Which is Better for Education? Education Loans vs. Scholarships

Which is Better for Education? Education Loans vs. Scholarships: The importance of education has increased a lot in today's world. Good education is necessary not only for getting a job, but also for a good life and thinking ability. But getting a good education is not cheap. Especially if a student wants to pursue higher education, such as engineering, medical, law, or studying abroad, then it costs lakhs of rupees.

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

In such a situation, two paths come in front of us –

Education loan

Scholarship

So the question is – which of these two is the better option? Which option is more beneficial for students and parents? In this article, we will compare education loan and scholarship in detail and understand which option proves to be better in which situation.

1. What is an education loan?

Education loan is the money that banks or financial institutions lend to students for their studies. With this money, students can cover their fees, books, hostel, laptop and other educational expenses.

Key points:

It has to be repaid later in installments.

Interest is charged.

Usually, repayment has to be started 6 months or 1 year after completion of studies.

Example:

If a student has taken an education loan of 10 lakhs, and the interest rate is 10%, then he can repay around 12-13 lakh rupees after completing studies.

2. What is a scholarship?

Scholarship is a type of financial aid that is given to students without any repayment requirement. It is given by the government, private institute, college or university.

Key points:

It is not repayable.

It is given on the basis of merit, economic status, caste/class, talent in sports or arts, etc.

Some scholarships are also available for studying abroad.

Example:

If a student gets a scholarship of ₹2 lakh, he can use this amount for his studies and he does not have to pay back any amount later.

Let us compare –

1. Cost and Repayment –

Pros Education loan Scholarship

Cost Has to be repaid with interest Free

Repayment Has to be repaid after studies There is no repayment

Risk Difficult to repay the loan if job is not found No risk

Scholarships are cheap and risk-free.

2. Eligibility and eligibility -

Pros Education loan Scholarship

Requirement is only admission and course recognition Available on the basis of merit, class, income, or talent

Relatively easy to get There is a lot of competition

Education loan is accessible to all, scholarship requires hard work and special qualifications.

3. Mental pressure -

After taking an education loan, the student has the mental burden of repaying the money. Many times it also causes stress. Whereas scholarship is completely stress-free as it does not need to be returned.

Scholarship gives more peace of mind.

4. Impact on studies -

Many students who take education loans do part-time jobs while studying so that they can save money for the future.

Students who receive scholarships get the freedom to focus only on studies. Scholarships help in maintaining focus on studies.

5. Availability -

Education loan in India is available from almost all major banks. There are also special schemes for this like SBI Education Loan, Vidya Lakshmi Portal etc.

There are also many scholarships, such as:

National Scholarship Portal (NSP)

INSPIRE Scholarship

Girl's Scholarship Schemes

State Government Schemes

Foreign Scholarships (Fulbright, Chevening, DAAD etc.)

Both options are available, but scholarships are limited in number.

When should one take an education loan?

When scholarship is not available.

When the course fees are very high and the financial condition of the family is poor.

When the student is confident that he will get a good job after completing his studies.

When should one try for a scholarship?

When your performance in studies is good.

If you belong to a reserved category and are eligible.

If your financial condition is poor.

If you have any special talent (eg – sports, music, art etc.).

Are both possible together?

Yes, sometimes even after getting scholarship, some expenses are not met. In that case, the student can take an education loan. By using both the options in a balanced manner, the student can complete his studies.

Real life examples:

1. Riya's story (Success through Scholarship)-

Riya is from a small town, she has always been a topper in studies. She scored 95% marks in 12th. She got INSPIRE Scholarship from the Government of India, which made her B.Sc. studies free. Today she is on the path to becoming a scientist.

2. Rohit's story (Struggle and success through Education Loan)-

Rohit's dream was to do MBA abroad. He did not get any scholarship. His father was a farmer. Still he took an education loan of 15 lakhs. After completing his studies, he got a job in a multinational company. Now he is paying an EMI of ₹20,000 every month, and is happy.

In conclusion:

Education is an investment, and every student should get his due. Scholarships are the best option, but are limited and require hard work. Education loans are a backup plan that comes in handy when you have no other option. Students should seek timely information, understand the options and make informed decisions. With the right information and hard work, the path to education can become easier.

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