In recent years, the price of higher education has increased significantly. Conversely, higher education and advanced studies at overseas universities are gaining popularity. This is a heavy financial burden for middle-class families. Therefore they take out loans to pay for their children’s future education.
Comparing a Personal Loan with an Education Loan
Annual Interest Rate
Personal loan interest rates are often high, ranging from 10 to 22 percent yearly.
Interest Rate on College Loans
The annual percentage rate for an education loan ranges from 10.35 percent to 13 percent, which is lower than the rate for a personal loan.
Personal loans may be used for various objectives, including financing your education, paying tuition fees, housing, and everyday expenses. At the same time, you are a full-time student and not generating an income.
This form of a loan may cover only higher education expenses.
Personal loans do not have any tax benefits. However, if you utilize a personal loan for educational or home renovation reasons, you may be able to claim tax benefits by presenting proof of eligibility.
You may be eligible to claim and benefit from tax breaks on the interest you pay on your student loan.
Duration of the agreement
In most situations, one-year personal loans are the most prevalent, with terms ranging from one to five years. There is generally a range of eight to ten years of repayment period for an education loan, depending on the lender. The repayment of the loan becomes easier and the monthly payments are reduced as a result.
At the moment of disbursement, the personal loan is put into the borrower’s bank account, which was supplied during the application process.
Loans for higher education
When you get an education loan, the funds are promptly put into the account of the school where you are enrolled.
Personal Loans Are Superior to Student Loans
There are no restrictions on how a personal loan may be used; it may be used for anything, from supporting daily expenses to paying for college expenses. Money from a personal loan may be used for anything.
Easy to put into action
When requesting a personal loan, there is no need to provide proof of your academic accomplishments or institution. Applying for a personal loan online is also feasible, which is substantially simpler and requires less paperwork.
Rapid disbursement of a personal loan is possible. However, a student loan must be approved and disbursed gradually.
Personal loans have problems compared to education loans
Personal loan rates are often higher than student loan rates. Personal loans feature quick repayments that begin within one month after loan approval, preventing you from working or saving money in the meantime. In contrast, if you choose an education loan, payments will begin six to twelve months after you finish your studies. Consequently, you will have enough time to repay the debt.