What are loans for students to use for travel
Travel loans for students are basically just personal loans that they can use to pay for things like transportation, food, and lodging while they are traveling. With a travel loan, you'll get a lump sum in the amount that you qualify for based on things like your credit score, credit history, and income.
If you don't have much credit history, you may be able to get a loan with the help of a cosigner, like a parent or guardian. This could make it more likely that you'll be accepted.
Important loan terms to know about
APR: The annual percentage rate (APR) of a loan is the total amount of interest and fees you have to pay to borrow money. APRs are also added to credit cards and mortgages, as well as other financial products. The better your credit score, the lower your APR can be, and the lower your APR, the less you'll pay back over the life of a loan.
The amount of time you have to pay back your loan is called the loan term. Most personal loans have terms between 12 and 60 months, but some lenders offer loans with terms as long as 144 months. Most of the time, your payments will be higher if you have a shorter loan term.
Credit score: Your credit score is a number, usually between 300 and 850, that shows how creditworthy you are and how likely it is that you will pay back a loan on time. Your credit score is based on whether or not you pay your bills on time, how much of your credit you use, what kinds of accounts you have, and how long you've had them. By going to annualcreditreport.com, you can check your credit score for free from all three credit bureaus.
Soft-credit inquiry vs. hard-credit inquiry: Before you apply for a loan to see what rates and terms you might be able to get, make sure you can prequalify. This is called a "soft credit inquiry," and it lets you see what rates and terms you can get without hurting your credit. If you decide to take out the loan, the lender will have to do a hard credit check, which could temporarily hurt your credit score. Make sure to compare these offers with those from other lenders to find the best terms.
Cosigner: If you have bad credit and can't get a travel loan on your own, you might want to get a cosigner (this can be a parent, guardian or friend that has good credit). Getting a cosigner can help you get a travel loan, but if you can't pay back the loan, it will be up to your cosigner to do so.
How a student can get a loan to pay for a trip
Lenders usually need the following information from people who want a travel loan:
- How to get in touch
- Number of Social Security
- Income
- Account numbers for banks
If you have a cosigner, they will also have to give you this information.
Since credit scores are a big part of how many lenders decide whether to lend or not, you'll need to check your credit to see where you might end up. If you don't know much about credit, you might want to ask a parent or guardian with good credit to cosign the loan with you. Consider getting a student credit card to build your credit history and show lenders that you are responsible with your money.
Before you sign for a travel loan, though, you should make sure you have a plan for how to pay it back. If you don't pay back a loan, it can hurt your credit score badly and stay on your record for up to seven years.
Other ways for students to pay for travel
Some students who want to travel could use a personal loan, but it might not be the best choice for everyone. Here are some things you can do instead of getting a travel loan.
You might be surprised to learn that you can use student loans to pay for travel. But this is usually not a good idea, since it probably has nothing to do with your formal education unless you're studying abroad. If you use your student loans to pay for travel, you might not have enough money to pay for things like classes, textbooks, room and board, and other important costs.
Student credit card: A student credit card is a type of credit card that is made just for students. Many of them are easier for students to get than regular credit cards because you don't have to go through as many steps to get them. For example, student credit cards might have lower credit score requirements, but you might have to pay a higher APR because of this.
Grants and scholarships: If you want to study abroad, you might be able to get some of your travel costs covered by grants and scholarships. Before you apply for any grants or scholarships, make sure you read the requirements. Some may have specific requirements, like traveling to a certain country, or they may only be for students in certain majors.
students traveling loans Pros and cons
Pros | Cons |
Can help you build your credit as long as you pay on time. | If you don't have a good credit history, it may be hard for you to get in. |
You can travel without having to pay a lot of money up front. | If you can't pay back the loan on time, it can hurt your credit score in a big way. |
Can help you spread out your credit, which could help you get other kinds of credit in the future | If you save for a trip instead of taking out a loan, you won't have to pay as much in fees and interest. |
May teach you how to budget as you set aside money to repay the travel loan | If you don't have a good or great credit score, you may have to pay a higher APR. |
How to plan a trip on a budget
You'll need to carefully plan your budget if you want to be able to pay for your travels. Not only should you make a budget before you leave, but you should also keep an eye on your money while you're away to make sure you don't spend too much. To do this, you should:
Find out how much money you make so you know how much you can spend. Your income will set the limits on what you can and can't spend money on. (As we'll explain later, you should leave some room in your budget for unexpected costs.)
Figure out how much money you want to spend while you're away. It might be tempting to spend a lot of money on expensive food, drinks, souvenirs, and hotels, but these kinds of extravagances can quickly wipe out your budget. Think about how you want to spend your time and money while traveling, and look into ways to save on things like lodging and transportation.
Put some money away in case you need it. Even though it might feel like you're going over your budget, having an emergency fund can be a good idea. When you travel, there are often a lot of things you don't know, and having the money to deal with any problems can help. Some examples are getting sick or hurt, losing your luggage, being a victim of a crime, or having to change hotels or flights.
Things to do before using student loans to travel abroad
If traveling is something you love to do, don't let your student loan debt stop you. Traveling is one of the most exciting things you can do, especially if you get to go on a long trip.
