It has become extremely expensive to give yourself a good education. So much so that, unless you are extremely well-to-do, you will have to borrow funds. Well, in this regard, you have two options – a personal loan and study loan. The following article will go over some reasons why the latter is always the best way to go.
1. Tax benefits - Both personal loans and education loans will help you cover the cost of your education. However, an education loan can also help you save money. That’s because one of the most formidable benefits of an education loan is the tax benefits it provides. Under section 80E of the Indian Income Tax Act, any interest you pay toward a student loan will be deducted from your taxable income. This ensures that you pay way lower taxes at the end of the financial year! This is something you will miss out on if you take a personal loan.
2. Moratorium period - Getting the loan is the easy part. The real challenge begins when the repayments become due. With a personal loan, you have to start paying the EMIs immediately. This can become quite troublesome when your balancing an your studies with a possible part-time job. However, with an education loan, you can wait until 6 months after you’ve finished the course or until 6 months after you’ve found a job to start repaying the loan. Great isn’t it?
This feature is known as moratorium period. You can choose not to make even a single payment during this period. You could also choose to pay only an interest component or you could choose to pay a full-fledged EMI amount. Making payments during the moratorium period should invite certain benefits as well!
3. Interest rates - Personal loans and education loans will be made available to you at a cost. This cost is the interest rate. Again, education loans hold the upper hand in this aspect. Where personal loans usually have interest rates ranging from 16 to 22 percent, sometimes more, an education loan will usually have an interest rate of 10 to 16 percent. Not only is this lower, the interest you pay also brings tax benefits as mentioned earlier.
4. Rewarding - Education loan providers usually reward students who have worked hard & done well throughout their academic life. For example, student who have exceptional grades in school and college are usually offered better rates, or higher loan amounts or lower processing fees or longer tenures! The same is applicable for students who do well in their entrance exams!
5. Fitting financing - A study loans can be tailored around your education-related expenses. It will cover everything from your entrance exam fees, travel & living expenditure, the cost of study material, a new laptop, any deposits, the visa expenses and even provide proof of funds for the same!
So as you can see, education loans really hold the edge over personal loans when it comes to financing your higher education. So if you need financial help to achieve your academic dreams, there’s probably no better option than taking a study loans. Hope this has been helpful, good luck and all the best!