Can we combine a personal loan and an education loan?

A study loan has certainly made higher education – in India and abroad – within the reach of thousands of Indian students who were previously unable to finance their higher education.

Quality education often comes at a price that increases rapidly over time. In such scenario, student loans become the support system for people unable to afford such high expenses. Therefore, most students looking for a quality education end up with a student loan.

However, experts say, on several occasions, the loan amount sanctioned is not enough to cover the cost of the expenses.

Ankit Mehra, co-founder and CEO of Gyandhan, says: “Students, especially those looking for funding for education abroad, are wondering if they can qualify for two student loans from different lenders at the same time. time. Some even wonder if they can opt for a personal loan in addition to their student loan to meet short-term expenses. While nothing on paper necessarily prevents them from taking out two education loans, lenders are generally unwilling to extend an education loan if the student already has one.

Also, keep in mind that for tax benefits, only one loan can qualify as a student loan.

Industry experts say that opting for a personal loan to cover additional expenses is fine as long as one does not violate any of the terms of the existing loan agreement. A borrower may even be required to sign an affidavit stating other borrower’s debt obligations or may need to notify the lender of any additional loans they may take or have taken on.

Mehra adds, “If the borrower misrepresents on either of these fronts, the loan could be canceled and the borrower could face other penalties as well. The key here is to communicate the correct information.

Note that banks also take into account the fixed bond-to-income ratio (FOIR) when reviewing personal loan applications. The ideal FOIR for personal loans is between 40 and 50 percent. Simply put, the borrower’s fixed monthly obligations should not exceed 40 to 50 percent of their total monthly income.

With a large majority of programs online due to the pandemic, experts say students are now signing up for online programs and short courses and looking for educational loans to fund them. Mehra says, “Traditional lenders in India have largely stayed away from funding these online programs and short-term courses. In such cases, NBFCs and emerging fintech players like GyanDhan are carving out a niche for themselves by offering zero percent EMI loans. “

A study loan has certainly made higher education – in India and abroad – within the reach of thousands of Indian students who were previously unable to finance their higher education. Experts say it’s important for students to understand all the nuances of the student loan on offer before taking out it.

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