InvestorQ : What are the benefits of taking an education loan?
Manisha Mehta made post

What are the benefits of taking an education loan?

2 years ago

With the cost of education rising with every passing year, higher education can come with a very steep price tag. But that’s no reason to give up on your dreams of pursuing a good educational course in India or abroad.

The facility of education loan has eased the way in which students pay for their higher education. Previously parents used to pay for their child’s higher education by dipping in to their savings, but that’s not required anymore. One can easily approach a bank or a non-banking financial company (NBFC), work on the loan conditions and repay the loan after getting a job.

Here are five benefits of taking an education loan

Protecting your savings: Taking an education loan means a student or his/her parents will leave their savings undisturbed, which will enable them to achieve their long-term financial goals like retirement corpus, children's marriage, buying a house, etc. From a student’s point of view, his/her cash kitty will remain as is, and might even earn some interest over time. And from parent’s point of view, taking a loan for a child’s education will ensure that the parents won't be financially dependent on their children post-retirement.

Coverage:Education loan doesn't just cover course fee, but it also covers other course expenses like hostel expenses, exam fee, library charges, lab fees. The loan also covers the cost of books, travel expenses as well. This reduces parents' as well as the student’s financial burden immensely.

Tax benefit: Under Section 80E of the Income Tax Act., the entire interest one pays on education loan qualifies for income tax deduction. This income tax deduction can be claimed for up to eight years.

Moratorium period: Moratorium period is like a holiday period given to the borrower during the loan term. During this time they don't have to repay the loan. In case of education loans, the borrower gets a moratorium period ranging from 6 months to 1 year from the date of completion of the course, this gives the borrower enough time to look for a good job that pays well and save enough to start repayment of the loan.

Credit history:Timely repayment of education loan will keep the credit score positive which will help them to get a loan easily in the future.