No longer are classrooms and offline classes the only places to learn. Over time, distance learning and online courses have gained the same value. This is because they save time and help students learn important skills.
Before COVID-19, a personal loan was the only way to pay for an online course. But, after the crisis, the Ministry of Education has started considering online courses. And in some cases, let students use education loans to study an online course. The Ministry allows loans for certain courses, online or in person, as long as important information is shared. This helps those who need money to study the courses they want.
There are a few online courses, distance learning programs, and degrees offered by startups that get sponsorship and loans from banks, but there aren’t many rules to follow. Many NBFCs and fintech companies have started to lend money for such courses.
What is an education loan?
An education loan is a form of financial aid that can be used to pay for things like books, supplies, and living costs to finish the required course.
This loan comes in two different forms:
- Domestic Studies Loan: These loans can be used for any course within India. It can be a basic or higher-level course.
- Study Abroad Loan: These education loans are given to students who want to continue their education abroad.
What is a personal loan?
Personal loans are unsecured loans that give you money without requiring you to put up collateral. They have a fixed rate, amount, and time to pay it back. The best thing about this loan is that you can use it whenever you want. And you don’t have to fill out any paperwork or prove where the money has gone.
Eligibility Criteria for Education or Personal Loans for Online Courses
The eligibility criteria for students to get education or personal loans are as follows:
- Course or Degree Approval by UGC and AICTE
Students can only get a loan for school if the UGC and All India Council for Technical Education have approved the online course. The online course could be from a college, university, or new company. These authorities know which online courses are certified and which can be taken from a distance. This makes it easier to get student loans for these courses.
To apply for a loan, the student must have Indian citizenship and have assets in their name (or their parent’s name, if an education loan).
- Proper paperwork and legal documents
To get a loan for education, you need the following documents:
- Aadhar Card: To prove where you were born and where you live, you need a valid Aadhar card.
- Age Limit: You must be between 21 and 68 years old for a personal loan. On the other hand, you must be between 18 and 28 years old to qualify for an education loan.
- Monthly or Annual Income: For a personal loan, you must be self-employed, run a business, or be on a salary and show pay stubs from the last few months and your current annual income. If students are dependent on their families, their parents can take out loans in their name.
- PAN Card and KYC Documents: Your bank account must be linked to your PAN Card and KYC papers for a student or personal loan.
- Information About the Course and Fees
With less paperwork involved, you don’t have to specify why you want a personal loan. If you want an education loan, you must provide all course details. This includes the fee structure, travel costs, cost of living, and so on. The final loan amount will be decided and given based on these details.
Perks of an Education Loan
Here are some of the benefits of an education loan:
- Tax Breaks
Under Section 80E of the Income Tax Act of 1961, students and their parents can get rebates on these loans, which can help them save money and get tax benefits. In the case of personal loans, such tax rebates are not available.
- Payback Perks
One of the best things about student loans is that EMIs aren’t due until after the course ends. Students can study without worrying about payments until they start making money.
Benefits of a Personal Loan
Here are some benefits of getting a personal loan:
- No usage restrictions
The best thing about personal loans is that there is a limit to how much you can borrow. This limit is based on your current annual income or source of income. This helps you and the bank make sure you can repay the loan. Based on that, the EMIs are set, which can help you plan your spending and savings.
- Unsecured or Secured
Personal loans can be secured or unsecured, depending on their risks. When it comes to unsecured loans, there is no need to put up property as collateral. This makes it easy for regular people to get these loans without risking their property.
- Flexible Loan Tenure
Personal loans can easily be repaid as per fixed tenures, which are very flexible as per the duration of repayment chosen. EMIs can be paid easily as per similar terms.
Education loans may take time to process, and the chances of getting them depend on what they are used for. Personal loans can be used with no trouble at all to pay for online classes.
Online certification courses can make it difficult to obtain education loans. In such cases, personal loans help you start a career and build a strong portfolio by getting the needed skills.
On the other hand, these loans have high interest rates. This is because there is more risk involved than with loans meant for education.
In the end, it’s important to make an informed decision. Consider your eligibility and research the funding options available to you. This will help you reach the path to higher education more easily.
To learn more about personal or education loans, visit Piramal Finance for more blogs like this. You may also take a look at their products and services.