may also want to consider whether or not you’d like to attend an accredited institution, since many good cosmetology schools choose not to become accredited. An accredited institution is one that meets specific academic and institutional requirements by an institution that offers accreditation. An accrediting body will typically take a look at facilities and staff as well as the curriculum of the school and admission requirements.

Graduation Rate

The graduation rate can tell you a lot about the satisfaction of current and past students at a particular cosmetology school.

The most recent data shows that, about 34% of full-time undergraduate students who began a certificate or associate’s degree at two-year institutions received their certificate or degree within 150% of the normal time required.

On the other hand, 14% of that same cohort had transferred to another institution within 150% of normal completion time. A total of 10% stayed enrolled in that same institution. The rest of the students in the cohort were no longer enrolled in the original institution nor were they recorded as a transfer at a different institution — a total of 42% of students.

Look for a school that offers a high retention rate, which measures the percentage of first-time students who return to the institution to continue their studies the following fall. One way to measure retention and graduation rates is to use College Navigator “>College Navigator, which offers this information about nearly 7,000 colleges and universities in the U.S.

Loan Default Rate

Consider asking about the student loan default rate for a particular institution. The loan default rate indicates whether students are successful in paying off their student loans. Specifically, the U.S. Department of Education publishes the cohort default rate (CDR) which shows how well prior students have done at repaying their student loans. You can check the Department’s cohort default rate database for specific institutions.

Why should you worry about loan default rate? It illustrates the relationship between the quality of the degree and the ability of graduates to obtain jobs that can help them pay off their loans. While a low default rate doesn’t automatically put a particular cosmetology school into the “good school” category, it’s a great metric to have at your disposal.

Job Placement Rate

Job placement rate might be one of the most important questions you can ask a particular college or university. The job placement rate is the percentage in which graduates of the program obtain job placement. Most schools survey students to obtain this data and will showcase it on their websites.

However, there’s no universal method that schools use to arrive at their numbers. That’s why it’s also a good idea to ask deeper questions when you tour cosmetology schools. Dig into whether students who graduate are employed by salons or other cosmetology-related businesses. Ask about how often they open up their own salons. Ask for admission professionals to give you examples of successful alumni and if possible, lists of where the most current graduating alumni currently work.

Also ask about exam rates, because states require students to take a licensing exam in order to be able to practice. How many students successfully pass and how many have passed in recent years?

School Costs

A cosmetology school program may cost between $5,000 to $20,000. Find out how much each school costs and learn the cost breakdown. You should be able to find this information on the school’s website, but it’s a good idea to make an appointment with the financial aid office at the institutions you’re considering to get an exact estimate of all costs as they pertain to your situation.

Furthermore, don’t forget to ask questions about how much tuition will increase over the time you’ll be at the cosmetology school and whether financial aid will match the increasing tuition.

Cosmetology Career Options

As mentioned before, cosmetology careers can encompass a wide range of career options. It’s important to study the types of programs a particular cosmetology school offers in order to make sure it matches up with your career goals. Many cosmetology programs offer full programs in hair styling, skin care, nail care, and makeup. However, many cosmetology programs also offer training in esthetics, nail technology, electrolysis, and teaching as well:

•  Esthetics: Students in this area learn to apply makeup, wax, and perform facials. They also learn how to give clients massages and perform reflexology.

•  Nail technology: Going a step beyond nail care, nail technology includes studying nail art, design, and how to implement tips, wraps, and gels.

•  Electrolysis: Learners who study electrolysis learn the art of permanent facial and body hair removal methods.

•  Teacher training: Students who want to prepare future cosmetologists may choose to enter into a teacher training program.

Cosmetology School Financing Options

The amount of financial aid you receive could be affected by whether a school chooses to become accredited or not. Schools often become accredited in order to offer Title IV government funding to cosmetology students through the U.S. Department of Education. If you attend a schools that is not accredited, you won’t be eligible for federal student aid like federal student loans.

The next sections will review information about scholarships and grants, payment plans, trade school loans, work-study programs, and federal and private student loans.

1. Scholarships and Grants

Scholarships and grants are two methods you can use to pay for college. Scholarships, which can be considered free money and don’t have to be repaid (unless there are caveats in the scholarship requirements — for example, you may be required to finish the program). They can come from a wide variety of agencies, institutions, and organizations. Know the scholarship requirements in depth before you apply. It’s also a good idea to look into a wide variety of scholarship opportunities. Opportunities can come from your cosmetology school or your community.

Grants can be awarded to students from the federal government, state government, or your cosmetology school. Most of the time, you won’t have to pay the money back. However, if you don’t finish your program or fail to fulfill some other requirement, you may have to repay all or a portion of your grant money. The U.S. Department of Education offers several federal grants, including Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), and Iraq and Afghanistan Service Grants.

The American Association of Cosmetology Schools (AACS) partners with various sponsors in the beauty industry to offer scholarships and grants to help students pay for tuition at their chosen institutions.

