How Does An Education Loan Help You to Achieve Your Dreams?

In today’s world, getting a good education is important if you want a successful career. In developing nations like India, sending your kids to reputable and top schools is sometimes necessary. They can get a good start on a well-paying job if they do so. But these well-known colleges and schools are often hard to get into and cost a lot. This has caused more parents than ever to look for an education loan in India.

The costs are even higher for students who want to go to college abroad. Also, the costs of private institutions are much higher than those of public colleges. When this happens, students and their parents prefer to get a loan to pay for school.

Education Loan Versus Personal or Property Loan

Is an education loan better than a personal or property loan? Many believe a personal or property loan is better than an education loan. But that’s not true. Personal loans have higher interest rates, so in the long run, you’ll pay more. On the contrary, education loans have a lot of benefits and are designed specifically for education. It makes students’ lives better and helps them have successful careers.

Helps That an Education Loan Provides

• The Safety of Savings

When you take out an education loan, the savings stay the same. This lets you reach your long-term financial goals. The goals include retiring, helping your kids get married, and buying a house. Education loans help your kids get the right education for their future. It helps you keep your own money in retirement. You won’t need to put any extra stress on your child.

• Coverage For Expenses

A student loan pays for the cost of the course. It includes room and board, lab fees, exam fees, library fees, and more. It also pays for the costs of books, travel, and other things related to finishing the course. Education loans help you financially and ensure your child can finish school without problems.

• Tax Benefits

One of the best things about getting a student loan is that you don’t have to pay taxes. Section 80E of the Income Tax Act lets you deduct student loan interest in full. You can get this tax break for up to eight years. Higher education loans don’t have to be paid back in taxes, so don’t worry about your child’s education.

• Postponement Period

Postponement or Moratorium period is like taking a break from your loan payments. During this time, you don’t pay back the loan. Most student loans have a grace period between six months and a year grace after graduation. This gives your child enough time to find a job and save enough money to repay the loan.

• History of Credit

Responsibly repaying student loans will help your credit score. This shows financial institutions that they can trust you. If you have a higher credit score, you can get loans in the future with lower interest rates. So, take the benefits of both worlds and get a student loan for your kids.  

How to Obtain an Education Loan?

Indian government launched a Comprehensive Educational Loan Scheme with IBA and RBI. This program pays for all sorts of coursework in colleges and schools in India and other countries.

Interest Rates on an Education Loan in India

So what are the interest rates for an education loan in India? Different banks in India charge different interest rates for education loans. Depending on the bank’s base lending rate, it could range from 12 to 16%. The RBI says that the base lending rate for Indian banks is between 9 and 10%.

Requirements to Apply for an Indian Education Loan

Before you can get a loan, you need to meet some basic requirements. The requirements and details of the education loan are as follows:

• The main factors are the course cost and the applicant’s family income.
• There must be a co-applicant, a spouse, a parent, or a sibling.
• Loans under Rs. 4 lakhs require neither security nor a guarantor.
• For loans of greater than Rs. 7.5 lakhs, one requires collateral.
• Students who desire to study abroad may need part-time employment or a sponsor due to low loan balances.
• If you’re going to study abroad, you must get insurance.

Tips to Consider Before Going for an Education Loan

Education loans need to be planned for just like every other type of loan. Here are some good ideas to think about:

• First, take a look at your finances and know how much you can afford to pay back. Then, choose a loan amount that is easy for you to pay back.
• Be careful about who you borrow from. An education loan is a lengthy financial investment. Just choose a lender with a favourable interest rate. Even a 0.5% change in interest rate can affect the loan’s overall cost. Before you choose the best lender, make sure you understand the terms and conditions.
• Just as you plan to get the loan, you must also carefully plan to pay it back. As soon as you graduate and start working, start paying back the loan. Your main goal should be to repay the loan as soon as possible.
• Part-time work in school is a good way to save for loan repayment. A part-time job might help you get work experience and save money for loan repayment.

Conclusion

Every parent wants their child to get the best college education possible. Choose a reputable and well-known bank to get an education loan for your child’s education. Banks often have good offers and deals on student loans and know what you need. 

Let your child go after their goals, and your banking partner will care for the rest. Piramal Finance is a great option for you for such finance-related content.  Visit their website to learn more about the products and services they offer.