In today’s society, receiving a good education is critical to launching a successful profession. In developing countries like India, it is sometimes necessary to educate your children in reputable and renowned academic institutions in order to give them a leg up on the competition for a well-paying job. These top schools and universities, on the other hand, are expensive and generally difficult to get into. As a result, more parents are seeking Education Loans in India than ever before.
The costs are even greater for students considering higher education abroad. Furthermore, private universities charge significantly higher fees than public colleges. Students and parents alike choose to take out an education loan in these situations. Going for an education loan paves a path to your ambitions. A student loan might assist you in enrolling in your preferred university. Because of the government’s emphasis on education, you may be eligible for an education loan subsidy, as well as tax benefits for interest paid under Section 80E of the Internal Revenue Code. In India, the majority of student loans have a payback period of 10-15 years and a moratorium of the course period and a defined number of months.
Why is an education loan preferable to a personal loan?
Higher education is costly, particularly if you intend to study abroad. To cover expenditures, parents may be forced to deplete their resources or liquidate their possessions. In this situation, education loans provide a simple solution to keep track of these costs. They offer complete financial solutions to ensure that a lack of cash never stands in the way of your academic goals.
Many people believe that a personal loan is more advantageous than an education loan. Personal loans, on the other hand, have higher education loan abroad interest rates, so you’ll wind up paying more in the long run. Education Loans, on the other hand, offer a slew of benefits and conveniences, and are designed exclusively for education that improves students’ lives and propels them forward in their careers.
How Do I Get a Student Loan?
In partnership with the Indian Bankers Association (IBA) and the Reserve Bank of India, the Indian government has developed a Comprehensive Educational Loan Scheme. This programme covers funding for a wide range of courses at Indian and international institutions and colleges.
Who all are eligible for an education loan?
Merit students who enrol in recognised private institutions are eligible for education loans under the Indian Banks’ Association’s new model education loan plan. Students who apply for admission under the management quota will be eligible for study loans as well.
It’s no surprise that education loan portfolio banks have increased by 23% from Rs 42,300 crore in 2010 to Rs 52,100 crore in 2012. It also helps that the Reserve Bank of India (RBI) recently issued a warning to banks not to reject education loan applications just because the borrower does not live within the bank’s service area.
The rising availability of the product is a more significant component driving this growth. Only public-sector banks had hitherto given it in accordance to government directives. Private players have gradually entered the fray, and two non-banking financial companies (NBFCs) have just joined the conflict. Credila Financial Services began operations in 2008, and with the support of HDFC after 2009, it has grown to become India’s largest private-sector education loan provider. Dewan Housing Finance has lately entered this market with Avanse Financial Services. As a result of the increased competition, borrowers can now benefit from lower interest rates, larger loan amounts, and a more efficient, painless process.
Interest Rates on Education Loans in India
So, what is the interest rate on an education loan in India? In India, education loan interest rates vary from bank to bank. It can range from 12% to 16 percent, depending on the bank’s base lending rate. According to the Reserve Bank of India, banks in India have a basic lending rate of 9 to 10%.
The Tax Benefits of Taking Out a Student Loan
An Education Loan not only covers the costs of higher education at some of the world’s most prominent schools, but it also allows you to save a significant amount of money in taxes. If you have an authorised Education Loan and are repaying it in instalments, the entire interest paid on it is allowed to be deducted from your total income for the financial year under Section 80E. This feature of an education loan is particularly advantageous for parents, since it allows them to take advantage of tax benefits while ensuring a better future for their children. The best thing is that there are no restrictions on the amount of money that can be deducted.
Pre-Requisites for Obtaining a Student Loan in India
Before taking out a loan, there are a few basic requirements that must be met. The following are the requirements and details for an Education Loan:
The course fees and the applicant’s annual family income are the two most important factors.
There must be a co-applicant, who can be a family member such as a parent, spouse, or sibling.
A security or guarantor is not required for loans under Rs. 4 lakh.
Collateral is required for loans over Rs. 7.5 lakhs.
When it comes to studying abroad, a student must look for part-time work or sponsorship because the loan amount may not be enough.
Unlike other investments that may or may not pay predicted interest in the future, an education loan is a risk-free investment with predictable returns. A degree from a prestigious institution offers up several doors for career advancement and, as a result, improved work opportunities.
- A degree from a famous and well-known university is widely recognised.
- Multinational corporations are eager to hire professionals with degrees from prestigious universities.
- Higher education allows students to explore and seize chances in some of the world’s highest-paying countries.
Furthermore, from application to disbursement, the loan process is no longer a stumbling point, and it has become increasingly straightforward and transparent. So now is the moment to put money towards a better future.