A personal loan can be used for any kind of expenditure; there are no restrictions on this. Consequently, it can be used to pay for expenses associated with education. So to answer your query: Why can't personal loans be used for education? I’d like to say that in India, while personal loans can be used for education, many lenders and experts discourage, or even restrict this due to several key reasons:
Higher interest rates make personal loans more expensive than specialized education loans. Personal loan rates often range from 11 to 18% p.a., whereas education loans usually offer lower rates, around 8 to 13%.
Second, personal loans lack moratorium periods. EMI payments begin immediately, placing financial strain on students' pre–job, while education loans typically defer repayment until after course completion plus several months.
Another downside is the absence of tax benefits. Education loan interest payments are deductible under Section 80E of the Income Tax Act, but personal loan interest isn’t eligible.
Additionally, education loans are structured specifically for academic use; though personal loans are multi‑purpose, lenders may still restrict usage.
By comparison, personal loans are seen as unsuitable for funding education, as they’re meant for short‑term personal needs, not long-term investments. Financial advisors typically recommend starting with education loans first for their lower cost, lenient repayment terms, and tax benefits. This is why can't personal loans be used for education.
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Why Can t Personal Loans Be Used For Education?
ravi
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6 months
2025-06-17T12:28:59+00:00 2025-06-17T12:29:01+00:00Comment
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