With the cost of living skyrocketing, loans have come to play a pivotal role in many people’s lives, including even financing education. These loans help anyone wanting to pursue higher education. Generally, lenders don’t offer education loans to students alone. Most lenders require a co-applicant, who is typically one of the parents so that they have some recourse if there is a delinquency.
For taking an education loan, one needs to have a letter confirming the admission to a course. Experts say without confirmation, lenders would not offer an education loan. Such loans typically cover the tuition and hostel fees, the cost of books and, in some rare cases, even computers. Some lenders also have defined limits on the maximum loan they offer for specific courses.
On the other hand, personal loans are more flexible for the borrowers. Gaurav Jalan, CEO and Founder, mPokket, says, “A more convenient route would be opting for a personal loan instead.”
Such personal loans for education can be used to cover all education-related expenses, including course fees, accommodation, travel, living expenses, course material and even smaller miscellaneous expenses that might arise, since lenders do not ask for reasons for the personal loan. Also, the application process of a personal loan is less cumbersome, needs fewer documents and has faster disbursal times.
He further adds, “Such personal loans being unsecured do not require collateral and also do not need a co-applicant. However, the amount available for a personal loan will typically be much lower than an education loan and interest rates will generally be higher.”
Parents on behalf of their child or students can avail of small-ticket or large-ticket personal loans, depending on their requirements at that point. Jalan says, “Personal loans can help ease the financial burden of education in today’s world, without all the stress that comes with applying for an education loan.”
Having said that, experts suggest all borrowers should note all the repayment options, loan tenure and the interest rate of the loan, whether they apply for a personal loan for education or an education loan.
Jalan adds, “The borrower must evaluate all avenues before taking a final decision on a specific financing option. One should only opt for a loan if they are sure they won’t be able to fund these expenses out of their pocket.” Hence, carefully calculate your requirements and accordingly apply for a specific loan amount.