An education loan should be viewed as a tool that enables you to study your chosen subject at a prestigious university. It can assist you in laying the groundwork for a successful future profession. However, because of the employment shortage caused by the Covid-19 pandemic, today’s youth are understandably concerned about landing their dream job and repaying their student loans. However, keep in mind that an education loan has its own set of advantages. Keep in mind that you’ll need a strong Credit score to get one. On any of the third-party services websites, you can check your free CIBIL score. Let’s look at some of the benefits of getting a student loan.
A credit information report (CIBIL) summarizes your credit history up to that point in time. On the CIBIL scale, which ranges from 300 to 900, a score of 750 is deemed good. Because prompt EMI repayment will contribute to the development of the needed score, an education loan will boost your CIBIL score, making it easier to acquire a loan in the future.
Oftentimes, parents dispose of significant assets to pay for college tuition, disrupting long-term financial plans such as home or apartment purchases, children’s marriages, and so on.
Banks hold your liquid assets, such as FDs, insurance, and government bonds, as security when you take out an education loan. You won’t have to sell any of your valuable assets as a result.
Other types of unsecured loans, such as personal loans, are significantly more expensive than education loans. Because these loans are given to students for future studies, they have lower interest rates.
HDFC Bank has competitive education loan interest rates, including preferential rates for top-ranked universities and institutes. We also offer a variety of collateral and co-borrower options to make loan repayment as simple as possible.
Under Section 80E of the Income Tax Act of 1961, interest paid on student loans is entirely deductible. The tax advantage calculator at Axis Bank shows the benefit. For students studying abroad, there is a higher tax benefit. Under existing legislation, each transaction done abroad that exceeds Rs. 7 lakh is subject to a 5% TCS (Tax Collected at Source). As a result, if a student is studying abroad and paying for her own tuition, she will be obliged to pay a 5% TCS fee. The TCS is only 0.5 percent if the student takes out an education loan from an Indian bank.
Students who borrow money to pay for their education must refund the money once they have completed their studies. This ensures that the student is completely focused on his academics and profession.
Because the student is responsible for repaying the debt after completing his studies and the moratorium period has gone, taking out an education loan can relieve parents of all financial obligations.
This is one of the most significant benefits of a student loan. Until the EMIs commence during the moratorium period, the student is not required to make any payments. Students can focus on their academics during the moratorium period, which normally lasts for the duration of the course plus 6 months/1 year. Education loans have a long moratorium period that lasts the duration of the course. Several banks give a six-month or one-year extension after the student starts working or finishes school.
As a result, the student may not have to worry about repaying the loan anytime soon, and the family will be able to organize their budget more successfully around this schedule. The loan is available to students from low-income families under the government’s ‘Subsidy on Interest’ programme.
Taking out a student loan is a convenient way to begin and complete your higher education. You need not to have to panic about the cost of your education. All you have to do now is concentrate on your academics, and if you have steady employment, you should be able to repay the debt. Your CIBIL score is the most important criteria that lenders assess when contemplating an education loan. To avoid being turned down for an education loan, you should always check your CIBIL score before applying therefore you should know how to improve cibil score.
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