Are you confused about going ahead with that student education loan? Post-graduation studies, or even a graduation degree abroad appears to us, like it would make our future promising, and give us prospects of a better career. But how feasible are they? Considering the increasing cost of education with every passing year, higher education especially in a foreign university seemed like a distant dream to many. Fortunately, that’s not the case anymore. With the introduction of student loans in India in early 2000s, the aim of achieving a degree, now appears possible and how!
Let’s have a look at the advantages and disadvantages of getting a student education loan.
Why should you choose it?
- Your education is sponsored.
Education loans finance nearly all the expenses covered to study under the institution. This mainly includes hostel fees, tuition fees, books, laboratory fees, travel expenses, library and refundable deposits.
You do not have to worry about the education expenses anymore, and can allocate your personal savings to erstwhile profitable causes for better investment, or to pay for the things your education loan doesn’t cover.
- The repayment policies are flexible.
An education loan enjoys the benefit of a ‘repayment holiday’ dissimilar to other categories of borrowings. This means the loan-taker can take time to pay off the amount for 1-year post-study, or 6 months after bagging a profession, whichever occurs earlier.
The option of deferred payments makes it an attractive choice amongst students and parents.
- The processing is hassle free.
You can submit an application for a student loan as soon as you receive your offer letter. The bank might/might not indict a processing bill or demand a collateral safety, depending on the loan amount needed by you, and other requirements.
An education loan consists of easy paper work, has basic guidelines for eligibility, and ensures quick processing.
- It is available for both students and working professionals.
Excluding any financial aid received, students and working professionals, both can cover up their entire cost of study by borrowing an education loan on their own behalf.
- You can avail huge tax benefits from education loan.
Education loans apart from paying for the expenses, also give huge tax advantages to its borrowers.
“According to Income Tax Action, Section 80 (e), the amount paid against the interest of educational loan can be exempted for a person or his/her spouse or children for a period of eight years from the time repayment starts or the duration of the loan which is in effect, whichever is higher.”-http://www.pace2race.com/education-loan-india/
Why should you not choose the student loan?
- Fluctuations in rate.
The loan borrowing can be a super expensive affair as the interest fee ticks flanked by 10-15% (this depends on the amount of loan as well as the bank). In addition, rate oscillations during the period of loan can prove even more costly.
- Clauses that remain hidden.
Everyone runs after profits. Even the banks. Therefore, they will devise the loan in a manner that it will prove as an investment to them. Lest you don’t pay attention to all the clauses, or norms of taking up an education loan, you may experience deceived later on.
- Amount limit.
The banks can provide you loans till a limit. For example, they might give up to 10 lacs for a post-graduation degree in India, and up to 20 lacs for a degree abroad.
- Default in repayment.
After the deferred period of loan repayment, if you are still not able to pay back the loan amount, the banks might not permit any further delay and charge you a higher interest rate, or lay even more strict repayment conditions.
With some serious contemplation upon reading about the pros and cons of student loans, you will be able to decide if a student education loan is right for you or not.