Most students find taking an education loan to be taxing. For one reason or another, students would like to pay for everything up front rather than having to worry about EMIs. However, this would require them to accumulate savings and also sell or pledge assets. So, which among the two – ‘student loan’ or ‘self-funding’ is the best way to go? And how do you know which one is right for you? We’ll help you put this question at rest by explaining all about student loans vs self-funding.
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Self-funding |
Student loan |
| Supporting one’s own education by soliciting financial aid from one’s friends, family, savings or other relatives rather than receiving cash from a third party is self-funding your own education. | Instead of investing your own money, you might support your education by requesting financial aid from a third party, such as a bank or non-bank financial institution. |
| The main benefit of self-funding is that you’re not taking out any loans, which means no interest payments or worries about paying off a huge amount. | Student loans allow you to fund your education, but you will have to pay back your loan along with interest. In addition to this, extra fees might be levied as your loan processing fees. |
| The whole year’s tuition must be paid at the beginning of the semester for self-financing students. Additionally, living expenses often equal 50% of the tuition fees or more. | Tuition and living costs are covered through student loans. The only POST course that demands principal payments are completed. Lenders include six months before principal payments. |
| Self-financing entails using up money that might have been retained as investments or provided us with a safety net in case of family or health emergencies. | You may save your money for investing and for family/medical emergencies with the aid of an education loan. |
| If one finances the cost on their own, you will have to prove proof of funds and also pay taxes accordingly. | Tax saves are available for students paying off an education loan. |
| Paying with life savings prevents you from building a solid credit history, which is important for students to buy cars, credit cards, and other necessities shortly after acquiring employment. | The timely repayment of an education loan helps a student create a strong credit score. |
Before taking a loan, assess how much money you have in the bank and how much debt you have before applying for a student loan. People usually consider their future professional prospects when determining whether to take a student loan or not. But, it is important to consider one’s current financial condition to avoid future problems.
If you’ve assessed your dept appetite and if taking an education loan is the best choice for you. Then look at how you can get an education loan in India.
How To Apply For an Education Loan?
A student loan application is a simple process. You can apply for a student loan online, in person, or by visiting a bank or financial institution. Suppose you want to apply for an education loan through your college, university, or other educational institutes. In that case, you will have to visit the institute’s office or official website and fill out an application form there.
Documents Required For an Education Loan:
Following are the supporting documents needed to apply for an education loan:
- Fully filled application form.
- Photos of both applicant and co-applicant.
- Any photo ID such as Permanent Account Number (PAN) Card, Passport, Driving License, Aadhaar Card, and Voter’s ID Card.
- Residence proof in the form of a Passport, Driving License, Aadhaar Card, and Voter’s ID Card.
- Academic documents that include mark sheet and certificate of 10th, 12th Exam and subsequent years of higher education.
- Proof of admission with admission letter, demand letter and Bonafide certificates.
- Bank Statements of self and co-applicants six months bank statements.
- Co applicant’s Income Proof; Salary Slips, Form 16 from Employer/ ITR, Provisional Financial Statements Certified by CA.
- If, Immovable Property is collateral, then the document of apartment, homes or any Non-Agricultural Land.
While both options have their benefits and drawbacks, it’s up to you to decide which one is best for your situation. However, if you choose a student loan instead of self-funding, then be sure not to overextend yourself financially when it comes time for repayment.
