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Education Loan Vs. Self Funding to Study Abroad

Education Loan Vs. Self Funding to Study Abroad

Updated on Apr 13, 2020
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The quality of education plays a vital role in determining the financial and psychological benefits one draws from their professional life. Job-oriented degree programs at prestigious universities are specifically designed to equip students with tools needed to build a stronger tomorrow.

However, this quality education comes at a steep cost and often, meritorious students facing financial constraints are deprived of the shot at a better future merely due to lack of finances. Education loans are a viable way to fill the gaps that , grants and family resources leave behind. Most people prefer education loans over self-finance since the assurance of timely fee payment and inclusion of complete cost of education associated with education loans can seldom be derived from self-finance.

With the cost of education on an exponential rise and the importance of quality education widely recognised, many have come to see education loan as an investment since it comes packed with assured returns and excellent benefits, some of which are:

Income Tax Benefits

Tax Benefit is one of the most important advantages of  that are taken for courses in India and abroad. It is a great way to save money while securing a better future for your children. This is one aspect which makes education loan a preferred choice over self-financing.

Education loan applicants are eligible for deductions on interest paid on the loan under Section 80E of the Income Tax Act of India, thereby lowering the rate of interest. The deductions under this section can be claimed for a total of 8 consecutive years including the year in which the loan is taken in or till the interest on the loan is fully repaid, whichever occurs earlier. It must be noted that only loans taken from gazetted financial institutions are eligible for these deductions.

Any Indian individual can claim deductions on interest part of the education loan availed for self, spouse, children or any other child of whom the individual is a legal guardian. It must be noted that education loans taken from friends and relatives are not eligible for tax deductions under Section 80E.

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Improves Credit Score

Applying for an education loan and complying with the repayment terms can significantly improve your credit score, a parameter that plays a vital role in addressing financial needs arising in future. Approval of loans and credit cards are subject to a decent credit score, or CIBIL score. Low credit scores are associated with economic instability and can mar an individual’s credit reputation.

快穿系统女主深吻hIn addition to loan lenders, employers too associate high credit scores with trustworthiness. Repaying your loans on time improves your credit worthiness, a deciding factor for approval of any home, car, personal or other loan that you may avail in future. When you apply for a loan, the bank officials examine your credit history to determine your credit worthiness, based on which your loan can be approved or denied.

100% Cover

快穿系统女主深吻hDuring the course of higher education, students incur various additional costs besides the tuition fee. These costs include, but are not limited to, one-time registration fee, library fee, lab and equipment charges, living and personal expenses etc.

Education loans are largely comprehensive and extend funds that students may need to support a healthy lifestyle in a foreign country. This lifts the financial burden off parents’ and students’ shoulders and timely fee payment to the university/college ensures that a student’s study period advances without any bumps.

Apply for Education Loan through Shiksha

快穿系统女主深吻hShiksha has partnered with India’s topmost and trusted loan providers who will assist you in getting an education loan. 

 Various other benefits of Education Loan are:-

  • Moratorium Period – The repayment of education loan usually begins after a moratorium period. This period may range from six months to one year after completion of the course.
  • Margin Money – Margin money is the percentage of loan amount paid by the borrower. Most banks do not ask for margin money for loans up to 4 lakh rupees. For loans exceeding Rs. 4 lakh, margin money is 5% for studies in India and 15% for studies in abroad.
  • Collateral – For loans exceeding Rs. 7.5 lakh, collateral is required. Collateral is an asset pledged against the education loan and can be a Fixed Deposit, Life Insurance, Non-agricultural land, flat/bungalow etc.
  • Online Application – Most banks and financial institutions have an easy online application form which can be filled and submitted online.
  • Easy Repayment – Education Loan can be repaid in Equated Monthly Instalments (EMI) that are distributed through the loan tenure.
  • Eligible Courses – A large number of courses leading to graduate degree, postgraduate degree and PG diploma are eligible for education loan.
  • Approval before Admission Confirmation – While most banks and financial institutions require admission confirmation letter from the concerned college/university as a  for loan approval, some provide loan approval even before confirmed admission.
  • Quick Processing Time – Online application, home visits, guidance from dedicated loan specialists have reduced the loan approval and processing time.
  •  – For students travelling overseas for higher education, loan sanction letter can be used as an evidence of funds while securing student visa.

The ever-growing competition in the  has worked in favour of the aspirants. The process has become increasingly transparent and hassle-free. Many banks even offer doorstep service and flexible repayment terms to beat the rising competition. It is, however, advised to explore various options and examine the product benefits of every bank before zeroing in on one. Contact India’s leading education loan providers through .

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About the Author

HDFC Credila, an HDFC Ltd. Company, is India's First Dedicated Education Loan Company. With specialized focus, in-depth understanding of the requirements of students who wish to pursue higher education, HDFC Credila o...Read Full Bio

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