Due to the fierce competition and rising prices, the majority of students who want to pursue an international education now have to take out a student loan. The majority of parents were used to using their savings and liquidating assets like gold, fixed deposits, land, etc. to pay for their children’s education in the past. These days, parents are beginning to embrace the paradigm shift of borrowing money to pay for their kids’ education.
This is because parents and students are now both aware of the many benefits that a student loan may offer. They are aware that choosing an education loan over a personal loan for education is preferable.
Benefits of taking an education loan
Lower Interest Rate:
Interest rates on personal loans for paying for school abroad are typically higher than those on education loans. Less interest is charged on education loans. Additionally, all female students receive an additional 0.5% discount from government banks.
One of the key benefits of education loans is this. Education loan programmes have a moratorium period, unlike personal loans where the borrower is required to begin making payments on the accrued EMIs in the following months.
The moratorium period is the time frame during which the student is exempt from making payments to the lender or the start of the EMIs. In order to allow students to focus on their studies. The moratorium period typically lasts the length of the course plus 6 months
A wide range of expenses are included:
Nearly all of the costs that a student can incur to complete their education are covered by an education loan for abroad studies. Tuition, travel (tickets), housing costs, university fees, food costs, living expenses, a laptop, or any other equipment necessary for your studies are all included.
Interest reduction on education loans:
For the benefit of loan applicants who come from economically disadvantaged parts of society. The Government of India has implemented a number of interest-subvention programmes for education loans. The below list includes the subsidy plans.
- Central Sector Interest Subsidy Scheme
- The Padho Pardesh Education Loan Interest Subsidy Scheme
- Dr. Ambedkar Central Sector Scheme of Interest Subsidy
One benefit of these subsidy programmes is the elimination of the interest on educational loans accrued during the moratorium period. However, following the moratorium period, these students must begin their own EMI repayment.
The loan applicant or co-applicant may take advantage of the education loan income tax exemption under Section 80E of the Income Tax Act 1961. Simply put, the loan applicant or co-applicant may declare that a portion of the interest they pay on their student loan is deducted from their gross income.
Build your CIBIL Score:
The credit information report, or CIBIL, provides an overview of your credit history to date. The typical CIBIL score varies from 300 to 900. A good score is one that is greater than 750. Your CIBIL will benefit from your education loan because prompt EMI repayment will increase your score. And make it easier for you to secure future loans like a home loan or vehicle loan.
Finally, students should be informed of the benefits of student loans and how to save money without running out. But even at Bank of Maharashtra, our financial advisors advise taking out an education loan to pay for one’s postsecondary education because there are so many benefits to doing so. We are only a phone call away if you find yourself in a scenario where you are unsure about applying for an education loan or fear it will put a financial burden on your parents. Get expert guidance on student loan issues by getting in touch with our staff.