You are happy to receive the acceptance letter from your choice of university abroad. I am pretty sure you are excited about starting the new chapter in your life in a new country. Though the prospect of having an overseas education is thrilling, it may get tedious to manage funds. Pursuing studies outside your home country is a costly proposition. Hence, an education loan is an essential element to control funds to study abroad. We curate a list of benefits about study loans so that you clear all your inhibitions and help you make an informed decision.
1) Loan amount:
Lenders grant education loan for abroad studies depending on the fees and other costs involved in the course. Usually, you can gain a credit up to Rs 75 lakh for studies within the country, and up to Rs 1.5 crore for abroad. The loan is granted on the basis of borrower’s necessity and financial condition. Loan amount, in this case, can be as high as Rs 40 lakhs.
2) Moratorium period:
Moratorium Period or EMI holiday states to the time when borrowers don't have to pay any EMI. It usually lasts for a year after completion of the course. Education loan, hence, saves borrowers from the burden of loan repayment, and give them enough time to find a job before loan repayment starts. However, consider paying the interest during the moratorium period to avoid accumulation of interest.
3) Loan tenure:
You can avail an education loan for up to 15 years. The repayment period begins after the moratorium period, hence, you get additional time to create sufficient corpus for paying off your educational loan. You can further request your financier to extend the tenure if you are unable to service EMIs. Keep in mind that you cannot continue the tenure beyond 15 years.
4) Tax benefits:
You can gain tax benefits on interest paid towards study loan under section 80E of the Income Tax Act of India, 1961. The tax advantage is available only for consecutive 8 years or until the loan is paid in full, whichever is earlier. If you take an educational loan on behalf of your child, only the parent would be eligible to avail tax benefits on repayments. The child cannot claim tax benefits even if he/she takes responsibility for repaying the education loan. Therefore, it is recommended to try a joint loan instead.
5) Rate of interest:
The education loan interest rate is usually lower than other loan options such as a personal loan. You can get an educational loan for as low as 8.85% per annum. Female applicants can receive an additional allowance of up to 0.5% on interests. Some lenders provide credit at a lower interest rate if you seek admission in a specialised course or institute. Hence, make sure you research and compare all available options before applying for a loan.
1) Loan amount:
Lenders grant education loan for abroad studies depending on the fees and other costs involved in the course. Usually, you can gain a credit up to Rs 75 lakh for studies within the country, and up to Rs 1.5 crore for abroad. The loan is granted on the basis of borrower’s necessity and financial condition. Loan amount, in this case, can be as high as Rs 40 lakhs.
2) Moratorium period:
Moratorium Period or EMI holiday states to the time when borrowers don't have to pay any EMI. It usually lasts for a year after completion of the course. Education loan, hence, saves borrowers from the burden of loan repayment, and give them enough time to find a job before loan repayment starts. However, consider paying the interest during the moratorium period to avoid accumulation of interest.
3) Loan tenure:
You can avail an education loan for up to 15 years. The repayment period begins after the moratorium period, hence, you get additional time to create sufficient corpus for paying off your educational loan. You can further request your financier to extend the tenure if you are unable to service EMIs. Keep in mind that you cannot continue the tenure beyond 15 years.
4) Tax benefits:
You can gain tax benefits on interest paid towards study loan under section 80E of the Income Tax Act of India, 1961. The tax advantage is available only for consecutive 8 years or until the loan is paid in full, whichever is earlier. If you take an educational loan on behalf of your child, only the parent would be eligible to avail tax benefits on repayments. The child cannot claim tax benefits even if he/she takes responsibility for repaying the education loan. Therefore, it is recommended to try a joint loan instead.
5) Rate of interest:
The education loan interest rate is usually lower than other loan options such as a personal loan. You can get an educational loan for as low as 8.85% per annum. Female applicants can receive an additional allowance of up to 0.5% on interests. Some lenders provide credit at a lower interest rate if you seek admission in a specialised course or institute. Hence, make sure you research and compare all available options before applying for a loan.
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