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Can You Use a Personal Loan to Pay Off Student Loans?

Wondering what you can pay for with a personal loan? This article breaks down how that may relate to your student loans.

If you have student loans, you may be looking for any way to pay them off as quickly as possible. If you've wondered whether you can use a personal loan to pay off student loans, the answer is generally no. Even if you could, you'll likely end up paying more money than if you were to refinance your student loans instead.

Here's what you need to know about using a personal loan to pay off student loans and why it's a bad idea.

Can you use a personal loan to pay off student loans?

Personal loans are incredibly versatile, with lenders allowing you to use your funds for just about anything you want. But that list generally doesn't include paying off student loans. 

Of course, the lender isn't watching every move you make with your loan funds after you receive them. But if you struggle with making payments down the road or try to include the personal loan in bankruptcy, the lender may investigate how you used the money, and if you're in violation of the loan terms, you may be in trouble.

Even if a lender does allow you to use personal loan funds to pay off student loans, you likely won't benefit from the transaction.

That's because personal loans tend to charge higher interest rates than student loans. According to the Federal Reserve, the average interest rate on a two-year personal loan is 9.58%, but depending on your creditworthiness, you could face interest rates of more than 30%.

And that's just on a two-year loan. Longer loan terms will generally come with higher interest rates.

Personal loans also typically come with shorter repayment terms. That means that you'll need to make a higher monthly payment, which may or may not be affordable based on your current budget situation.

Finally, while student loan interest is deductible on your tax return up to a certain point, you won't get the same benefit on personal loan interest. The student loan interest deduction can save you hundreds of dollars every year.

In other words, if you're thinking about getting a loan to pay off student loans, a personal loan should be avoided.

What can I use personal loans for?

If you're in college, you can use personal loans to pay for living expenses that aren't covered by student loans. According to the Office of Federal Student Aid, that includes anything that doesn't fall under the following categories:

  • Tuition and fees
  • Room and board
  • Textbooks
  • Computers
  • Supplies and equipment that are necessary for study
  • Transportation to and from school
  • Child care expenses

Once you've graduated, you also can use a personal loan to consolidate credit card debt or cover other personal expenses that you incur while paying down your student loans.

But remember, personal loans can be expensive, and it's best to avoid taking on debt if you can by earning an income and budgeting your expenses.

Getting a loan to pay off student loans

If you're looking for an opportunity to lower your interest rate or monthly payment or get some flexibility with your student loan repayment plan, refinancing your student loans is a better choice.

Student loan refinancing is the process of replacing your current student loans with a new one through a private lender. There are many benefits to refinancing your student loans, including:

  • Lower interest rates: Depending on your financial situation and credit history, you may be able to qualify for a lower interest rate than what you're currently paying on your student loans. Depending on how low the rate is, you could save thousands of dollars. Refinancing also can reduce your monthly payment, making it more affordable.
  • Payment flexibility: Student loan refinancing companies typically offer repayment terms ranging from five to 20 years. So if you want to pay off your student loans early, you could opt for a shorter repayment period. This approach will increase your monthly payment but will save you money on interest and ultimately make you debt-free sooner. In contrast, you could extend your repayment term to lower your monthly payment to a more affordable level. That will increase the total interest you have to pay, but it can help reduce the strain on your budget.
  • Choice of features: Some private student loan companies offer features that you can't get with federal student loan servicers. If you're looking for better customer satisfaction or specific features that certain lenders offer, refinancing can make it easier to take advantage of them.

Of course, it's important to keep in mind that refinancing student loans isn't always possible. Eligibility requirements can be difficult to meet if you've just graduated from college and haven't had the chance to build your credit history or land a high enough salary at the start of your career.

If you have a loved one who can co-sign your loan application, that can speed up the process. But if not, you may need to wait until you've had the opportunity to establish your credit history and finances.

Also, refinancing federal student loans will cause you to lose access to certain benefits, such as student loan forgiveness programs and income-driven repayment plans. Make sure you won't need them before you pull the trigger on refinancing.

How Juno can help you score exclusive rates and discounts

If you're thinking about refinancing your student loans, consider joining Juno to gain an advantage. Juno actively negotiates with lenders to get them to compete for your business. This setup means that Juno members can access exclusive interest rates and discounts that aren't available to those who apply for refinancing on their own or through a different platform.

Joining Juno takes less than a minute, and there's no credit check to get started. You'll also pay nothing for the service we provide. 

Juno's Exclusive Student Loan Refinance Deals

earnest-logoBest for Most


Can’t be refinanced with a cosigner


Fixed starting at 4.99% APR, Variable starting at 5.89% APR including the .25% autopay discount and the .25% Juno discount.

Juno benefit:

Rate reduction of 0.25%


Soft Credit Check to get rates; Hard Credit Check to refinance

splash-financialAlternative Best for Most


May be able to refinance with a cosigner


Fixed starting at 4.96% APR, Variable starting at 4.99% APR. May include autopay discount.

Juno benefit:

Up to $1,000 cash back based on loan amount


Soft Credit Check to get rates; Hard Credit Check to refinance

laurel-roadBest for Medical Professionals


May be able to refinance with a cosigner


Fixed starting at 5.74% APR, Variable starting at 5.49% APR*

Juno benefit:

Rate reduction of 0.25%*


Soft Credit Check to get rates*; Hard Credit Check to refinance

Ultimately, regardless of the path you take to pay off your student loans, it's important to be proactive about researching your options and choosing the one that best suits your needs and long-term goals.

Ben Luthi

Written By

Ben Luthi

Ben Luthi is a personal finance and travel writer based in Salt Lake City, UT. He loves helping people better understand their finances. When he's not traveling, Ben enjoys spending time with his kids, hiking, and watching films. His work has been featured in U.S. News & World Report, The New York Times, MarketWatch, Fox Business, and many other publications.


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