How an Education Loan Can Help Realize Dreams

Today, even as the quality of education in India has improved drastically, not all students are able to get access to such quality education. While there are many top-notch, globally recognised colleges and educational institutes in India, the fees at such colleges are often unaffordable to many.To bridge this gap and make quality education available to all, a lot of lenders in India offer student education loan at competitive interest rates and with easy repayment options. So, if you wish to go overseas for education to widen your career scope and realise your dream career, you can apply for an education loan.While a lot of students get scholarship programs to study at foreign universities, often the scholarship covers only the course fees. So, to cover other expenses like accommodation, and sundry expenses, applying for an education loan is a great way to get the necessary funds.

To be able to apply for an education loan, it is paramount that you understand the eligibility guidelines. The qualifying criteria may vary from lender to lender, but some of the common factors that the lender consider are:

• You must be a citizen of India.
• You must be at least 18 years of age at the time of applying for the loan. For minors, parents can apply for a loan on their child’s behalf.
• You must have an excellent academic background.
• The college or university in which you seek admission must be a recognised one.
• The course which you wish to study must either be a professional or a technical one. Most lenders tend to offer loans for courses that have high job prospects.

Just like any other type of loan, applying for education requires proper planning. Here are a few valuable tips that may consider:

• First and foremost, assess your finances carefully, and know your repayment capacity, and then choose the loan amount accordingly so that it is easier to repay.
• Choose the lender carefully. Education loan is a long-term financial commitment, so choose the lender that offers the loan at a competitive interest rate. Even a difference of 0.5% in the interest rate can significantly reduce the overall loan cost in the long-run. Make sure that you understand the terms and conditions before choosing the most favourable lender.
• Just as you plan for taking the loan, you must meticulously plan for the repayment. Once you finish your studies and start earning, make sure that you keep aside a fixed sum from your income for repayment of the loan. Your focus must be repaying the loan as soon as possible.
• One of the best ways to build a decent corpus for repayment is to do a part-time job while you are studying. Working part-time can not only help you gain valuable work experience, but it would also help you build savings that you can use for repayment of the loan.

In India, the interest rate for student education loan varies from lender to lender. But, in general, it ranges from 12% to 16%, which mainly depends on the bank’s base lending rate and other factors. As per the Reserve Bank of India’s directives, the base lending rate for education loan is 9% to 10%.

Applying for an education loan is not only a great way to get the desired funds for pursuing your educational goals, but it also allows you to save tax. The tax benefits on education loans are covered under Section 80E of the Indian Income Tax. The interest repaid is treated as a deductible from the income during the financial year. Final Word Proper financial planning is the key to making the most out of the education loan and realising your dreams.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.