Even after saving for a lifetime, most parents find it impossible to send their children overseas to study. This is due to the fact that education is expensive, a situation made worse by high education inflation, and also most people’s savings are insufficient. Estimating future cash requirements is one of the obstacles in financial planning for our children’s higher education. It’s difficult to compute this precisely. Whether you wish to take a management degree or something else, an education loan might be the answer. So here are certain things you need to know about study abroad education loans.
Select the Appropriate Course
Examine the Whole Cost of Education
Before asking for an education loan to pay for your foreign studies, this should be the first and most important difference to consider. A student should include costs such as living expenses, travel, and other additional charges in addition to tuition. There are a number of universities that offer similar courses with generally identical pedagogies, however, tuition rates and living expenses might vary greatly. Some of the basic expenses a student needs to take into account for the loan:
- Fees that must be paid to the College and Hostel
- Examination, Library, and Laboratory fees
- Purchase of Books, Instruments, and Equipment
- Building Fund, Caution Deposit that is refundable
- Expenses for travel
- Purchase of laptop required for the course
Look Into All of the Available Scholarship Options
This has shown to be the most profitable strategy to reduce overall expenses in a foreign area, as a number of commercial and government-sponsored organisations give substantial sums through various scholarship options that might potentially help you in reducing the total costs. You can check out the kind of scholarships available in the UK, USA, Canada, and other countries. Check out the scholarship provided by Leverage Edu.
Minimize the Amount of Loan Required
One of the most typical blunders is taking out the largest debt possible, regardless of their ability to repay it. It’s important to be realistic about future earnings. If the student is unable to return the debt, the student will be placed on probation. In this case, the co-applicant, usually the parent, is responsible for repaying the balance.
Keep Your Credit Score up to Date
A parent or guardian is usually a co-applicant for an educational loan. To avoid being turned down, the borrower must have an excellent credit history. Even a long delay in paying your credit card account will hurt your chances of getting a student loan.
Choosing Your Loan’s Financial Institution
It might be difficult to find a lender who can meet your education loan needs because most education loan financiers will only issue a loan to a student who has been accepted into a prestigious university. The applicant should confirm that the course and college for which they are applying for a loan are eligible for funding. They must also determine if the loan is unsecured or secured. Fly Finance can help you provide all information regarding the eligibility for the type of loan i.e collateral and non-collateral. Here students come in bulk so you can get the education loan at lower interest rates compared to the market rate.
Loan Conditions
Following the eligibility check, the applicant should review the loan amount available, the relevant interest rate, the moratorium period before the EMIs begin, the total loan term, the availability of a co-payment option, the margin needed, and the eligibility for an income tax deduction. The applicant should also accept the loan in instalments, meaning that the money is disbursed at the same time as the semester fee is paid, as interest is imposed after the money is disbursed.
Child education loan tax benefits
There is a common misconception that taking an education loan attracts tax. However, it is not the case. If you are pursuing a full-time or part-time course at a recognised institute and taking an education loan to fund your study, then you can claim income tax benefits on principal paid and interest component up to Rs 1 lakh. Here’s why you can do that.
- Section 80E of the Income Tax Act offers tax deductions on the amount of interest paid towards education loans. However, the I-T department has clarified that the principal amount paid throughout the loan period is not eligible for deduction under this section.
- This section is applicable for all kinds of education loans, such as those taken for higher education, professional courses, and even vocational courses. As long as the loan is taken from a bank or a registered financial institution, it is eligible for this benefit. The limit of eight years is also applicable in case of education loans.
- The best feature of this tax benefit is that there is no cap on the interest rate which qualifies to be deducted. This means that if your interest rate is 11 per cent and you pay Rs 50,000 as interest in a particular year, you can claim deduction up to maximum Rs 54,250 that includes both principal and interest components.
tHINGS TO KEEP IN MIND BEFORE APPLYING FOR A LOAN
The following are things to think before applying for an education loan:
- Best loan providers with minimum interest rate
- Make sure to keep your documents ready
- Consider your repayment options
- Apply timely considering the processing time
Hope now you know all about study abroad education loans. Before taking out an education loan, be sure you understand all of the terms and circumstances. For more information, check out this blog on how to apply for a student loan. Applying for educational loans is not that much tough if you are getting the proper guidance regarding the same. So, here you can sign-up for a free consultation with Leverage Edu finance experts at 1800572000.
