Today’s students prefer higher education to gain career-specific skills and better job opportunities. Higher education has become crucial for students as educational institutions incorporate new technologies and experiential learning methods.
However, the escalating tuition fees have become a burden for many, especially those from poor and middle-class backgrounds. Many banks offer educational loans to help students pursue higher education.
These loans cover tuition, hostel, travel and food expenses, examination fees, lab charges, library fees, books, uniforms, and projects. Let’s explore the benefits of taking out an education loan.
Education Loan Benefits: Students can choose loan types based on their courses and needs. These loans may also cover ancillary costs, such as refundable security deposits at course completion.
Only 0.5% TCS is required for students obtaining education loans. Section 80E allows students to receive unlimited tax deductions on interest paid for up to 8 years.
Education loans do not require immediate repayment, with EMI payments typically starting 6 to 12 months after course completion. This provides students with time to secure a job and settle down.
Repaying education loans on time can lead to a good credit history and improved credit score, making it easier to secure other loans in the future, such as home or car loans.
Paying through EMIs fosters a habit of saving money from an early age and encourages disciplined financial planning.
Choosing the Right Bank: While many banks offer education loans, it is essential to choose one that best suits your needs.
While some may opt for obtaining loans through phone-based services, banks generally offer loans at lower interest rates and provide benefits under Section 80E of the Income Tax Act.
Determining the Loan Amount: It’s essential to correctly estimate all costs associated with your educational institution and determine the amount needed for an education loan.
Assess how much you can receive from a bank as an education loan and decide on the down payment amount.
Considering Job Opportunities: Before applying for an education loan, evaluate the job opportunities related to the chosen course.
Banks consider the student’s ability to repay the loan when granting it, so it is advisable to choose courses with high employment opportunities.
Understanding Credit Scores: A good credit score is crucial for obtaining an education loan. Paying interest on time is essential for one’s financial well-being, and neglecting loan repayments can negatively impact one’s credit history.
Loan Repayment: If you secure a job immediately after completing your education, it’s essential to repay the loan promptly. This will improve your credit score and help you avoid late penalties.
Considering Alternatives: Be prepared for alternatives if higher education does not guarantee immediate employment.
Even if you don’t land your desired job immediately, seek employment related to your profession to start repaying the loan while continuing to pursue your ideal job.
Exercising Responsibility: Focusing on your academic goals and not succumbing to financial pressures is crucial.
Every individual’s financial situation is different, and while it’s true that some students come from wealthy backgrounds, it’s important to maintain sight of your financial responsibilities.
Interest Rates: When you apply for an education loan, banks consider various factors, such as the college you attend, course details, educational expenses, family income, assets, and past payment history.