Funding higher education is not a task in these times given that there are many lenders who now offer education loans. Opting for an education loan has become an easy way to fund higher education not only within the country but also abroad. There are some peculiarities of a student loan as compared to other types of loans. Before opting for this type of loan, it is important to understand the features of this loan so that you can make the right loan application.
Advertisements
Features:
- An education loan depends on the course fees. It generally covers tuition fees, book fees, library fees and in some cases, accommodation fees. This loan is available for school, undergraduate and post graduate studies. However, not all lenders may offer loans for all types of education. For example, not all lenders offer loans for school education. Most of them focus on graduate and post graduate loans.
- Once they get approved, the funds are directly paid to the educational institution. The lender does not finance the entire cost of education.
- One important eligibility criterion is that the student must have confirmed admission into the educational institution of his choice. Without confirmed admission, the application will not be accepted.
- Lenders generally offer concessional rates for girl students. Student loan interest rates are also different for part time courses.
- The final amount approved depends on the income of the loan applicant. To improve the income, it is possible to make a joint loan application with parents or spouse to ensure the total income is higher.
- Generally, these loans are unsecured but if the loan amount is very high, the lender may ask for some form of security to cover the repayments.
- Education loans do not have immediate repayments. The repayment generally starts 6 to 12 months after the graduation of the student. A simple interest is charged during this moratorium period which is added to the outstanding loan amount. The principal and simple interest becomes the total outstanding loan which is repaid through EMI.
- You can repay them in the form of EMIs. The instalment amount can be calculated by using an EMI calculator. This tool is available for free on lender websites.
- The Ministry of Human Resources along with different lenders have a portal called Vidya Lakshmi where different lenders offer education loans. It is possible for a student to apply for the credit on this portal and track the progress of the application through this portal.
- You also get a tax deduction on the interest paid on an education loan. This deduction is available under Section 80E of the Income Tax Act. There is no monetary limit on the deductions available under this section. The interest paid to the lender will be allowed as a deduction. However, the loan must be taken from a lender in India. This deduction is available for 8 years from the year of repayment of loan. The section does not distinguish between a trust, an NBFC or a bank for the purpose of student loan.
Student loans in India is easily available and with the various benefits, you can use this loan to get good quality education both in India and abroad.
