What Is An Education Loan?
In any country, ensuring a good education means that you will have a good and lucrative career and, therefore, a secure future. However, due to inflation, education costs have also risen. As a result, attaining a good education and paying for it will not come cheap.
An education loan, also known as a school loan, is defined as an amount that is borrowed to pay for the cost of a college education. Student loans cover tuition and other school fees. Its scope also includes books, school supplies, allowances for personal use and transportation, student accommodations such as dormitories. These can also extend to other school expenses.
Students who need financial assistance (or their parents and guardians) may apply for student loans in the Philippines.
Unlike with scholarships and grants, you need to pay off your educational loans in monthly installments and their added interest over the entire loan term. Some lenders and financial institutions allow borrowers to fully repay their loans after they graduate or find a job.
Aspects Of An Educational Loan
The aspects of an education loan are as follows:
- Eligibility: Most financial institutions in India offer education loans to students for higher studies in India or overseas. In India, if you are between 16 to 35 years of age, you can apply for a loan to pursue post-higher-secondary schooling. You can get and apply for your loan even if it is a vocational course, as it can count as a form of tertiary education.
- Amount of loan: The school loan amount varies depending where you get your education from. This depends on the cost of education and course you take. Some colleges offer higher prices, while others come at a lighter cost.
- Interest rate: The interest rate of a school loan also differs among banks. The interest rate of a school loan usually ranges between 9 and 15 percent, but it can vary depending on your location as well as your country’s economy. The bank where you get your loan from usually gives a holiday period, or a moratorium, on the payment of interest accrued from your loan. This moratorium period is normally between 6 months after you snag a job up to a year after you successfully finish your course, depending on which happens much earlier.
- Guarantor: If you wish to study abroad, then you require a member of your immediate family who will be the co-applicant for your loan. Some banks may require third-party security.
- Income Tax breaks: if you are from India, you can obtain an income tax benefit. The tax benefit will also rely on the interest component of your education loan EMI. This income tax break is found under Section 80E of the Income Tax Act of India. The income tax breaks can also depend on the state from where you come from, as legislations regarding such things vary from one place to another.
- Necessary Documents: When applying for something, it is inevitable you will need documents. For an education loan, you need your duly filled application, proof of admission to the educational institution you are studying in, mark sheets, and the details of your expected expenses. Do not forget your guardian’s bank statements for the last six months, photographs, any other achievements, identity, and address proof.
Due to its many benefits, a good education remains valuable. Due to rising prices, a market for school loans opened. With many school loans open, it contains several aspects that can change depending on the state where you hail from. We best recommend checking with your nearest financial institution to ensure what exactly you will need.
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Frank is an energetic salesman. On his free days, he spends his time writing and reading about financial plans and educational loans to help the parents and the next generation gain more insight about multiple educational opportunities.