Student Education Loan Advantages and Disadvantages

Today, education is the most important aspect of a student’s life. The student’s future and earning opportunities largely depend on their educational background. A student can get a head start if he is from a premium college. But the problem is that not all parents can fund expensive colleges. The fact is that the education cost has breached the sky. Currently, the cost of MBBS from a private institute can touch Rs 1 crore. Even the cost of an MBA has breached the Rs 15 Lakh mark if you opt for a premium institute.

So, how do you fund the cost of education in that case? Well, a student loan is an answer for such funding issues. The student loan can help you with funding your college fee, and there are certainly more aspects to it. Jump on to the next section to learn about student loans.

Student Loan

? What is a Student Loan?

A student loan can be available to students and parents when a child is going for higher education. Usually, this loan is available for graduation, post-graduation and doctorate programs. Depending on the bank, the fee is transferred to the institute, or you get the cheque in favour of the institute. The good thing about the student loan is that it can even cover your living expenses, hostel charges and the mess fee. This removes the burden from the parents. Another point to note here is that the parents of the student can choose to pay the full interest component during the education, or they can choose to pay a part of the interest component during the tenure of your college.

Once you graduate and get a job, you can start paying the loan yourself. We are sure that you would find this package to be very attractive.

What Else Should I Know Before Taking Student Loan?

We have covered most of the crucial aspects of student loans in the pointers above. You should also check out the points listed below when taking a student loan:

  • A student loan is offered mainly on floating interest rates, so the loan cost may rise in future.
  • The student loan may be secured or unsecured. You need to check what is on offer, and it also depends on the institute, parents’ profile and the loan amount.
  • Also check government educational loan scheme they are quite affordable than private bank loans.
  • Start repaying student loans as soon as you get a job. This will not increase the interest component of the loan.
  • You can even opt for a balance transfer facility where you can transfer the student loan to a different bank after you get a job. This can lower your interest rates and bring down the cost of a loan.

So, let us now go ahead and check out other advantages & disadvantages of student loans.

? Advantages of Student Loan

There are many benefits of a student loan. You can review them in the section below.

  • Fund Education – Student loan helps you complete your dream course in the dream college. A student loan is the best way to fund your education if you don’t have that cash at your disposal. This is especially true if you are opting for expensive courses like MBBS.
  • Living Expense – The best part about the student loan is that it can even fund your living expense. That means you won’t have to burden your parents with the living expense. This sounds like a good deal, especially if you have a two-year course.
  • Pre-Payment – Many banks don’t charge additional interest on pre-payment or part payment. You can pay an extra amount every month, and you can close your student loan early. This is one of the best parts about having a student loan. Even if you wish to pay the full amount, that is possible with a student loan. We recommend checking with the bank for more details.
  • Builds Focus – When you avail of an education loan, you know you have a liability to pay back. This brings more focus when it comes to studies. You will be more responsible in college, and you will not lose track. Student loans have helped many students build the pressure required for them to perform.
  • Easy to Avail – Getting an education loan is relatively easy. If you are going into a premium institute, you won’t have to spend much effort getting the loan. Apart from this, a student loan is also available as a secured and unsecured loan.
  • Interest Benefits – Student loan is available with an interest benefit. You can claim the interest benefit in the income tax. In addition, your parents can also claim the interest benefit until you start paying the student loan. So, in a way, you are saving tax when you are availing student loan.
  • Moratorium Benefits – You get a moratorium benefit when you avail student loan. You don’t have to start paying immediately after completing college. The bank gives you a year to start paying the loan. However, if you wish, you can start paying the loan even immediately. You can make this decision based on your job and the joining date.

? Disadvantages of Student Loan

The disadvantages of student loans are listed below.

  • Long Tenure – Most students choose a long tenure for the student loan. The maximum tenure usually available is ten years. In such a case, the cost of an education loan also increases. In the initial years, you will notice that your monthly interest is more than 50% of your payment.
  • Compounding Effect – If your parents are not paying full interest during your education, then this will have a compounding effect on your principal. It will increase the principal you have to pay; hence, the EMI will be higher. But again, this is subjective to the financial profile of your parents.


This was all the information about the student loan. If you want to know more about student loans, you can visit your preferred bank or even check out more details about the bank’s website. Most likely, your institute will have a tie-up with a bank, and they can help you get a loan for your higher education.

Student Education Loan Frequently Asked Questions

Q1. What If I Cannot Pay My Education Loan?

Ans: Don’t worry, if you find yourself struggling to make your monthly payments, there are options available. It’s important to reach out to your loan servicer as soon as possible to explore options like deferment, forbearance, or income-driven repayment plans.

Q2. Can I Get Student Loans Without My Parents?

Ans: The answer is yes, you can! There are many student loan options are made available by many banks and financial institutions that don’t require parental information, as well as private student loan options that may not require a cosigner.

Q3. What Age Do Student Loans Stop?

Ans: Well, as long as you’re enrolled in an eligible school or college, you can apply for student education loans. However, keep in mind that there are age-related restrictions that may affect your eligibility or loan limits.

Q4. Do I Have To Start Repaying My Student Education Loan Immediately After Graduation?

Ans: After years of hard work and late-night study sessions, the last thing you want to worry about is paying back your student loans. Luckily, most student loans come with a six-month grace period after graduation, giving you some breathing room before you have to start making payments. That gives you time to focus on finding a job and settling into post-college life.

Q5. Can I Refinance Or Consolidate My Student Education Loans?

Ans: If you’re looking for a way to simplify your student loan payments or lower your interest rate, refinancing or consolidating your loans may be the answer. Think of it like hitting the reset button on your loans, you can combine multiple loans into one, potentially get a lower interest rate, and make one monthly payment instead of several.

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Sumit Kumar Yadav has experience analyzing business and finance of big to small companies. Loan, Insurance, Investment data analysis are his key areas.