Benefits of Education Loans: Features and Advantages of Why You Should Take an Education Loan!

benefits of education loan

We can gain from investing in education over the course of our lives. Studying abroad for higher education may only be an ambition for many people due to rising tuition costs. Due to the availability of education loans, both parents and students are now able to realise their aspirations. But the majority of the time, people believe that taking out an education loan will add to their already heavy load of completing the study abroad application procedure, selecting a foreign university, and receiving approval for their visa. However, this is untrue. Although the concept of student loans may sound frightening, it has advantages of its own. Through this blog, we will be highlighting the benefits of education loans in detail. Keep reading to know more. 

Also Read: Education Loans for Abroad Studies 2023

Features of Education Loans

  • The fact that education loans are provided in accordance with the needs and requirements of the student is one of their best features. 
  • There is something available for every need, regardless of whether students are intending on attending a domestic or overseas higher education institution, enrol in an undergraduate or graduate programme, or even a professional development programme. 
  • Another feature of education of loans is that students can enjoy long-term repayment tenures for higher education loans. 
  • In order to further their education, one needs to secure funding, students can put up immovable assets such as equity shares, bonds, debentures, fixed deposit certificates, residential, commercial, and other types of real estate, as well as gold deposits. 
  • The student may be able to obtain an education loan with the aid of a guarantee letter from a bank employee or a home bank.
  • Students may also have access to 100% financing in certain circumstances.
  • Interest rates are an important consideration when taking out any loan, but especially when obtaining one for education. In general, education loans around the world have lower interest rates, especially if they are obtained from public sector banks. Even those from disadvantaged backgrounds are eligible for subsidised loans. The government subsidy’s strongest feature is that it handles loan interest payments for the duration of the course and up to six months.  
  • Direct loan payments are made to your educational institutions. It may be sent in full or in portions depending on your course’s requirements.
  • Some banks provide free savings accounts with student loans for higher education.

Also Read: Expenses Covered in Education Loan

Benefits of Education Loan

Now that you have gained knowledge about features of the education loans, let’s take a look at the benefits of education loans:

Tax Benefit

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.

Save TCS on Loans Below INR 7 Lakh

Under the Liberalised Remittance Scheme (LRS), studying abroad with an education loan can help you save 4.5% on your tax amount. When you study abroad without any education loan, the government charges 5% Tax Collected at Source (TCS) on all foreign remittances above Rs. 7 lakhs. However, this amount drops to just 0.5% TCS when you finance your overseas study through an education loan, making it the smarter option.

Releasing your Parents from the Debt Load

As the student is responsible for repaying the debt after completing his studies and the moratorium period, taking out an education loan can free parents from any financial obligations. Additionally, it instils a sense of accountability in the children. 

Also Read: 5 Things to Keep In Mind to Apply for Education Loan

Payment after the Course Completion

One of the key benefits of student loans is this. Education loan programmes have a moratorium period, unlike personal loans where the borrower is expected to begin making payments on the accrued EMIs in the coming 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. To allow students to focus on their studies, the moratorium period typically lasts the length of the course plus 6 months (with the option of an additional 12 months). 

Range of Expenses Covered

An education loan for international studies will cover almost all of the expenses a student may have to pay to finish their study. The following expenses are covered: tuition, transport (tickets), housing costs, university fees, food prices, living expenses, a laptop, or any other tools you’ll need for your studies.

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 CIBIl score over 750 is considered to be a good score. 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.

Students should undoubtedly think about taking out student loans to pay for their studies abroad, but before they do, it’s crucial to organise their finances and both parents and students should educate themselves on the benefits of education loans. 

FAQs

Q1: What is the maximum amount offered for education loans to study abroad?

Ans: The maximum amount varies from bank to bank and also depends on other factors like the cost of an entire course

Q2: Do women who take education loans receive any discounts??

Ans: Yes. Many banks in India, including Axis Bank and SBI offer discounted rates of interest for girls.

Q3: What are the modes of payment that one can use to pay off higher education loans?

Ans: One can pay back your student debt in equal monthly instalments. Additionally, standing instructions, postdated checks, and ECS are payment options.

It might be difficult for students to arrange every single detail of their study abroad journey on their own, making the preparation process burdensome. Giving students the option to pay for their own higher education is the best method to get them ready for exposure. Get in touch with the Leverage Edu team of professionals to receive help with the planning for your study abroad experience, and have your application process accelerated. 

Follow Leverage Edu and FlyFinance for all your study abroad requirements.

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