January 27th, 2022 | Education
Education from a reputable institution is often regarded as a crucial stepping stone on the path to a successful career. A 2019 report by CARE rating agency states that in the last decade, the cost of general education, which encompasses everything from elementary to graduate school, increased fourfold to Rs 8,331 per student per year. The cost of professional courses has increased by roughly 52%.
As the expense of education rises, an education loan appears to be a good choice for parents and students who are short on cash. Students can apply for universities in India and abroad that meet their budget with the help of an education loan. However, before applying, there are a few things to know about education loans:
Eligibility for a loan: One of the most important things required for an education loan is to know about the eligibility criteria for the loan. To be eligible for a loan, you must be an Indian citizen who has been accepted into an institution recognized by a competent authority in India or overseas.
The student is the borrower of an education loan. The loan may be approved easily if the borrower has a job. In case you don’t have a job when you apply for a loan, you’ll require a co-applicant, that can be your parents, siblings, or spouse. Since the loan amount granted varies from bank to bank, it’s important to double-check the types of courses covered by the loan to avoid any future misunderstandings.
Maintain a solid credit score: When a child applies for an education loan, the parent or guardian is usually the ‘guarantor.’ This is especially true if the student has no credit history, and the lender expects the loan to be guaranteed by a friend or family member. In situations like this, it is critical that the guarantor has a solid credit score for the loan application to be approved.
Carefully read the terms and conditions: Each bank has its own set of rules. While not all of them are directly communicated to you at the time of loan disbursement, they are all spelled out in the terms and conditions portion of your loan documentation. Read them and make sure you’re aware of all connected expenses, such as processing fees, fees for early or late EMI payments, and so on.
Prepare a repayment strategy: Although the interest rate begins to accrue the first month, students may be given a one-year grace period before beginning to pay the loan amount, known as the moratorium period. Plan your loan repayment strategy accordingly.
Get additional benefits: Taking an education loan provides several advantages, including a tax benefit. The borrower can deduct the entire interest portion of the loan under Section 80E of the IT Act. Taking an education loan also helps to establish a solid credit history because often, it is the first loan that students take.
Education loan makes education more accessible to students. It allows students to choose their preferred course of study. A good education loan can help you develop a successful career. Consider these things before taking an educational loan to ensure a bright future.