The education cost in India is on the rise. The tuition fees, your post-graduation fess or fess to pay your MBA course goes up to lakhs of rupees. Even if you opt to pay in installments, you have to pay some amount to get started. Many young individuals or parents opt for personal loans in such a scenario. Personal loans are short term loans which one can take for any personal reasons. These loans can be availed even for your educational requirement.
Before one takes an education loan these are few things one should know:
1. When do you pay educational loans:
In cases of educational loans which goes up to 25 lakhs or more, one can’t simply pay the entire amount at one go. Educational loans can be availed by banks or financial institutions in the name of the student. The student will only start paying the educational loan once he or she secures the job. After completing the education one can start paying the loan in installments. This arrangement is stress-free as you can slowly pay off the debt once you have a job.
2. Interest rates:
Usually, the interest rates offered on a personal loan is higher compared to the educational loans. The personal loans offered by banks charge somewhere around 10% whereas the educational loan might start at 8%. If a student starts paying the loan while he or she is still studying, they are liable to get 1% concession on their interest rates.
3. Tenure of the educational loan:
The tenure of the education loan is more compared to personal loans. One can take a personal loan for up to 5 years. The education loan can be taken up to 8 to 10 years. This makes the instalments lesser than personal loans.
4. Tax benefits:
One can get tax benefits under the section of 80E on the interest paid on the educational loans. This allows you to get full tax benefits without any limit of the deduction. There is no such option for a personal loan.
5. Short education loans:
In case you want a loan for a less amount up to Rs 2 lakhs, you can opt for a personal loan via online apps like CASHe. These apps provide quick loans in any situations. If you are working and want to pursue a course which will uplift your career, this is an ideal option. The documentation is quite simple and one can get a loan on the same day of application. Do remember that these loans are not education loans which means you won’t have the benefits of educational loans. But the process will be faster than any other loan type.
6. Documents required:
There are basic criteria if you want to fulfill a personal loan for education purposes. If you are a student, your parents should be Indian. The maximum age of your parents at the time of maturity of the loan should be 60 years. You will need your identity and address proof. If you want to get a loan via loan app or any other financial institute, you have be a salaried employee.
You will find educational loans at most of the banks, online apps, and other financial institutes.