Education loan become helping hand, education loans are the financial assistance provided to the students to meet their expenses regarding the study. Every parent wishes to provide best possible education to their children so their carrier becomes bright and successful but all parents are not able to do it most of the times due to financial reasons because higher education and professional courses are very expensive these days.
Most of the times banks provide these loans and loan have to payback usually with interest over the period of time. Usually, interest rates on education loans are very low and education loans come at very flexible terms and conditions. Students and parents are granted a period of time to start repayment of the loan, they don’t have payback instantly after getting a loan, for example, they can start repayment of loan completion of course or degree.
Types of Education loan
Domestic education loans – These are the loans granted to students to pursue their education in domestic university or educational institute. The student has to meet the eligibility criteria of the lender to get this loan, in most cases, the loan is only approved if the student has got admission in a university or educational institute.
Study abroad loans – Study abroad loans are the loans granted to students to continue their education in university or educational institute abroad. Like domestic education loans, the student has to meet eligibility criteria of a lender to get this loan, the student is granted loan once he/she has secured a seat in a university or educational institute abroad.
Loans based on course
Undergraduate education loans – Undergraduate education loans are granted to a student to provide financial support so that student can continue and complete its undergraduate education program. Usually, the undergraduate education program has a duration of three to four years, after completion of the undergraduate education program he/she get employment opportunity. The applicant student must have completed its secondary education to apply for this loan.
Graduate education loans – These are the loans granted to a student to continue and complete its postgraduate degree or any other professional course. The applicant student must have completed its undergraduate course to get a graduate education loan.
Career education loans – Banks provide career education loans to pay for training and courses that can help the applicant to get an unemployment opportunity after that he/she can start repayment of the loan.
Loans based on collateral
Loan against property – Loan against property is a loan in which documents of an immovable asset like a residential home, plot, flat or agricultural land has to submit to the bank as security.
Loan against deposit – This loan is usually granted against deposits of gold/silver or fixed deposits (FDs).
Loan against securities – This loan can be granted in which bonds, equity shares and debentures can be used collateral.
Benefits of Education loan
Protect savings – Having an education loan means you can keep your hard-earned savings such as bank balance or fixed deposits (FDs) undisturbed which will allow you to achieve your long-term financial goals like starting your own business, children’s marriage, buying a house etc. Education loan secures your savings so that you can spend those savings on other purposes to fulfil your dreams.
Wide coverage – Education loan surely cover the course fee, along with that it also covers other expenses like accommodation charges, buying gadgets like laptop or computer for study, books expense and lab fees etc. This reduces the massive burden from parents’ shoulders so they can also live tension free life.
Long moratorium Period – In case of education loan, you get a moratorium period from 6 months to 1 year after the date of completion of your course, this gives you enough time to look and find a good employment opportunity so that you can repay the amount of education loan from your salary.
Tax benefits – Under Section 80E of the Income Tax Act., interest you pay on education loan qualify for an income tax deduction. It usually saves your money which you have to pay on your income as tax.
Builds good credit history – After completion of your education, you start repayment of your loans it builds your good credit history which will help your in future to get other loans such as home loans and personal loans easily.