With India becoming an increasingly competitive space for jobs, higher studies take precedence as the ticket to stable, lucrative employment. However, the ensuing costs pose a hurdle for many. For instance, one year’s expense of studying in IIT Bombay is Rs.2.5 lakh (1), inclusive of tuition fees and hostel bills. When it comes to studying abroad, the cost shoots up even further.
- Pursuing Masters in Canada can cost an individual between CAD 17000 to CAD 25000 or approximately Rs.10 lakh – Rs.14 lakh (2)
- Simply the tuition fees will cost a student around $20000 or Rs.14.5 lakh approximately in the US (2).
Besides incurring these expenditures, one will also need to cover their living expenses when staying abroad or travelling to another city in India. While an education loan is a preferred option, a personal loan for student comes through as more beneficial owing to various reasons. Individuals uncertain about the same can read along to find out how this financing option can be more conducive to realising their higher studies aspirations.
Merits of a personal loan for higher education
A primary benefit of higher education loan of this sort is financiers do not ask for any collateral. A couple of other advantages of this financing option include –
- No end use restriction
A traditional education loan limits your usage of it to only tuition fees. However, higher studies involve a host of other expenses, especially when doing so abroad. Even if you choose countries like Norway and Germany, where tuition fees are nil to minimal, living expenses can set you back by lakhs.
- Cost of living in Norway can be as high as NOK 116,369 or Rs.10 lakh approx. (3)
With a personal loan, you have the liberty to use it for living expenses, travel costs, and maintaining a standard lifestyle. Moreover, education loans do not finance all types of courses. A personal loan for student lets you finance any degree, even vocational ones. Thus, you can sponsor a great education abroad with a personal loan.
- Simple documentation
One of the more significant demerits of an education loan is the applicant needs to submit an array of documents to complete the application, and even then, approval might not be sure. Alongside the standard ID and education certificates, you need to submit proof of admission to a university recognised by the financier, brochure with course expenses, etc.
On the other hand, documents required for a personal loan for education only include ID and income proof. It’s one of the top reasons to apply for a personal loan to finance your higher studies.
Things to consider before availing of a personal loan for student
A personal loan is still a financial commitment, and you need to consider a few factors before obtaining one to ensure smooth repayment. These are –
- Take stock of expenses
Before you apply for a personal loan, estimate the whole range of expenses that you plan to defray with it. You wouldn’t want to obtain a loan and then realise the total costs surpass the principal amount. Conversely, borrowing substantially more than what you need will only strain your finances unnecessarily.
In general, it is wise to avail slightly more than what you estimate. For instance, if you think expenses will amount to Rs.15 lakh, consider applying for Rs.16 lakh loan for abroad studies.
- Check eligibility
It is paramount to determine your eligibility for a small personal loan before you start planning yours or your children’s higher education expenses. While financial institutions offer up to Rs.25 lakh, you may be eligible for only Rs.20 lakh based on your credentials. You can use an eligibility calculator to check the same.
Specific lending institutions like Bajaj Finserv provide pre-approved offers, speeding up the application process and minimising the documentation hassles. Such offers are available on personal loans, credit cards and business loans. You can provide your name and phone number to check your pre-approved offer.
- Choose tenor wisely
The EMIs you will pay toward repayment depends directly on the selected tenor. A long tenor means you pay smaller EMIs and vice-versa. However, an extended tenor is synonymous with increased interest outgo. Keep these in mind and find out the personal loan tenor that works for you.
A personal loan for student offers several benefits a traditional education loan fails to. It ensures you can finance your higher education without constraints and realise your aspirations more easily.