education loan

Many students wish to go for higher studies but may face financial constraints. The best option for students is to borrow loans to fund their higher studies. But before borrowing any type of loan, it is essential to check the pros and cons of education loan from private lenders to make an informed decision.

Students can borrow government loans involving low-interest rates.

Many private lenders have vague terms and conditions that may make it difficult for you to borrow loans. It is essential to cross-check before going to any lender.

Fund your Education the right way

Loans from private lenders are sometimes known as alternative student loans or provident loans. In Ireland, these loans are easy to borrow.

Like any other loans, they have their own drawbacks and benefits too. Hence, it is important to weigh it’s both sides to get a clear picture of borrowing a private loan.


1. Rewarding interest rate

In the case of borrowing a government student loan, the interest rate is almost the same for everybody, irrespective of the credit amount. The government education loan rates start from as low as 2.75% and go up to 5.4%, depending upon the level of education.

Alternatively, with private student loans, your interest rate is mainly dependent on your credit amount. Borrowing a large amount may attract a lesser interest rate and vice versa.

2. Higher borrowing limits

Government loans offer a specific limit. For example, going to an expensive school may have a huge fee, and government loans may not be able to cater to such high fees. You may not be offered the complete amount, and only partial payment is being approved as your credit limit.

The government student loans may range from $31,000- $57,500 depending upon the graduation/ under graduation level. These amounts vary as per the needs o the students.

Alternatively, with loans from private lenders, you can borrow the total amount on your loan. Private student loans can fill up the funding gap and make up the difference created with your government loans.

3. Statute of Limitations

In case of non-payment of government loans, there is no way out but to pay back your loans eventually. You may default on your government education loans, but there is no way to escape. Your loan amount may be added to your taxes.

Private student loans have a statute of limitations involved. At the time of your default, there is a statute of limitations ranging from 3 to 10 years. After this period, lenders are left with very few options to collect the amount from you.

4. The amount can be used for other expenses too

If you think that your education loan can only be used for education, you are wrong. Many students use their loans on the room, tuition and many other things.

Further, you may use this money for expenses such as laptops, textbooks, computer software, et cetera.

A student may face a financial burden as they have no source of income. Hence, most of the students are being offered loans with lower interest rates. Other personal loans or credit cards are more expensive than these student loans.

5. Helps in building your Credit Score

If you borrow government student loans, you can boost your credit score. Upon paying your loan responsibly, it will push you in the direction of a good credit score.

Many students do not understand this point and hence do not take it seriously. Since there are not many debts or bills associated with students, this is their only hope to build their credit history.

Once you have an increased score, it can work wonders for you throughout your lifetime. You do not have to worry about any debt in your future life. You can easily borrow education loans from lenders.

There can be any unexpected costs involved in your future, such as buying a new car or buying a new house or looking for credit cards.

Even when you are applying for jobs, you may require alone. Hence, always consider this option of building your credit history while you are on your student loans.


1. Ineligibility for government forgiveness

Government student loans are beneficial in a way as they provide income-driven repayment plans by capping the small percentage of the loan amount of your income.

Unfortunately, private student loans do not fall in this category and are ineligible for this.

Although some options are available in the private student loans, such as deferment or forbearance, they are not as feasible as the percentage capping.

2. Variable Interest rates

The interest rates offered in government loans are fixed irrespective of the amount and the borrower. The interest rates remain fixed regardless of any fluctuations in the economy.

Whereas the interest rates in private student loans may vary, you may find a variable interest rate for yourself.

There will be a rise in variable interest rates with increasing interest rates and may pressure you. Different interest rates are there for various forms of loans. If you borrow legit loans for bad credit, they may have a different interest rate.

In Ireland, there are various options for borrowing loans. You have to be careful while choosing your option. Make sure to check all the terms and conditions before applying for your loan.

3. No government subsidy

Few of the government loans may be offered with government subsidies. The subsidy states that the government shall pay your interest in specific situations.

This may save you hundreds and thousands and save you from debt accruement.

Unfortunately, this option is not available in private loans. You might have to make payments even though you are in school, and there is no relaxation for the interest rate.

Upon non-payment of the interest rate, it may pile up and add to a huge amount you have to pay once you finish school.

4. Consignee/Consigner

A good credit score plays a relevant role in getting a lower interest rate on your existing debt amount. The government student loans may not require a consigner, unlike the private student loans.

Consigner plays an essential role in your debt repayment. If you are unable to pay the debt amount, the consigner is responsible for paying back the debt amount.

In case you miss a payment or are declared as a defaulter, it can cause damage to your consigner’s credit. 

5. Not discharged post borrower’s death

One of the benefits of government loans is that they are discharged post-death of the borrower. The debt amount will be cleared and won’t be counted.

The lenders are still eligible to collect the loans against your property in private student loans. They can contact and collect the amount from your relatives or friends in case of non-assignment of the consignee.

Some private loans may be declared as default when the consignee passes away.


Considering the above pros and cons, many private loans may come up with advantages, but it is beneficial to opt for government student loans.

An essential tip is to try and fund your education with your savings and scholarships and keep the private loan option as a last resort.

If you are confident about your repayments, only then opt for an education loan option.

Leave a comment

Your email address will not be published. Required fields are marked *

Apply Now