The loan that is borrowed to finance school, college or any other educational expense is termed as an education loan. This loan is sanctioned only for the purpose of pursuing an academic degree.

Financial advances borrowed and disbursed to meet educational expenses are termed as education loans. Such advances can be secured or unsecured and vary across loan amounts offered as well as the terms depending on the lender.
Education loan

Education loan subsidy is primarily offered by the government to assist students towards meeting their financial goals. There are numerous types of education loans which are available for academic aspirants in India. It is vital to have proper knowledge about them first.

Education loan subsidies 

Several tax benefits and attractive subsidy schemes are offered to students in order to make loans for education more affordable. Hence, students availing a subsidized education loan scheme can meet the demands of hefty fees of reputed institutions and repay them after becoming financially independent.

Moreover, tuition fees and other academic expenses are ever increasing due to the constant rise in inflation. A high cost of education is a concern for many aspiring students and their families. One of the solutions is opting for an education loan which can be obtained from nearly all well-known financial institutions in India.

For instance, students hailing from the Economically Weaker Section or EWS income segment Interest Subsidy scheme offered by the Central Government of India. The education loan subsidy offered is on the interest rates applicable on the loan. Students can also benefit from an additional period of moratorium equal to the course period and 1 year after completion or up to 6 months after gaining employment.

To avail this scheme, applicants need to provide legitimate documents showing the annual gross family income is not more than Rs. 4.5 Lakh. Eligible students can avail this education loan interest subsidy scheme only once in their life.

Financial institutions offer a comparatively lower interest rate on such secured loans, lower than on advances without an education loan subsidy.

As per the guidelines of the educational scheme issued by the Indian Banking Association, several factors are taken into consideration to determine the eligibility criteria of the borrowers, viz. –

● Educational courses covered.
● Tuition fees and related expenses.
● Repayment terms.
● Guarantor or co-applicant.

There are several other indirect subsidies available as well, such as tax benefits.

Under Section 80(E) of Income Tax Act 1961, interest paid on education loans can be claimed as tax exemptions. The effective financial burden is reduced significantly via such tax benefits which reduce the interest rates on education loans by almost 250-350 basis points.

Other viable means to avail an education loan

For aspirants who are not eligible for this scheme, a loan against property for education can come up as the suitable form of financing. It is vital to understand regular education loans will only cover the expenses as mandated by the educational course and/or the educational institution. Other expenses such as accommodation, cost of living, transportation, etc. are not covered under the scheme.

This is one of the most essential pointers to understand while considering which is better for you between a loan against property for education or an education loan.

A loan against property for education can help students access a substantial amount of funds with no end-use restriction. So, they can utilise the availed funds as and how they need to and complete their academic course without financial constraint.

Benefits of loans against property for education

Such a secured loan for education not only benefits students to finance their higher education courses but also provide several other advantages as well –

1. Relatively lower rate of interest

These are secured loans and therefore come with a lower rate of interest compared to other unsecured advances.

2. Varied financial coverage

A loan against property for education will not only cover the course fees but also funds other expenses like –

● Hostel expenses.
● Exam fees.
● Library, Laboratory, etc. related fees.
● Refundable fees to the institute if any.
● Cost of books, uniforms and other related essentials.
● Travelling expenses.

3. Long repayment tenor

Students can avail long repayment tenor of up to 18 to 20 years on a loan against property for education.

4. Pre-approved offers

Refer to a lender like Bajaj Finserv who provides pre-approved offers to ease the process of availing loans and makes it less time-consuming for the borrower. These offers are available on numerous financial products including loans against property, home loans, business loans, personal loans, etc. Check your pre-approved offer by submitting only some essential information online.

Hence, loan against property for education is highly beneficial for students to chase their dreams in pursuing higher studies. Education loans are gradually considered as a norm to study at leading financial institutions. More students are thinking of studying abroad without worrying about their financial constraints. Make sure you know the basics about an education loan against property before applying to avail the most repayment-friendly terms and features from the lender.

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