Why Does It Make Sense to Have a Personal Line of Credit Along with an Education Loan?

Many people tend to think that an education loan will take care of any and all education-related expenses, but it doesn’t work that way. In most cases, these loans only pay for tuition fees. It’s important to have additional funds earmarked for out-of-pocket costs, especially if you or your child plan to study abroad.

A personal line of credit is often the perfect solution for managing expenses that are not covered by a student loan. Here’s why:

You are only charged interest on the amount you use, unlike a loan where the full approved amount incurs interest from day 1.
Applying for a credit line is often easier, faster and less stressful than trying to get approved for a traditional personal loan.
You can access your line of credit anytime and anywhere, which makes it an ideal backup for emergencies and unexpected costs.
When you make a repayment towards a revolving line of credit, the available limit is topped up and you can use it again.

A line of credit can be used to pay for a wide range of study-related expenses, especially for study abroad. Some examples include:

Tuition Costs – Even if you have a student loan that covers school or college fees, an additional source of funds can be very helpful in case of any delays in loan disbursal.
Study Supplies – When you need to pay for new books, laptops, phones, bags, clothes and other college gear, a flexible line of credit is the most convenient way to do it.
Housing Costs – Students often prefer to rent a home off-campus, especially if they plan to work while studying. A line of credit can help with deposit payments and monthly rental.
Transportation – Credit lines can help pay for the cost of traveling between school/college and off-campus accommodation or work, whether through public transport or private.
Activities/Events – Educational institutions often organize extracurricular events and activities, and the fees for attending these special events are usually not included in tuition.
Living Expenses – Credit lines can also be used for food, medical bills, phone and internet connectivity, etc. While some colleges provide these in their fees, many do not.
Travel Expenses – The cost of traveling to school or college in another country are quite high. A line of credit can help, especially while planning a trip home during breaks.
Vacation Costs – Even if international students don’t travel back home during vacations, access to extra funds will allow them to explore their host country during this time.

That’s not all, though. As long as you plan expenses carefully and avoid impulse spending, a personal line of credit also provides the perfect financial safety net when you or your child plan to study abroad. It can give you instant access to funds anytime and anywhere, but cost you nothing at all when you have not used it!

Author bio:Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at shiv@moneytap.com.