My short answer is—yes, you can get another education loan when you already have got one ongoing education loan. Let’s delve deeper.
Education loan definition
An education loan is an amount of money borrowed to finance higher education-related expenses. The loan is intended to cover the cost of fees, books, supplies, and the living expenses of a student when she is in the process of getting a degree. An education loan is also called a student loan.
How education loan is important
Education loans came as a much-needed rescuer for students who were hitherto unable to pursue higher education because of a lack of funds. State Bank of India launched education loans in 1995, and many students benefitted from that establishment. Today, most public and private banks in India offer education or student loans.
The cost of education has increased domestically as well as overseas. And many students take education loans every year. Also, the Covid-19 pandemic has not impacted the education loans sector, and getting a student loan is still easy.
Benefits of taking an education loan
Apart from financing higher education, education loans also have other benefits like:
- Easy visa approval
- Tax exemptions
- Safeguarding personal savings safe for other contingencies
But can you get a second education loan when you already have one
Say you already have an education loan financing your undergraduate education. Now, what if you want to take a second student loan for your post-graduation? The question pops up in the mind of many students who want to get education loan financing for their higher education needs in India or abroad. There can be other scenarios where you may need a student loan on top of some existing loan.
You want to give your child the best education possible to forge her path to lucrative career and become a responsible citizen of the country. You might wonder whether it is even possible to take multiple education loans. Know that, even when you already have a student loan, you can take another one.
Different ways in which you can fund your education
Good quality higher education costs a lot of money. And in case you already have a loan running—either an education loan or any other loan—it is difficult to get the desired education loan financing. Because, in such cases, in addition to the fact that you do not have the cash, you are already paying instalments on another loan.
Let’s say you have a home loan. So, you have to pay instalments towards it. But you can make the most out of your situation. In this case, you can take out an education loan on top of a home loan.
What you can do is take a top-up on your home loan and use it to fund the education of your child.
If you have been paying your home loan EMIs regularly and on time, then your bank would gladly give you a top-up as the value of your mortgaged property would anyway have increased over time when you were paying the EMIs on it. The bank is unlikely to ask you for any additional documentation except your latest payslip and a bank statement.
Apart from this, there are many other ways in which you can finance your education. One of the fastest ways is to take an unsecured student loan.
Types of education loans you can take
There are two types of education loans that you can avail:
- Secured education loan
- Unsecured education loan
Secured education loan:
It is also called a loan with collateral. When you avail of a secured loan, you have to attach a security to the loan. This security can be a piece of land, a property, FDs, mutual funds, etc. Note that a secured education loan tends to take longer for approval. But on the upside, it has a lower interest rate.
Unsecured education loan:
On the other hand, unsecured education loans are loans without collateral. When you take an unsecured student loan, you do not attach any security to your loan. An unsecured education loan, like the one offered by PaySense, is best for students without any collateral to pledge for the loan. The unsecured student loan has a high interest rate. To avail of this loan, you may be required to show a minimum parental income.
The interest rate and repayment schedule of a secured education loan
Education loans are tailored for students wishing to pursue higher studies, but how you raise the money to fund it is your choice. Let’s see how a secured education loan works:
Rate of interest: The secured education loan interest rate is typically high than, say, a home loan. The education loan interest rate for this type of loan could go as high as 17%. Also, the process of availing of the loan is lengthy, involving a lot of paperwork.
Repayment schedule: A secured education loan has to be repaid in around 10 to 15 years. However, the advantage of a secured student loan is that you get a moratorium period of about a year after you finish your studies before your EMIs start.
So, calculate the total cost you will bear, availability, and other factors in deciding whether to go for a secured loan or an unsecured loan.
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