The cost of good quality education is no less and it’s increasing as time passes. In such a situation educational loans act as a support system for individuals who cannot afford such high expenses. Hence most of the students end up opting for education loans, but experts say that the sanctioned loan amount many a time is not enough to cover the cost of expenses.

Ankit Mehra, Co-founder, and CEO, Gyandhan, said that students who want to finance their overseas education wonder if they can opt for two education loans from different lenders at the same time and some even wonder whether they can avail a personal loan on top of their education loan to meet short-term expenses. While no one prohibits going for two education loans, but lenders typically are not so happy with extending an education loan if the student has an existing one. Also, for tax benefits, only one loan can be shown as an education loan.

Opting for a personal loan is fine as long as one does not violate any terms of the existing loan agreement, industry experts say. But the borrower might have to sign an affidavit stating other existing debt obligations on the borrower or inform the lender about the same.

Mehra also adds that it is important to communicate correct information because if the borrower makes any false statements, the loan could be canceled and he might be penalized as well

when considering personal loan applications Banks also consider the fixed obligations to income ratio (FOIR). The ideal range of FOIR for personal loans is 40-50 percent. Simply meaning, the fixed obligations of the borrower every month should not exceed 40-50 percent of one’s monthly income. 

A majority of programs are going online due to the pandemic, students now enroll in online programs and short-term courses and apply for educational loans for the same. Mehra said that traditional lenders stay away from funding these online courses and short-term programs but NBFCs and emerging fintech startups like GyanDhan are creating a place for themselves by offering EMIs at zero percent. 

An education loan has made higher education within India and abroad accessible to thousands of Indian students who were till now unable to do so. Experts advise that it is important for students to understand all the clauses of the education loan on offer before finalizing the same.

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