5 Benefits of taking an education loan

 Education loans help the students to chase their dreams by setting and following a career path for themselves. They also help students inculcate good financial habits when they start paying back the loans. All the more, there are many benefits of taking an education loan—from saving your financial assets from being used up to covering all the education expenses.

 

This article will help you understand 5 benefits of taking an education loan for your higher studies:

 

  1. Saves your financial assets

Education at prestigious universities is usually expensive. But your aspirations to study in those universities should not not take a toll on your family’s assets. An education loan helps in this case. You can use a loan to fund your studies at the universities of your choice, and let your family assets be safe to be used for the future. Once you bag a job, you can pay back the education loan through EMIs deducted from your salary.


  1. Covers all expenses

Studying at best universities or colleges not only requires you to pay the college tuition fees but also other costs like library fees, examination fees, stationery expenses, travel expenses, accommodation expenses, canteen expenses and so on. Most nationalised banks would fund between 80-85% 0f the total expenses of your education. If you want a lender to cover 100% of your education expenses then Non Banking Financial Companies (NBFCs) or private banks would be a right choice to get a loan from.

 

  1. Deducts tax on loan interest rate

According to the Section 80E of the Income Tax Act, 1961, students who have taken an education loan get tax deductions on the interest they pay while clearing off the education loan. If you pay back your study loan in say, 5 years then you will get tax benefits on the interest paid for those whole 5 years.



  1. Offers moratorium period

The lenders don’t expect students to start paying back the loan as soon as they complete their education. Lenders offer a grace period. It is called the moratorium period. The moratorium period is usually, as long as 1 year from the time the students complete their education or 6 months after they get their first job, whichever comes earlier. After that period the EMIs of the loan will be deducted from your bank account.

 

  1. Imparts good financial habits

As mentioned, the moratorium period is a grace period. But it is also an opportunity to plan your long route of paying back the education loan. You can use this period as a buffer to stash savings. Apart from this, education loans help students inculcate good financial habits when they shoulder the responsibility of paying back their education loan. This helps the student to keep a good credit score if in case, he needs to opt for a loan in the future.

 

So, these are the 5 benefits you get if you take an education loan to pay for your higher studies. Please note that a consultation with a financial advisor before you take an education loan is necessary. Also, test the credibility and reliability of the lenders before you take an education loan from them. All the best for your higher studies!

 

Related Article - Here’s how you can pay back your education loan with ease

 

 

 

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