The ever-rising inflation has affected every industry in India and educational institutions offering higher education are also at the receiving a course in miracles. The result is fees have risen significantly and majority of the parents feel helpless when it comes to funding higher education of their children. Majority of the students are not able to pursue their dream of higher education just because their parents cannot afford it. The only solution to this problem is student loan.The Government of India directives to banks and financial institutions has worked in favor of students with higher education aspirations. India is a developing country and education play an important part in the country’s development process. Today, almost every private and public sector bank and financial institutions offer a warm welcome to students and parents who approach them for an education loan. There are several reasons that make education loan the best finance for higher studies in India.Benefits of education loan:
- Education loans in India have simpler terms in comparison to other loans offered by the banks. You do not have to offer any security or collateral if the education loan is below 7.5 lacs. This means if you have all the necessary papers in order then you will not find it difficult to get an education loan.
- One unique benefit of education loan in India is the student or his parents do not have to worry about education loan repaymentuntil he/she completes their higher education. The student can concentrate fully on his studies as the loan repayment is deferred until he/she completes the course she has enrolled for. Students can get around 15 lacs for higher studies in a foreign university. Students taking education loan are also eligible for a tax rebate for the interest they pay for the education loan under Section 80-E of the Income Tax Act 1961.
- The interest charges for an education loan in India are far less compared to other bank loans. The reason is banks and financial institution don’t like to burden students with higher interest. The bank levies only simple interest at month rest (remaining balance) during the moratorium period and course of study. Compound interest is levied on the monthly rest only after education loan repayment begins.
- The repayment period of student loan is around 84 months and the education loan repayment starts only after 3 months after completion of the course or after getting a job, whichever is earlier.
- The education loan in India covers tuition fees, accommodation expenses, cost of books and any other expenses during the course of study.
- Some banks do not levy processing charges on student loans while some banks and financial institutions charge a nominal fee that is adjusted in the loan amount.