But if you're going to be gone for more than a month at a time, you'll need to plan ahead for your student loans. These easy steps will help you cover all your bases and give you peace of mind that you won't have to worry about money during your trip.
6 financial steps to take before traveling abroad
1. Set a good budget for your trip.
Traveling abroad isn't cheap, so plan out where you want to go and how much it will cost to get there ahead of time. Remember that a fixed budget, like $50 a day, can mean different things in different places. In, say, Guatemala, it will go a lot further than in Paris.
Start with guidebooks and websites that are up-to-date and have specific information about the places you want to visit. This kind of planning is important, especially if you want to be able to act on the spur of the moment sometimes. It's much better to think you need more than you actually do.
2. Hire a money manager.
If you're traveling to a place where you don't speak the language, it's especially important to ask a trusted family member or friend to watch over your money while you're gone. This could mean the difference between being able to get your money in an emergency or not.
Call your student loan lender and let them know who is authorized to talk on your behalf. Don't forget to send your student loan paperwork to the right person while you're gone.
3. Make it work on its own.
The easiest way to pay is to set it and forget it. Set up automatic bill pay for your student loans as soon as you can if you haven't already. Start early because it can take 30 to 60 days for many lenders to set up a new automatic account.
The good news is that if you set up an automatic payment plan, you may be able to lower your student loan payments. All you have to do is call your lender (you can find out how to reach them here) and give them a bank account from which they can take payments each month.
4. Plan your bank accounts so that you can travel.
Having separate bank accounts for home and travel expenses can help you stay organized.
You might want to open three checking accounts: one for home (student loans, phone, rent), one for travel (hotels, flights, and food), and one for emergencies. Put the amount of money you'll need in each account, and carry separate debit cards for each so you know where your money is coming from.
You can also "pay" yourself to make sure your money is safe. Set up an automatic transfer of money from an account you use for everyday spending to an account you use just for travel. This will help you stay on track with your monthly budget and make sure you don't spend the money you've set aside for your student loan bill.
5. Save your money.
You'll need money to go on a trip. You can boost your cash flow before you leave by getting a second job or doing a few one-time jobs (check out our list of ways to make extra money).
You should put away as much extra money as you can because you never know when you might need it. When you are away from home and have a financial emergency, you may have to pay overdraft fees, penalties, and more.
When deciding how much to save, you should think about both your situation at home (e.g., your monthly student loan payments) and how much it would cost to get you home if you had to (plane tickets, hotel, food, etc.). Just to be safe, round up.
6. Always keep yourself safe.
According to a study by Experian, sensitive information about 20% of travelers has been stolen while they were away. The best way to keep your money safe, whether it's at home or while you're on the road, is to stay alert, smart, and aware.
Read up on travel alerts for your destination, and keep an eye out for signs that tell you where pickpockets are most likely to strike. Make extra copies of your travel documents, like your passport and visas, and give a copy to the person in charge of your money.
If you have access to a secure cloud, save your copies there so you don't have to carry around extra paper. And keep your money hidden on you while you travel, like in a money belt or pack.
One of the best pieces of advice we can give you for traveling while keeping an eye on your money is to only use cash. If you only use cash, you can't be tempted to spend more than you have. It also lets you see in real time how your money is being spent.
You should also look into apps that can help you stay on track with your trip budget. Trail Wallet, for instance, lets you set a budget for each day and add expenses as you go. It then keeps track of how much you have left per day or trip and alerts you when your balance is getting low.
Student loans and programs for people to volunteer abroad
If you are traveling because you are volunteering abroad with a group like Doctors Without Borders or the Peace Corps, you may be able to get a student loan deferment so you don't have to pay your federal student loan right away.
But if you want to keep working for a nonprofit after your Peace Corps service, you might be better off applying for a plan that adjusts your payments based on how much money you make.
Your payments may be as low as $0 per month while you are in service. In the future, you can use those payments based on your income as part of the 120 payments you need to make to get your public student loans forgiven.
Going on a trip with debt
You shouldn't put your plans to travel on hold because you're worried about how to pay back your loans. You will be safe if you make a budget ahead of time for your trip, your bills, and any possible emergencies.
Setting up a safe system that works for you and your money manager will make it less likely that you will miss payments or go over your limit. If you plan and think ahead, you can leave the country knowing that your student loans are paid off and your money is safe.
FAQ about student loans for travel
Can you take a trip with a student loan?
You can use your student loans to travel, but most people don't think it's a good idea. Student loans can help you pay for your education, but you will have to pay them back at some point. If you spend your student loans on things that aren't necessary, you might not have enough money to pay for things like tuition that are more expensive.
Can you get travel loans?
Students can get travel loans, even if they don't have a lot of credit history or a low credit score. It might be hard to get approved by a lender, though. If you do qualify, you may have to pay a higher APR if you need to improve your credit score. Make sure to look into the requirements carefully, since each lender has their own. If you are pre-approved for any loans, compare each offer to see which one might be best for you.
Can I get a loan to go to school abroad?
Yes, you can get a loan to study abroad, but you might also want to look into grants and scholarships that might help you avoid getting a loan. Many schools and programs that help students study abroad may offer financial aid. This may not only be easier to get, but it may also be cheaper in the long run.
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