Emergency Student Loans

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By Brian O'Connell

September 6, 2019

No college student wants to face a mad scramble for emergency funds in the event of a personal financial crisis, but sometimes it’s unavoidable.

When times are tough, emergency student aid or emergency student loans may fit the bill, but there are no shortage of twists, turns and some turbulence involved with getting an emergency loan on the fly.

What is an Emergency Student Loan?

An emergency student loan is a loan (usually a short-term one) that covers basic educational and living expenses in the event of an emergency.

Common scenarios that lead to emergency student loans include:

  • A death in the family (especially if the person passing is the family breadwinner).
  • The loss of a job that leads to the college student not being able to pay college expenses.
  • A theft, accident or unexpected loss of funds and property with financial value, that were originally earmarked for college costs, but are suddenly unavailable.
  • A natural disaster, like a hurricane or other weather calamity, that keeps you from getting access to cash at your bank.

Money to pay for transportation costs is among the most common requests. This can include the cost of repair of a vehicle or the cost of a bus pass.

In short, any unexpected event that triggers a dire and sudden financial need situation may be reason enough to apply for an emergency student loan. Most colleges offer them, although each has unique processes and rules that govern the issuance of an emergency student loan.

Typically, emergency student loans are issued by colleges and universities, public and private lenders, and by non-profit organizations to cover basic living expenses, like meals, health care, housing and any other vital short-term expense need that arises after a financial emergency suffered by the borrower.

The goal is a simple one with an emergency loan – provide the funds needed to keep a college student working towards his or her degree in a time of severe financial need.

Characteristics of Emergency Student Loans

With that as a backdrop, let’s take a look at issues, both common and often uncommon, associated with college students taking out an emergency student loan.

Emphasis on “short-term.” If you do wind up taking out an emergency student loan, be prepared to pay it back quickly. Most emergency loans to college students are expected to be paid back by 60 or even 30 days, or the end of the academic term, depending on the lender.

Loan amounts are usually low. Emergency student loans usually top out at $500-to-$1,000 per semester, per student, at most colleges. Thus, if you experience a major financial calamity and need more than $500-to-$1,000, have a “plan B” in the form of a private student loan or any financial aid offered. Your bursar’s office can help on the additional financial aid front, if you haven’t maxed out for the semester.

You should get the loan fairly quickly. After you apply for an emergency student loan and are approved (your college’s bursar office or financial aid office can provide an application and advice on filling it out), the money should show up soon in your bank account.

Some colleges offer same day ACH bank account deposits and some may take a day or two more. By and large, though, you’ll get the cash sooner rather than later.

You don’t need a cosigner – in most cases. If you’re seeking an emergency student loan and are getting it directly from your college or through a federal financial aid program, you likely don’t need a cosigner.

If you’re applying for a private loan from a bank or other lender, you’ll need to have a job or good credit to gain approval. Otherwise, you’ll need a cosigner.

You won’t pay any interest or fees – in most cases. Likewise, if you are obtaining an emergency student loan from your college or from a federal financial aid program, you’ll likely pay no interest rate on the loan and no administrative fees (outside of a possible loan origination fee).

If you opt for a private student loan, you may be able to borrow more money, but you’ll pay an interest rate based on your credit health and the lender’s own lending policies, and you’ll pay administrative fees, as well.

What you’ll need to qualify for an emergency loan. Colleges and universities have their own criteria for issuing emergency student loans and you should check with your financial aid office to see what you’ll need to qualify.

That said, don’t be surprised if you’re expected to clear these emergency student loan hurdles:

  • You are enrolled at the college or university as a student.
  • There are no “holds” on your academic registration.
  • You have over a minimum grade-point average.
  • You’re up to date on your payments to the college and don’t own any money on other loans.
  • You haven’t already taken out an emergency student loan during the same semester.

What if you can’t repay the loan? If you cannot pay back your emergency student loan, a negative, ripple effect may kick in. First, you’ll trigger late fees, which will add to your loan burden as you struggle to make good on the debt.

Additionally, your college may place a “hold” on your registration for next semester, so you won’t be able to sign up for classes. You’re also placing future college financial aid in the “harder to get” category, and if it’s a private loan you’re not repaying, your credit standing will take a hit, too.

Alternatives to Emergency Student Loans

If you can’t get your hands on an emergency student loan, you do have other options.

Aim for college grants, not loans. Many colleges and universities offer emergency funds in the form of quick grants and scholarships to needy students. Need may factor in, as issues like health or legal troubles usually count more than other financial emergencies.

Again, your financial aid office is the place to go – ask about grants and scholarships before you ask about an emergency student loan. If you’re lucky, and can make a good case, you’ll get emergency funds that won’t need to be paid back.

Ask for any unused/additional financial aid. Your college’s financial aid office can let you know if you have any financial aid eligibility remaining. Note that new student loan funds may take a few days to be disbursed.

A private student loan. Banks, credit unions and online lending platforms can be a good source of quick funding. You’ll likely need great credit or a cosigner to gain approval, and fees and interest rates will apply.

If you have trouble getting a loan, try Boro. If obtaining an emergency student loan is a problem, or if you can’t get the money when you need it, or are having problems getting approved for a private loan due to credit issues, you have options. One is Boro, which approves student loans based on your grades and academic performance instead of your credit standing.

Get your family involved. A quick $500 from mom and dad, the grandparents, or other trusted financial source can come in handy if you need the money ASAP. Just write up a quick (and signed) note to your family member, noting the amount borrowed and expected repayment date, so everyone knows what’s on the table, obligation-wise.

Ask for an extension. If tuition payments compound the emergency need for funds, and you can’t pay them back, your college will likely be happy to put you on an installment payment plan that breaks big tuition costs down into manageable financial bites. Your college may also grant you an extension on a hardship basis if you can’t pay your college costs, thus buying you time to make good on your tuition debt.

The Takeaway on Emergency Loans

If you’re at college and strapped for cash and have nowhere else to turn for the money, an emergency student loan can quickly defuse the crisis, and keep you plugged in to your classwork and on the path to graduation.

In some ways, that makes an emergency student loan no luxury – it could be a necessity.

A good place to start:

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