Education loans are basically a form of monetary assistance availed by students to meet the expenses associated with their studies. Education loans can be taken by means of funding, scholarships, financing and rewards, and are granted in cash, which has to be repaid to the lender along with a rate of interest.
Simply so, can I take education loan for myself?
Benefits under Income-tax Act
This deduction is allowed only for the individuals paying interest on the loan for himself, spouse or children or for the student to whom you’re a legal guardian. You can deduct the entire interest amount paid from your taxable income. This deduction is allowed for a maximum of 8 years.
Also to know is, is education loan is good or bad?
Some students take an education loan for graduation and then avail of the top-up facility to complete their post-graduation. “Taking a top up on education loan is bad, because it will increase the liability further. It is better to finish the first education loan before taking the second one,” says C. S.
Is it a good idea to take student loan?
In the good debt versus bad debt debate, student loans fall into a gray area. They can be considered good debt because the money you’re borrowing to attend school is your ticket to earning a degree and getting hired at a well-paying job. That debt should pay itself off over time with a lucrative career in place.
One of the easiest ways to pay off education loans early is to pay more. And you can do so by choosing a shorter repayment tenure or loan prepayment. However, the EMI can be higher when choosing a shorter tenure. So, don’t cut short the loan tenure to a point that can make monthly payments hard to execute.
In either case, an education loan is a good idea and a commonly sought after resort. Pursuing higher studies usually involves high fees and an education loan comes in handy at this point. … Such loan is offered to students who want to study in India or pursue higher education overseas.
Documents required for an Educational Loan:
- Duly-filled application form.
- 2 passport size photographs.
- Graduation, Secondary School Certificate, or High School Certificate or mark sheets.
- KYC documents that include ID, address, and age proof.
- Signature Proof.
- Income Proof of parents or guardian.
There are three types of federal student loans:
- Direct Subsidized Loans.
- Direct Unsubsidized Loans.
- Direct PLUS Loans, of which there are two types: Grad PLUS Loans for graduate and professional students, as well as loans that can be issued to a student’s parents, also known as Parent PLUS Loans.
There are four types of federal student loans available:
- Direct subsidized loans.
- Direct unsubsidized loans.
- Direct PLUS loans.
- Direct consolidation loans.
Disadvantage of Education loan: … The Education Loan has a floating Rate of Interest with a variable index which changes with time. Depending on banks and type of loans that one is taking, the interest rate may change. Loans below 4 lakhs require no guarantor but for the ones above this amount a guarantor is mandatory.
If you are unable to make repayment on your education loan, then you will receive notices and warnings from the lender. If you fail to comply with the same, then the lender is legally entitled to the assets you mortgaged. Your property or asset can be auctioned or used by the lender.
The loan is repaid by the student. Generally, the repayment starts when the course is completed. … During the course period, the bank charges simple interest rate on the loan. The payment of simple interest during the course period lessens the equated monthly instalment (EMI) burden on the student for future repayments.
Opting for an education loan reduces the strain on your family savings and eliminates the need to liquidate your investments in fixed deposits, mutual funds or bonds. Besides, the interest on an education loan is eligible for a tax rebate under Section 80 E of the Income Tax Act 1961.