Which is Better for Education? Education Loans vs. Scholarships

Which is Better for Education? Education Loans vs. Scholarships: Education is a weapon that can take a person to the heights of success. Nowadays, everyone has a dream of getting higher education, but money is required to fulfill this dream. There are two main ways for this – education loan and scholarship. 

Both the ways can be helpful in getting education, but there is a difference in their nature, advantages, and disadvantages. In this article, we will learn about both in detail and try to understand which way is better for education: education loan or scholarship.

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

1. What is Education Loan?

Education loan, as the name suggests, is the loan that is given to students from banks or financial institutions to meet their study expenses. This loan is given to the student who wants to get higher education, but does not have enough money.

The main purpose of an education loan is to provide financial assistance to students so that they do not face any interruption in their education. This loan has to be repaid within a stipulated period. Generally, the terms and interest rates of an education loan are quite affordable, and in some cases the government also subsidizes it.

2. What is a scholarship?

A scholarship is a financial aid given to students based on their excellence, need, or other merits. Scholarships are usually interest-free and do not have to be repaid. It provides financial help to the student for their educational needs, such as tuition fees, book expenses, or accommodation.

There are different types of scholarships – academic, sports, social service, arts, and many other fields. Both government and private institutions offer scholarships.

3. Advantages of Education Loan:

(a) Continuity of Study-

Education loan allows the student to complete his studies without any financial worries. If one does not have enough money, he can continue his education by taking a loan.

(b) Low Interest Rates-

The interest rates on education loans by the Government of India are low, especially on loans taken from government banks. Apart from this, some loans are also subsidized by the government, which reduces the pressure on the student's financial situation.

(c) Flexible repayment period-

Education loan can be repaid after complete education. Usually, the student has to start paying the installments only after getting employment. This gives students time to earn money after completing their studies.

(d) Borrowing record-

If the student takes an education loan and repays it on time, his credit record can also be strong, which helps in taking other loans in future.

4. Disadvantages of education loan:

(a) Loan amount-

If the education loan is taken too high, it can be difficult to repay it, especially if the student does not get a job on time.

(b) Interest burden-

Although the interest rates are low, paying interest on the loan can put an additional financial burden.

(c) Pressure to repay the loan-

Sometimes, education loans can put pressure on the student to find a job and earn money quickly, which can also cause mental stress.

5. Benefits of Scholarships:

(a) Study without any financial pressure-

The biggest advantage of scholarships is that it does not have to be returned. This allows students to put all their energy into education without any financial worries.

(b) Recognition of academic or other abilities-

Scholarships are given to students who have certain special qualities, such as academic performance, sports, or other field excellence. It is also a respectable award that can be beneficial for future career.

(c) Different types of scholarships-

There are many types of scholarships available in India, such as government scholarships, scholarships from private institutions, and scholarships for studying abroad. For this reason, students can get the right scholarship according to their ability and need.

(d) Networking through scholarships-

Many scholarships are awarded by special organizations, which also provide a networking opportunity to students. Students receiving scholarships can participate in various events, which can lead to better opportunities.

6. Disadvantages of Scholarships:

(a) Tough competition-

Scholarships can be very difficult to obtain, as the number of them is limited. To get them, students have to excel in their academics, sports, or other abilities.

(b) Specific criteria-

Sometimes certain criteria have to be met to get a scholarship, such as academic performance, social status, or financial need.

(c) Time Limit-

Some scholarships are available only for a certain period of time, and you may have to go through the application process again to renew them later.

7. Education Loan vs Scholarship – Which is Better?

Now let’s understand which option is better between an education loan and a scholarship. Both have their own advantages and disadvantages, and it depends on the individual situation and need of the student.

(a) Education Loan-

If you don’t have the money to pursue higher education, and you are certain that you can get a job after completing your studies, then an education loan can be a good option. An education loan gives you financial support, but it has to be repaid, which can become a responsibility in the future.

(b) Scholarship-

If you are an excellent student and have a special ability (such as sports, music, or contribution to a social cause), then a scholarship may be better for you. It gives you the opportunity to complete your education without any financial pressure.

8. Conclusion:

Ultimately, both education loan and scholarship are important options for students. Education loan provides you financial aid, while scholarship is an honour for your excellence and gives you a chance to pursue your studies without any financial burden. Students should choose either of these based on their need, ability and circumstances. Before choosing any path, it is important to understand its advantages and disadvantages thoroughly.