Australia is renowned for the quality higher education it provides, yet it is also remarked as being quite expensive. With sky-high tuition rates, many students often get confused about what route to take to finance their higher education.
Finding the least costly option can be difficult, but we’re here to provide you with all the facts you need to know about Education Loans for students and how they can be a better option than self-funding your studies. This article will explore why Education Loans are the superior choice, whether you plan to study in a private college, TAFE or university within Australia.
What Are Education Loans & How Do They Work?
Education Loans, also known as Student Loans, are a type of personal loan designed to help students pay for their higher education. In particular, a lump-sum amount is provided to students to help them pay for tuition fees, laptops, supplies, and living expenses. When government assistance is not an option, the next best option is an Education Loan with a private lender. However, it is good to note that the repayment terms, eligibility criteria, and interest rates differ depending on the lender.
Private lending for Education Loans tends to follow the traditional method of applying for a loan wherein the student will need to fill out an online application, and the lender will conduct credit checks before approving their application. Typically, the funds are deposited in the student’s bank account to distribute to the educational institution or other costs as required.
What Are the Benefits of Education Loans?
Education Loans with a private lender are considered to be an attractive option because of several key benefits. Let’s take a look at some of them:
- Typically offer lower interest rates, compared to credit cards or cash advances
- If you borrow from a private lender, you can usually have a higher borrowing limit
- More flexible in terms of repayment terms
- Since most private lenders provide funds directly to your account, you can use them on other unexpected expenses as well
Education Loan for Students or Self-Funding; Which Is Better?
Now that you know about the benefits of an Education Loan, it is time to compare this type of Personal Loan with self-funding to determine which is better. If you have been considering self-funding your education, it is usually not a recommended option unless you have liquid cash. If not, Education Loans for students are better because you can use them so you don’t need to turn your assets into liquid cash.
Moreover, people tend to underestimate the cost of living. In countries like Australia, living expenses can be relatively high. If you plan on self-funding your studies, you might not have enough cash flow for living and day-to-day expenses. An Education Loan can cover both education and living expenses. Additionally, self-funding leaves little room to be financially prepared for any emergencies or unexpected surprises.
If you plan to sell your assets to self-fund your education, that may not be a great idea. Assets like property tend to appreciate over time; hence, you risk losing benefits in the future, such as using these assets for collateral for future loans. However, with an Education Loan, that is not a problem because you won’t need to sell your assets or even put them as collateral for the loan.
The Bottom Line
Education Loans for students are an excellent option for those who are eligible for them. Self-funding your education can be a significant risk or simply may not be an option for most students.
If you want to apply for an Education Loan or want to know more about your options, don’t hesitate to reach out to us at Cashify. Our helpful and friendly team would love to speak with you, so get in touch with us about Education Loans at Cashify.
Disclaimer: Please note this content is of general nature only and does not take into account your personal objectives, financial situations or needs. For advice tailored to your financial situation, it is advised that you seek guidance from an accountant or financial advisor. The information contained in this article is correct at the date of publication.