While Australia's HECS-HELP system covers most university fees, private student loans fill gaps for living expenses, private colleges, and international students.
Why Private Student Loans?
HECS-HELP doesn't cover:
- Living expenses (rent, food, transport)
- Textbooks and equipment
- International student fees (full cost)
- Private college/institution fees (sometimes)
- Postgraduate courses (limited)
- Study abroad costs
- Professional course materials
Private student loans bridge these gaps
Types of Private Student Loans
1. Living Expenses Loans
Cover: Rent, food, transport while studying Amount: $5,000 - $30,000/year Rates: 12-20% p.a. (unsecured) Rates: 8-14% p.a. (property-secured)
2. Fee Payment Loans
Cover: Course fees for private institutions Amount: $10,000 - $100,000 For: Private colleges, bootcamps, trade schools
3. International Student Loans
For: Non-residents studying in Australia Amount: Full tuition + living Rates: 10-18% p.a. Requirement: Often need Australian guarantor
4. Postgraduate Loans
Cover: Masters, MBA, PhD costs Amount: $20,000 - $100,000+ Rates: 8-16% p.a.
Private Student Loan Providers
Banks (Limited Options)
- Commonwealth Bank
- NAB
- Westpac (ceased student loans)
Typical:
- Rates: 9-15% p.a.
- Require good credit/guarantor
- Limited to certain courses
Non-Bank Lenders
- More flexible
- Accept varied situations
- Rates: 12-18% p.a.
Private Lenders (Property-Secured)
- Secured by parent's property
- Rates: 8-14% p.a.
- Any course/institution
- Flexible amounts
Peer-to-Peer Platforms
- Online student lending
- Rates: 10-16% p.a.
- Smaller amounts
Rates & Costs
Typical Private Student Loan Rates:
Unsecured:
- Good credit: 12-16% p.a.
- Fair credit: 15-20% p.a.
Parent Guarantor:
- 10-14% p.a.
Property-Secured:
- 8-12% p.a. (cheapest option)
Example: $40,000 Study Loan, 5 Years
Unsecured @ 15% p.a.:
- Monthly: $952
- Total interest: $17,120
- Total: $57,120
Property-secured @ 10% p.a.:
- Monthly: $850
- Total interest: $10,960
- Total: $50,960
Savings: $6,160 with property security
Repayment Options
While Studying:
- Interest-only: Pay just interest
- Deferred: Start after graduation
- Reduced payments: Minimal payments during study
After Graduation:
- Standard P&I: Principal + interest
- Income-based: % of income (some lenders)
Parental Options
Option 1: Parent Takes Loan
Parent borrows, student benefits
- Lower rates (parent's credit)
- Property security available
- Parent responsible for repayment
Option 2: Parent Guarantor
Student borrows, parent guarantees
- Student builds credit
- Parent backs loan
- Student repays (ideally)
Option 3: Family Equity
Release equity from family home
- Cheapest rates (8-10% p.a.)
- Large amounts available
- Flexible terms
Most common: Parent takes property-secured loan
International Students
Challenges:
- No HECS access
- Full fees upfront
- No Australian credit history
- Visa limitations
Solutions:
- Home country education loans
- Australian private lenders (with guarantor)
- Parent property-secured loan
- Scholarships + part loan
Typical requirement: Australian permanent resident guarantor
Alternatives to Private Student Loans
Before taking private loan, consider:
- HECS-HELP - If eligible, always use first
- FEE-HELP - For approved courses
- Austudy/Youth Allowance - Government support
- Scholarships - Research extensively
- Part-time work - Student visa allows 20 hrs/week
- Family gift - Tax-free from parents
- Delay study - Save first, study later
Use private loans for:
- Gap between government help and actual costs
- Ineligible courses
- International students
- Living expenses beyond government support
Need private student loan? Explore education finance options.