With the cost of education rising every year, it is becoming increasingly difficult for students to cover their study expenses on their own. Tuition fees at reputed universities are sky high, leaving an education loan as the only sensible option for students to chase their education dream. Unlike a personal loan, education loans also come with many other benefits for students.
So let's look at the top reasons for students to apply for an education loan:
Rapid rising costs of education
Studying at a well-known university in India or abroad is not a cheap affair. Students and parents have to burn a hole in their pocket to meet the education expenses. Students with high ambition have no option other than taking an education loan.
Easy to get education loan
Gone is the time when taking an education loan was a herculean task. Today, taking an education loan has become much easier with many banks offering it with other facilities to students for their higher study purpose. There are many lending institutions that offer to fund the total cost of education, including the student's living expenses as well. This is one of the leading reasons why student opt for education loan.
No need to provide collateral
As per some bank guidelines, students can avail education loans up to INR 7.5 lakh without any collateral security. Because most colleges have a tuition fee that falls within this range, it is a great advantage for students to opt for education loan.
Tax benefits under section 80E
When students start repaying their education loan, they can avail some tax rebate. The tax benefits help them in reducing the overall cost of the loan. Under section 80E, they can claim a tax deduction for the repayment of interest on an education loan. This benefit is not only applicable for students to study in India, it is also applicable to them who take loans to pursue higher education abroad.
Preserving family assets
Many students from affluent families also opt for education loans for their higher education, it’s because they want to preserve their family assets and don’t want to sell their properties to finance their education. Because the term of repayment is a bit longer between ten to fifteen years, it becomes easy for students to repay once they start working. In this way, they can ease the burden of their parents.
Building a good credit score.
Many students start working within a year of graduating and can allot a specific amount of their salary towards loan repayment. And this regular monthly payments to banks build up their credit score and paves way for better loan options in the future as well. It is a good opportunity for them to start building a good score from an early age.
Financial obligations
With the rise in mortgage interest rates and Adjustable Rate Mortgage (ARM) payments, parents are not in a situation to fund their kids’ higher studies. These financial obligations keep their parents' hands tight. In this critical financial situation, millions of parents are finding it difficult to meet their financial obligations. This is another reason, why parents suggest their children go for education loan.