Whether pursued in India or abroad, education is pretty expensive, especially if you plan to join a premier institution. Getting a higher degree in India is no different. At the same time, an average Indian salaried or self-employed professional dreams of giving the best education to their kids, finances prove to be one of the biggest obstacles.
An education loan is a boon to those who dream of studying in premium colleges in India or abroad but struggle with insufficient funds.
What is an Education Loan?
Education loan is tailor-made to suit the financial needs of students when it comes to funding their educational costs, primarily from low-income backgrounds, to fulfill their educational dream and achieve a great career. Unfortunately, in India, we still hear stories of students who left their education midway, as the family could not further fund it. It is one of the most heartbreaking realities of our society. However, nobody should be denied their right to education, especially students who want to continue quality higher education.
A Comprehensive Educational Loan Scheme, with the Indian Bankers Association and the Reserve Bank of India, was rolled out to counter this problem. Under this scheme, students have access to education loans at low-interest rates for various courses at institutions in India or abroad. They can also apply for an online personal loan.
Why Should You Get an Education Loan?
An education loan should not just be treated as a loan. It is an investment towards your own or your kids’ bright future and a successful career. Think about the times when we have to say no to things as they are unaffordable. Education should not be one of those unaffordable things. Higher education is a necessity for personal as well as societal growth.
The advantages offered by education loans are:
- Need not liquidate your savings– We all save for many important occasions throughout our lifetime. Education loans can help protect your savings and lessen the financial burden.
- Wide coverage– Education loan not only covers the core education cost, including admission fees, semester fees, and examination fees, but it also covers adjoining expenses, like, hostel or transportation costs, library and lab fees, books, and others.
- Flexible Repayment Tenure– An education loan typically comes with a flexible repayment tenure so the applicant can assess his financial standing and accordingly commit to a loan tenure. You can choose between 3 to 12 EMIs as repayment options with no prepayment charges if you decide to close the loan earlier than the stipulated time.
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- Eligible for tax benefit– The entire interest you pay on an education loan qualifies for an income tax deduction, as mentioned under Section 80E of the Income Tax Act. You can avail of the income tax deduction for up to eight years.
- Good credit score– Taking up an education loan, repaying on time, and paying regular interest will keep your credit score high and healthy. A good credit score comes in handy when applying for any other loan in the future.
- Moratorium period makes things easier– When it comes to education loans, a moratorium or holiday period is allotted to the borrower before the repayment period starts. It usually ranges from six to eight months.
- Lesser interest rates– Compared to other loans, like, personal loans, the interest rate on an education loan is much less. It makes it even more affordable and convenient for the borrower.
- Learning About the Pre- Requisites Before Applying for an Education Loan
Here are the basic requirements that you should know when considering an education loan:
- There must be a co-applicant, your parents, or your spouse.
- Loan amount of less than ₹ five lakhs loans does not need security or guarantor.
- Your course fee and family’s annual income determine the approval status of the loan.
Thinking About Your Future Career with the Help of an Education Loan
Education loans continue to make higher education dreams a reality for more and more students. With the increase in well-educated youth population in our society, many struggling aspects from technological to financial will come to an end.
Financial institutions are coming out with better instant loan for students options now and then with easy application processes and faster approvals. But as with all loans, before you apply – read the rules carefully, and choose one that suits your purpose the most. Feel free to ask questions, and always clear your doubts before applying.