2. Cosmetology School Payment Plans

Cosmetology schools may allow you to make incremental payments. This means that instead of paying the full tuition bill at the beginning of a new semester, you make small, likely interest-free payments as you complete each course. Students who want to pay for cosmetology school without loans may prefer this method of chopping up payments into smaller bits.

The financial aid offices at the schools on your list will have more information about how payment plans work.

3. Trade School Loans

Learners who attend trade schools can get both private and federal student loans. Federal student loans come from the federal government, while private student loans come from a bank, credit union, or other financial institution. Both types of loans must be repaid with interest, which will vary depending on the type of loan you receive.

Some private lenders offer specific loans for those attending trade schools. It’s important to look into the details before you apply for a trade school loan, such as interest rates, repayment plans, and more.

4. Work-Study Programs

The Federal Work-Study Program provides part-time jobs for students to help pay for expenses related to education. Work-study often gives students enough of a stipend to pay for small expenses such as books. As long as you are enrolled at least part-time, you may apply for a job as long as your school participates in the Federal Work-Study Program. Check with your school’s financial aid office to find out if your school participates.

Because work-study is part of a federally funded program, you must file the Free Application for Federal Student Aid (FAFSA®) in order to qualify.

5. Federal Student Loans for Cosmetology School

The federal student loan program can offer loans for cosmetology school that come from the U.S. Department of Education through the William D. Ford Federal Direct Loan (Direct Loan) Program. You may be able to tap into Direct Loans, including the Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans:

•  Direct Subsidized loans: Cosmetology school students who have financial need may be awarded the Direct Subsidized Loan to help pay for career school. The federal government will pay the interest while you’re in school.

•  Direct Unsubsidized loans: After filing the FAFSA, cosmetology students may want to take advantage of Direct Unsubsidized loans. This federal student loan is not based on financial need and the government does not take care of the interest while you’re in school.

•  Direct PLUS loans: Parents of undergraduate students can help pay for cosmetology students’ education with a Direct PLUS loan. Parents will have to undergo a credit check. An adverse credit history may require an additional credit check.

The interest rates of federal student loans are typically lower than that of private student loans and they offer income-driven repayment plans and other perks such as public service loan forgiveness. Keep in mind that, as mentioned, one of the federal student loan requirements is attending an accredited institution.

6. Private Student Loans for Cosmetology School

You can also obtain private student loans for cosmetology school. Private student loans for cosmetology school are different from federal student loans because they come from different organizations. However, they also diverge further from there. Private student loans may require you to make payments while you are still in school. They may have variable or fixed interest rates. Federal interest rates, on the other hand, are always fixed.

Private cosmetology school loans are not subsidized, which means that your lender doesn’t pay the interest on your loans while you’re in school. You’re usually completely responsible for paying the interest on your loans.

In addition, you must also have to have a positive credit history or a cosigner to get a private loan. You cannot consolidate your loans (turn them into one loan) like you can with a federal Direct Consolidation Loan or take advantage of loan forgiveness programs with a private student loan. Because private student loans lack the benefits offered with federal student loans, they are often considered a last-resort option.

Are student loans worth it? It’s important to remember that private student loans can fill in the gaps between scholarships, grants, your own cash, and cosmetology loans for school. Check on the student loan requirements among private student loans as well as when to apply for student loans.

Explore Private Student Loan Options With SoFi

If you decide to take advantage of your federal student loan options but still need more loans to cover your tuition bill, private student loans with SoFi may help. SoFi private student loans may be an option for certain eligible certificate programs.

SoFi offers competitive rates for qualifying borrowers as well as flexible repayment options. You also won’t pay any extra fees to get a private loan with SoFi.

FAQ

Are there student loans for cosmetology school?

Yes, you can take advantage of both federal student loans and private student loans for cosmetology school. You may also want to consider tapping into trade school loans as well. It’s worth meeting with the financial aid office at your cosmetology school in order to make the right decision about the type of loans for your particular situation.

How do you get money for cosmetology school?

In order to get money for cosmetology school, you’ll want to file the Free Application for Federal Student Aid (FAFSA). The FAFSA determines your eligibility for federal and institutional financial aid, including institutional scholarships, federal student loans, and grants. If you want to apply for outside scholarships, you may have to seek out and apply for independent scholarships.

How do I go to cosmetology school for free?

You may be able to get free training while still in high school. Many high schools have agreements with technical or vocational schools or community colleges that allow you to attend at no cost. Some community colleges also offer free tuition to certain students as long as they meet certain requirements.

Photo credit: iStock/Natalia Rusanova
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SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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Making student loan payments with a credit card can be tempting. After all, if your credit card offers you rewards like points or miles, by putting your student loan payments on your card, you could be cashing in on points and scoring a free flight to Vegas, right?

On the flip side, you might be looking for a way to make your monthly student loan payment during a month when your checking account isn’t quite as full as you’d like.

So is it even possible to pay down your student loans with a credit card? The short answer is that it’s not possible to do so on federal student loans, though there may be ways to do so on some private student loans.

