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Planning to take an education loan? Consider these 5 tips

Posted by nehash141 on May 27th, 2019

Building a corpus for higher education is not the only way to get admission you’re your dream course. One way to easily finance your dreams of studying is to opt for an education loan.

An education loan is a type of loan where a lender finances the cost of education. The typical expenses covered in such type of a loan are:

  • Tuition fees
  • Library fees
  • Term fees
  • Any other education expense
  • Accommodation expenses

These charges are directly paid by the lender to the educational institution.

If you’re considering taking an education loan for your education or your child’s education, here are 5 tips to remember:

  1. Joint loan:

Educational loans are not given for the entire amount of tuition fees. The loan amount depends on the course, the educational institution and also the income of the applicant. This is why it is advisable to take a joint loan to improve the acceptance of the loan application. Another thing to remember is that these loans have to be taken by the student and can be taken jointly with the parents to enhance the income limit. It is better to check education loan eligibility on the lender website before applying for this loan.

  1. Moratorium:

Educational loans are not immediately repayable. This means lenders consider the fact that the student has to graduate from their course and find a job to start working. This is factored into the loan and repayments generally begin a few months to a year after graduation. Till then, interest is charged on the principal amount and added to the loan outstanding.

  1. Confirmed admission:

Education loans are only given out to students who have confirmed acceptance in a course. This is one crucial education loan eligibility criteria. The student must have an acceptance letter from the educational institution. Since the lender pays the tuition fees and other costs directly to the educational institution, this requirement is absolutely necessary.

  1. Tax benefit:

There is a benefit of the education loan interest rate. Any interest paid on an education loan for courses both in India and abroad get a deduction under Section 80E of the Income Tax Act. There is no limit on this amount of deduction. This benefit is available for 8 years from the time of repayment of the loan.

  1. Scholarships or schemes:

For students considering education loan in India, the Government has different interest subvention schemes. There is a portal called Vidya Lakshmi where students can search for educational loans under 110 different schemes.

One important thing to remember for an education loan is that it is generally unsecured. However, the lender may require some form of security to lend a high amount.

Before taking an education loan, it is recommended to find out education loan eligibility by visiting lender websites. This can help make your loan application stronger and increase acceptance.

Also See: Education Loan, Educational Institution, Tuition Fees, Loan Eligibility, Loan, Education, Educational

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