Avail A Personal Loan To Pay off Education Loan

The cost of education is rising steadily and at an increasing pace. Many students who wish to study in a top B-School/Medical/Engineering College in India or abroad are unable to do so due to financial constraints. An education loan helps bridge the gap between the money required and money available. Education loan acts as a good friend taking care of your career goals. However, once you have completed your course and started earning, it makes sense to take a personal loan to help pay off your education loan. Here are some reasons why:

1. Tenor Customisation

At the time of availing an education loan, the loan tenor is usually determined based on the repayment capacity of the borrowers, and also considering the existing income sources of the co-borrowers. However, once you have completed your studies and moved to a well-earning job, you can transfer the balance of education loan into a personal loan, thereby allowing you to reduce the original tenor as per your current repayment ability. This helps you reduce your interest burden as well over the loan tenor. On the other hand, you can also choose a longer loan tenor than the current repayment schedule of the education loan, so that your repayment schedule can match the cash flows.

2. Relieving the Co-borrowers of Education Loan

An education loan is applied at the time of taking admission into a reputed college/ institution within the country or across the Globe. For this, your parents would generally be the borrowers/co-borrowers in the education loan. Once you are also an earning member of the family, you can strive to take the responsibility of paying off this education loan. Refinancing your education loan with a personal loan can help you avail the credit on your strength, thus taking the liability off the shoulders of your parents.

3. Competitive Interest Rates

With an intent to capture a larger pie of the market share, banks and other lending institutions tend to offer competitive interest rates to individuals for personal loans. Thus, you stand to potentially gain by taking a lower cost personal loan to pay off your education loan. 

4. Top Up for Additional Study Expenses

Banks offer education loans to only cover full-time course fee expenses and may not cover the additional accommodation or extra-curricular expenditures incurred by the individual. However, while you are considering to take a personal loan to pay off your education loan, you can also consider topping up this loan amount for additional study expenses. Since personal loans can have a wide range of end-use options, your dreams and aspirations do not have to be restricted due to financial reasons.

The author is the CoFounder at MoneyView