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Personal loan for international students: What it is and why it’s usually not the best choice for postgraduate education

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When you’re an international postgraduate in the U.S., funding your degree often means turning to private lending. But there’s a critical distinction many students miss: the difference between personal loans and private education loans. Confusing these two can lead to unnecessary stress and higher repayment costs down the line.

This article unpacks how personal loans work, why they’re usually a last resort for postgraduate funding and why education loans – especially those designed for international students – are usually a much smarter fit.

What is a personal loan – and how is it different from an education loan?

A personal loan is a general-purpose loan that can be used for anything: medical bills, car repairs, moving expenses. Lenders offer them to individuals based on credit scores and income, not for specific academic needs.

A personal education loan or private student loan, on the other hand, is specifically designed to pay for educational expenses like tuition, housing and program-related fees. Lenders consider factors like your academic program, your university and even your future earning potential – especially with lenders that focus on international student borrowers.

Key differences include:

  • Repayment terms: Education loans often have longer repayment periods and eliminate prepayment penalties after graduation. Personal loans rarely offer these, often come with higher rates and expect faster repayment.
  • Interest rates: Education loans typically have lower rates, reflecting their intended purpose and lower default risk. Personal loans often have higher rates, especially for international borrowers without a U.S. credit history.
  • Eligibility: Personal loans almost always require a strong U.S. credit profile or a U.S.-based cosigner – barriers that international students often can’t meet. Education loans from lenders that specialize in international students often do not have these requirements.

Why education loans are usually the better choice for international students

If you’re an international postgraduate looking to fund your degree in the U.S., personal loans may seem like a shortcut – especially if you’re facing visa fees or urgent housing costs. But here’s why private loans for international students (education loans) are almost always a better fit:

  • They’re designed for your situation: International students often don’t have a U.S. credit history, collateral or a cosigner. Private international student loans are built for that reality, focusing on your field of study and future job potential.
  • They match your academic timeline: Education loans let you defer payments until after you graduate or finish optional practical training (OPT), so you can focus on your studies – not monthly bills.
  • They’re more affordable: Lower interest rates and transparent terms keep your total borrowing costs in check – critical when you’re living abroad on a tight budget.
  • They support your full cost of attendance: Unlike personal loans that might only cover short-term gaps, education loans are meant to be a more comprehensive source of financial support for international students in the U.S.
Insert Image alt text hereMulticultural group of international postgraduates in a university lounge, each focused on laptops while comparing loan types – personal vs. education loans.

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When personal loans might still make sense

Personal loans aren’t inherently bad – they’re just rarely the right tool for funding a degree. But there are situations where they might fill a gap when in a crunch without other options:

  • Unexpected travel for family emergencies: If your home country doesn’t offer support, a personal loan can help cover a last-minute flight.
  • Medical emergencies: Insurance deductibles or treatment gaps can be significant and a small personal loan can help.
  • Visa transitions or unexpected living expenses: Personal loans can sometimes cover urgent costs that fall outside the scope of an education loan.

The key is to treat personal loans as a supplement to your bigger funding plan – not the core of it.

How to build a funding plan that works for you

To make the smartest decisions, think of your funding plan in layers:

  • International scholarships and grants: These are your first priority – free money that reduces what you need to borrow.
  • Family or personal savings: Even small contributions can pay for upfront costs like visa application fees.
  • Education loans for international students: Lenders like MPOWER Financing provide flexible, no-cosigner loans that align with your degree and future career plans.
  • Personal loans for true emergencies: Use these only when no other options are available – and borrow as little as possible to avoid high interest rates and short repayment windows.
Insert Image alt text hereInternational student gazing out at a city skyline from a high-rise window, representing long-term career planning and financial decision-making beyond graduation.

MPOWER Financing’s perspective: Choosing education-focused lending for long-term success

MPOWER Financing knows that the best outcomes for international postgraduates come from education-specific funding and international student loan refinancing – not general-purpose personal loans. That’s why MPOWER focuses exclusively on loans that align with your academic timeline, field of study and plans for life after graduation.

Rather than evaluating you like a typical borrower, MPOWER sees you as a future professional. With no cosigner required, transparent fixed rates and a digital-first application process, their loans remove barriers so you can focus on what really matters: your education and your next steps.

MPOWER also provides practical tools through their Path2Success platform – helping you build a resume, navigate job applications and manage life in the U.S. after graduation. It’s a comprehensive approach that turns a loan into more than funding – it’s a stepping stone to a career that spans countries and industries.

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FAQs

What’s the biggest difference between personal loans and education loans?

Personal loans can be used for any purpose and usually have higher rates and shorter repayment terms. Education loans are designed specifically to cover your academic costs, offer more flexibility and lower rates.

Do personal loans work for tuition if I can’t get an education loan?

While they technically can, personal loans are rarely a good fit for tuition – they’re expensive and not designed for the timeline of a degree.

Can I get a personal loan without a U.S. credit history?

It’s difficult. Most lenders want a cosigner or proof of income in the U.S. That’s why no-cosigner education loans, like those from MPOWER, are designed for international postgraduates.

How can I cover unexpected costs that tuition-focused loans don’t cover?

Check for emergency funds for international students in the U.S. through your university or consider a small personal loan, but borrow only what you absolutely need to avoid future financial stress.

What should I prioritize when choosing a loan as an international student?

Look for transparency in terms, flexibility around your academic calendar and whether the loan covers both tuition and education related costs like housing and insurance.


*Rates as low as 9.99% (11.16% APR). This interest rate and APR includes a 0.25% discount for automatic recurring payments.

DISCLAIMER – Subject to credit approval, loans are made by Bank of Lake Mills or MPOWER Financing, PBC. Bank of Lake Mills does not have an ownership interest in MPOWER Financing. Neither MPOWER Financing nor Bank of Lake Mills is affiliated with the school you attended or are attending. Bank of Lake Mills is Member FDIC. None of the information contained in this website constitutes a recommendation, solicitation or offer by MPOWER Financing or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.

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