Can I Make a Student Loan Payment With My Credit Card?

Federal student loan servicers, as a rule, do not allow credit card payments directly. In order to pay student loans with a credit card, payments have to go through a third-party platform for a fee – which would usually negate any points you might have earned from using your card to pay off your loans. And if you’re keeping a balance rather than paying off your credit card bill immediately, you’ll have to contend with high credit card interest rates.

You may be able to pay off a private student loan with a credit card. To find out if student loan payment with your credit card is an option, consider calling your student loan servicer to find out. Some allow credit card payments in certain situations, such as if it’s the last day before your payment becomes overdue.


💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Is Using a Credit Card to Pay on a Student Loan a Good Idea?

Even if your student loan servicer accepts credit card payments, the practice could have downsides.

As previously mentioned, there may be additional fees to use a credit card to pay student loans. Paying additional fees could offset the benefit of earning any additional points or miles on your credit card.

Another factor is that credit card interest rates are generally higher than your student loans. If you’re unable to make monthly payments in full on your credit card, you might end up paying significantly more interest by using your credit card instead of a modest interest often associated with student loans. Simply put, making a student loan payment on a credit card, especially a high yield one, can cost you much more.

So while racking up those credit card points can seem enticing, they might not be such a great deal if you’re paying more on your student loans in the long run.

How Paying Student Loans With a Credit Card Can Affect Your Credit

You might want to also consider your credit score. Your credit usage makes up 30% of your FICO® score. Typically, you don’t want to use more than a third of the credit available to you. If you put a large student loan payment on your credit card, you might use a bigger chunk of your available credit, which could potentially bring down your credit score.

If you’re unable to keep up with your student loan or credit card payments, you could end up with both student loan and credit card debt.

Both the mix of credit and length of credit history are two factors that inform your credit score. Paying off your student loans may result in a temporary dip in your credit score because you have closed the loan.

Is There a Better Way to Manage Student Loan Debt?

If you feel like you’re going to fall behind on student loan payments, using a credit card isn’t your only option.

Income-Driven Repayment Plans

If you’re experiencing long-term financial difficulty, federal student loan borrowers may consider switching to an income-driven repayment plan (IDR). These plans are based on your discretionary income, are intended to make payments more affordable, and have terms that allow for loan forgiveness after a set amount of years. Here are the four IDR with their respective payment terms:

•   Pay As You Earn (PAYE) Plan: Borrowers typically pay 10 % of their discretionary income but not more than the 10-year Standard Repayment Plan. Remaining balances are forgiven after 20 years of payment with this plan.

•   Saving on a Valuable Education (SAVE) Plan: Borrowers typically pay 10 % of their discretionary income over the course of 20 years for loans for undergraduate study or 25 years for graduate or professional school loans. However, the repayment period can be as little as 10 years for undergraduate borrowers with balances under $12,000. And the minimum payment will fall to 5% of discretionary income starting in July 2024.

•   Income-Based Repayment (IBR) Plan: Student loan holders typically pay 10 % or 15% of their discretionary income but not more than the 10-year Standard Repayment Plan. After 20 or 25 years, depending on when the loan was first received, any remaining balance will be forgiven.

•   Income-Contingent Repayment (ICR) Plan: As a new borrower, student loan holders typically pay the lesser of these two: 20% of their discretionary income or a fixed payment over the course of 12 years. Any remaining balance will be forgiven after 25 years with this plan.

Consolidating Student Loans

A Direct Consolidation Loan could lower your monthly payment by giving you up to 30 years to repay your federal student loans.

If you’re not able to make your monthly payments, you could ask your loan servicer about forbearance or deferment, both of which pause payments until your financial situation improves. Student loan borrowers with both federal and private loans can consolidate their loans via private student loan refinancing. It’s important to note that consolidating the federal loans will release the borrower from federal loan forgiveness programs.

Refinancing Student Loans

You could also consider refinancing your student loans with a private lender. Refinancing combines existing student loans into a new loan, one ideally with a lower interest rate and a more favorable loan term, which may mean lower, more affordable monthly payments. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.) To determine your interest rate, private lenders will generally conduct a credit check, evaluate your credit score, and income among other factors.

Recommended: 7 Tips to Lower Your Student Loan Payment

The Takeaway

Can you pay student loans with a credit card? In short, it’s possible, but may require the use of a third-party app or paying additional fees to the lender. These fees can outweigh the benefits of earned credit card points or miles. If you’re using a credit card because you’re struggling to make monthly payments on your student loan, you’re probably better off refinancing or using an income-driven repayment plan.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

Can I pay student loans with a debit card?

Generally, paying student loans with a debit card is not permitted. It may be possible, but there may be fees associated. For the most part, student loan servicers prefer payments made electronically from your bank account. Most lenders will allow borrowers to enroll in automatic payments, where the loan payment is automatically debited from the checking account each month.

Can you pay off student loans all at once?

It is possible to make a lump sum payment to pay off all of your loans at once. Your lender should be able to provide a payoff quote if you are interested in this option.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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