In the contemporary world, having higher education, especially professional education, is crucial for students. All students are not equal, as their parents’ incomes are different. And hence, some students find it hard to make their dream of pursuing higher professional education come true. If it is with you, there is no need to worry about funding your higher education. You or your parents have options like education loans and personal loans.
As a parent or student, you move ahead to fund your or your child’s studies by choosing one of the available options. Before you make a final decision, you should study about an education loan vs personal loan on different aspects.
The big difference between an education loan and a personal loan is what they are meant for. An education loan is just for educational stuff like school/college or university fees, books, and accommodation. But a personal loan is for anything, even education at a school, college, or university level. Personal loans are more flexible because you can use the money for whatever you need.
Banks or money places usually give out education loans. To get one, you need to meet some rules. These rules could be things like getting accepted by a real school, not being too old, doing well in your studies, and maybe having something valuable to give if you cannot pay.
For personal loans, the rules are more about how much money you make, if you have paid back money before, and if you have a steady job. The person getting the loan might be a parent sometimes. Unlike education loans which are just for school stuff, personal loans can be used for other things too.
Interest rates are like an important puzzle piece in deciding how easy it is to pay back a loan. When you want to borrow money for school, the cost (or interest) is usually not as high as when you borrow money for yourself. This is because helping students get an education is seen as a good thing, so the government encourages banks to lend money for school at a reasonable cost.
They do this to help lots of students get the chance to study. But if you're borrowing money for personal things, like buying stuff, the cost (or interest) can be higher. That's because lending money for personal things is a bit riskier for the bank, so they might ask for more money back in return.
Education loans usually pay for everything you need for school, like tuition, where you live, and other costs. The amount you can borrow is based on what you're studying and where you're studying.
For personal loans, how much you can borrow depends on how much money you make, your credit history, and other things. But these loans might not always give you enough money to pay for everything you need for school.
When you get an education loan, you might have some time after you finish school to find a job before you start paying back the loan. And when you do start paying, you can take more time to pay it back so that the monthly payments are not too hard. But with personal loans, you usually have to start paying back the money right after you get it, and you might have to pay it back faster.
Education loans have a big plus: you can get some help with your taxes. In India, you can lower the amount of money you have to pay taxes on by showing the interest you paid on your education loan. This can save you a lot of money. But if you get a personal loan, there's no help like that with taxes.
Education loans and personal loans are not the same. They have differences that you need to know when deciding how to pay for your education. Education loans are meant only for education expenses. They usually have lower interest rates, more time to pay back the money, and could even give you tax benefits. Personal loans can be used for many things, but they might have higher interest rates and you might have to pay the money back faster. Before choosing a loan, think about what you really need, how much money you have, and what you want to do in the future. This will help you pick the right loan for you.