January 28, 2020
Student loans are a great way to finance higher education for students. It has helped several people with pursuing education and not worrying about paying the tuition at that moment. Although student loans can be really helpful to pay for college expenses, they have to be repaid back. The repayment term usually starts after a student graduates. The repayment amount includes monthly payments which are the addition of some principal amount along with accumulated interest.
Often, students struggle to repay this loan due to its high-interest rate which puts them in debt. So, the question arises, what are the options to get out of them. Can students take a personal loan to pay off their student debt?
Let's find out.
The burden of paying back the student loan can get to you when the repayment tenure starts. You can avoid this by taking a personal loan and consolidating your debts.
Here are some of the ways which can ease the repayment of student loans through a personal loan.
1 – Consolidation of loans
It is very common for students to take more than 1 loan during their academic life. It may be to finance their undergraduate or graduate studies. Since there are two or more loans, making payments for each one of them can be challenging and difficult to manage. To avoid this, you can consolidate all of your loans together, take a personal loan and pay off your existing debt.
By consolidating and paying off your loans, now you’ll have only one loan to worry about, which is a personal loan. It will now have a new fixed interest rate and you’ll only be making monthly payments for this debt now. It makes the repayment process easier and hassle-free.
2 – Lower interest rate
There are several lenders which offer personal loans at a cheaper interest rate as compared to student loans. It in turns becomes easier to repay and manage. In terms of repayment tenure, a personal loan offers a shorter-term as compared to a student loan which makes paying off the entire amount easier.
The repayment term of a personal loan is usually up to 5 years, whereas for a student loan, it goes up to 15-20 years. So, you can also save up a lot in terms of interest, when it comes to personal loans. It is a wise decision to calculate the overall amount you will be paying and then take either of the loans.
3 - Need for a co-signer
When you take a personal loan, you don’t need a co-signer or guarantor for your loan compulsorily, if you have a good credit score, scope for a good job and basic documents. It is because a personal loan is an unsecured debt and doesn’t need collateral.
In the case of a student loan, you would require a co-signer or guarantor since you as a student is not considered very well off to take a loan. Your family member or friend will have to act as a co-signer for your loan which means they’ll be making payments in case you miss them. Once you start working, you can start the repayment and release your co-signers from this obligation. You can do so by taking up a personal loan and paying off the existing debt.