Reasons why a student loan is better than a personal loan
In today’s incredibly competitive world, higher education has become essential. Since then, nearly every Indian student has made obtaining an education from one of the top colleges in the world their primary objective. But with the cost of education reaching an all-time high, getting outside funding is the only way to get through college without using up all of your savings.
There are currently two financing choices that can help you out of this confusion. Personal loans vs. student loans is the choice. Which one should you choose? Explore now.
- Moratorium period-
The time frame during which the borrower is temporarily exempt from loan repayment is known as the moratorium period. In essence, it gives college students a break, making up for the time it takes to get their degree and find employment. Only those who have taken out education loans are eligible for this period, which typically lasts from the time the loan is disbursed until about 6 to 12 months after receiving the degree. Lenders also compute interest based on simple interest during this time.
However, monthly repayment for personal loans begins as soon as the loan is disbursed. There is frequently no break, which can be very difficult for students to handle.
- Tax Benefits-
You can recover the interest you paid on student loans through tax deductions. Borrowers are permitted to claim tax deductions for an amount equal to the total amount of interest due under section 80E of the Indian Tax Act (ITA). Borrowers of student loans are the only ones who can afford this luxury. Contrarily, there are no similar tax incentives for personal finance.
- Loan Amount-
Depending on your credit score, you may be able to borrow between Rs. 50,000 and Rs. 50,000 in terms of personal finances. On the other hand, when it comes to education loans, you can get loans in the range of Rs. 50,000 and Rs. 60 Lakhs.
- Interest Rate-
The main distinction between a personal loan and an education loan is the interest rate. Practically speaking, interest rates on loans for education are lower than those for personal use. Additionally, depending on the lender, processing fees for student loans are relatively low.
- Quick Loan Disbursement-
Following the approval of your application, personal finance is immediately credited to your account. However, when it comes to student loans, the loan amount is immediately credited to the institution’s account. You may claim any remaining funds, if any, to pay for ancillary costs after the university has collected the overdue fee.
The question of “student loans vs. personal loans” comes up frequently when discussing how to pay for higher education. However, thanks to lower interest rates, moratoria, and a host of other benefits, student loans may be the best option for funding your education.
Edufintech companies like Kuhoo provide collateral-free, completely digitized loans for upskilling or any kind of higher education with flexible repayment options. At Kuhoo, we strive to achieve an Atmanirbhar Bharat everyday by helping the nation’s students become financially independent.