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Education Loan Vs Personal Loan
By Anupama Deshpande | October 27, 2017

Who will not want to send his/ her bright children to get higher education? All of us wish that our children become very successful in their lives and have a fantastic & secured future. As the cost of higher studies is increasing day by day on an exponential basis, very few of us can afford to make it possible out of their savings/ self financing.



To make the dream of getting higher education true, many banks and financial institutions in India have introduced a loan scheme named Education Loan or Study Loan. Students willing higher education, no matter in India or abroad, can apply for education loan on a very attractive interest rate.

Personal loans can be availed by a person for any urgent purpose like holiday abroad, family wedding, medical emergencies, etc. Personal Loans are unsecured loans offered by banks without any collateral. Personal loans aren't cheap but expensive one.

Interested to know How to Negotiate a lower Interest rate on a Personal Loan?

You can finance the education of your children by taking personal loans also. Before availing any of these loans, it is important to understand Education Loan Vs Personal Loan, which will help you come to the best decision.

Education Loan Vs Personal Loan

Basis of DifferenceEducation LoanPersonal Loan
PurposeFor the purpose of higher education & other ancillary expenses like purchase of study material and laptops, mess charges, expenses for various education trips, etc.For any urgent need like medical bills, house renovation, family vacation
EligibilityOnly StudentsAny person
Required DocumentsMore documents required than those in case of personal loanLesser documents required than those in case of education loan
QuantumDepends upon the course being applied forDepends upon individual needs & repaying capacity/ credit score
Interest RateLower, in the range of 10% to 15% p.a.Higher, in the range of 12% to 25% p.a.
Approval Time1 week to 10 days48 to 72 hours
Tax BenefitTax deduction can be claimed (without any upper limit) under Section 80E of the Income Tax Act of India, 1961Not available
Moratorium PeriodYes, borrower will get waiting period, called Moratorium Period, before the regular EMI repayments actually startNo, EMI will start immediately after availing the loan
Tenure5 to 15 years1 to 5 years
Benefit to Female BorrowerFemale students are often offered discounts or lower interest ratesNot available
Government SubsidyAvailable to economically backward sections of societyNot available

Interested to know You can invest as low as Rs. 100 in a Mutual Fund

I hope that with the help of above comparison, you would find it easier to decide as to which loan should be opted for between the two.

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About Anupama Deshpande
Anupama is a Co-Founder of CodeForBanks.com. She is an MBA (Finance) and Chartered Financial Analyst (CFA). She also carries a Fellowship degree in Life Insurance Sector and is a Master of Computer Application (MCA). She is an expert in Finance Field with an experience of over 18 years on different managerial positions in finance industry including Stock Market, Depository and Mutual Fund Sectors. Apart from that she has remained for few years in the field of marketing as well. Her suggestions and advice for investments have been very useful to many people.
Her vast interest & expertise in the field of finance have encouraged her to write the articles so that others can also get benefitted out of them. She never loses any opportunity to learn and be creative. She is a valuable asset for CodeForBanks.com & important resource to all those around her.

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