Which is Better for Education? Education Loans vs. Scholarships

Which is Better for Education? Education Loans vs. Scholarships: In today's time, it is the dream of every student to get a good education. But due to expensive studies, many times this dream remains unfulfilled. Especially when students want to pursue higher education or study abroad, then the problem of money comes to the fore. In such a situation, there are two ways - education loan and scholarship.

Both of these have their own advantages and disadvantages. In this article, we will understand in simple language which option is better for education - education loan or scholarship?

Thousands of student searching on internet for low interest student loans, student loan consolidation, college loans for parents, student loans no cosigner and private school loans etc.

Which is Better for Education? Education Loans vs. Scholarships:

What is an education loan?

An education loan is a loan that banks or financial institutions give to students for studies. With this loan, students can buy their study fees, living expenses, books, laptops and other necessary things.

Key points of education loan:

Interest Rate: Interest has to be paid on education loan. However, in some banks, interest is not charged till the completion of studies.

Repayment: After completing the studies, the loan has to be repaid within a certain time.

Collateral: On a loan of a large amount, property or guarantee has to be given.

What is a scholarship?

Scholarship is a type of financial assistance given to students for their studies. It is completely free and does not need to be repaid. Scholarships are usually given on the basis of merit, economic status, caste, region or special talent.

Main types of scholarships:

Merit-based scholarship: Available on the basis of good marks or performance.

Need-based scholarship: Available to financially weak students.

Government scholarship: Offered by the central and state governments.

Private scholarship: Many private institutions or companies also offer scholarships.

Benefits of education loan:

Easy availability: If you have the necessary documents and you are studying in a recognized college, then education loan is easily available.

Post-study payment: You do not have to repay the money during the study. Usually, the loan repayment has to be started 6 months after the completion of studies.

Credit history: Taking a loan and repaying it on time builds a good credit history, which makes it easier to get a loan in the future.

Helpful for foreign studies: Education loans are the easiest and most reliable way to study abroad.

Disadvantages of education loans:

Interest burden: Interest is charged on the loan, which makes the total amount repaid very high.

Mental pressure: There is pressure to repay the loan after completing studies, which can cause stress while looking for a job.

Need for guarantee: Sometimes banks require guarantee or collateral, which not all families have.

Fear of rejection: Banks may refuse the loan due to low credit score or other reasons.

Benefits of scholarship:

Absolutely free: You do not have to repay any money when you get a scholarship.

Mental relief: There is no financial pressure during or after studies.

Respect for talent: Scholarships respect the hard work and ability of students.

Self-reliance: Students studying with scholarships become self-reliant, as they get help on their own.

Disadvantages of scholarships:

High competition: There is tough competition to get scholarships. Very few students get it.

Strict conditions: Many times a lot of formalities and documents have to be filled for scholarships.

Limited amount: Some scholarships cover only a part of the fees.

Not getting it on time: Sometimes the scholarship amount is received late, which can cause problems in studies.

Which is better for whom?

Now the question arises that which is better among education loan and scholarship? The answer to this depends on what is the financial condition, ability and goals of the student.

If you...

get good marks, are competitive and have documents ready,

then scholarship is better for you.

If you need immediate financial support and are unable to get a scholarship, then an education loan is a good option.

If you want to study abroad and are unable to get a scholarship, then an education loan is the only viable solution.

If you are financially weak but hardworking, then there are many government and private scholarships that can help you.

Conclusion:

Education is every person's right and it requires resources to fulfill it. Both education loans and scholarships help students in their own way. If you are eligible and willing to work hard, then a scholarship is the best option for you as you do not have to repay any loan in the future. 

But if you are unable to get a scholarship or the amount is not sufficient, then an education loan is a reliable way. It is important that you take your studies seriously, no matter how the money comes from. We hope you get all point related to private student loan interest rates, grad school loans, the best student loans and current student loan rates etc. from this article.