Studying abroad is a dream of every child. Given a chance, they would love to go to their favourite university overseas. Scholarships and grades do come in handy in reducing the cost of the university fees. But what about the remaining amount? Your savings would not help here, considering the value of the education has increased manifolds over time. Educational loans can only bail you out from the scenario.
What is an educational loan?
Educational loans are given to meritorious and deserving candidates, generally. They are offered by banks and non-banking financial companies (NBFCs). With the help of the loan, students can pursue their undergraduate, graduate, post-graduate, professional and doctoral courses efficiently. Unlike the personal loans, you can start repaying educational loans once you start earning.
If you want to take an educational loan for abroad studies, you have to be aware of certain facts concerning the loan. They are:
1) Covers additional expenses: There is a common misconception that an educational loan takes care of only the tuition fees. False. An educational loan also manages your costs regarding accommodation, books, flight tickets and even day-to-day expenditure.
2) Subsidised loans: In case your family's annual income is INR 4.5 lakh, then the government provides a subsidy. The moment you start paying your equated monthly instalments (EMIs), the government pays the interest on your behalf. So, you only have to pay the actual loan amount. However, there are some points to remember in this situation:
- It is not an interest-free loan as the bank still earn the same amount of money
- The subsidy service is applicable for only students who wish to study in India
3) The overseas factor: If you have taken an educational loan for abroad studies, there are chances you will find a job and start earning in dollars in that country. This way your credit gets cheaper as the depreciating value of Indian rupee will work in your favour.
4) Tax-benefits for parents: Most of the educational loans come with tax benefits. As per the Section 80E of the Indian Constitution, you can earn a tax deduction for a total equal to your interest amount. It lightens the load of your parents’ shoulder. Note that you can use this deduction only to pay off the interest and not the principal amount.
5) No pre-payment charges: The best part about an educational loan is that no penalty is levied on pre-closing the loan amount. However, you can do so only after a stipulated period, i.e. after 6 months.
Now that you are aware of the benefits you earn from educational loans; the following are some points to keep in mind before applying for one:
1) Always look for loans that have zero margin
2) Since you can apply for loans online, check the interest rate offered by other lenders
3) Look out for universities that are linked with certain lenders
4) Repay your educational loan after accessing your future earning capacity
What is an educational loan?
Educational loans are given to meritorious and deserving candidates, generally. They are offered by banks and non-banking financial companies (NBFCs). With the help of the loan, students can pursue their undergraduate, graduate, post-graduate, professional and doctoral courses efficiently. Unlike the personal loans, you can start repaying educational loans once you start earning.
If you want to take an educational loan for abroad studies, you have to be aware of certain facts concerning the loan. They are:
1) Covers additional expenses: There is a common misconception that an educational loan takes care of only the tuition fees. False. An educational loan also manages your costs regarding accommodation, books, flight tickets and even day-to-day expenditure.
2) Subsidised loans: In case your family's annual income is INR 4.5 lakh, then the government provides a subsidy. The moment you start paying your equated monthly instalments (EMIs), the government pays the interest on your behalf. So, you only have to pay the actual loan amount. However, there are some points to remember in this situation:
- It is not an interest-free loan as the bank still earn the same amount of money
- The subsidy service is applicable for only students who wish to study in India
3) The overseas factor: If you have taken an educational loan for abroad studies, there are chances you will find a job and start earning in dollars in that country. This way your credit gets cheaper as the depreciating value of Indian rupee will work in your favour.
4) Tax-benefits for parents: Most of the educational loans come with tax benefits. As per the Section 80E of the Indian Constitution, you can earn a tax deduction for a total equal to your interest amount. It lightens the load of your parents’ shoulder. Note that you can use this deduction only to pay off the interest and not the principal amount.
5) No pre-payment charges: The best part about an educational loan is that no penalty is levied on pre-closing the loan amount. However, you can do so only after a stipulated period, i.e. after 6 months.
Now that you are aware of the benefits you earn from educational loans; the following are some points to keep in mind before applying for one:
1) Always look for loans that have zero margin
2) Since you can apply for loans online, check the interest rate offered by other lenders
3) Look out for universities that are linked with certain lenders
4) Repay your educational loan after accessing your future earning capacity
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