Ben­e­fits of an Ed­u­ca­tion Loan

Consumer Voice - - Bfsi/ For Higher Studies Abroad -

Be­fore ap­proach­ing any bank in the vicin­ity to en­quire about avail­abil­ity of ed­u­ca­tion loans, it is bet­ter to be ac­quainted with the at­tributes thereof. Let’s look at the plus points: Quick process Min­i­mum doc­u­men­ta­tion Quan­tum of fi­nance en­larged to in­clude hos­tel fees, com­puter cost, etc. Com­pet­i­tive rates of in­ter­est Longer re­pay­ment pe­riod No need to pay back loan till com­ple­tion of course

A Model Loan Prod­uct?

The types of fi­nan­cial as­sis­tance avail­able to study abroad de­pend on the coun­try/course one is ap­ply­ing to. Most US uni­ver­si­ties of­fer as­sist­ant­ships (mer­it­based), fel­low­ships and schol­ar­ships de­pend­ing on the course you have cho­sen. For coun­tries other than the United States, fund­ing from out­side sources (read: own funds/banks) will mostly be re­quired.

Al­most ev­ery bank ad­ver­tises in the print/ elec­tronic me­dia about their ed­u­ca­tion loan scheme. It can be a per­plex­ing sit­u­a­tion for loan-seek­ing stu­dents. Which one to go to, how to get it, what is the rate of in­ter­est and what is the mar­gin amount, and what is the re­pay­ment pe­riod? For stu­dents, there are time­lines to be thought of, for sub­mis­sion of doc­u­ments for reg­is­tra­tion and sub­se­quent ad­mis­sion. They can­not af­ford any de­lay, as de­lay may mean re­jec­tion of ad­mis­sion and loss of a year. At the same time, it may not be prac­ti­cal to get in and out of ev­ery bank’s branch to make en­quiries.

You may be sur­prised to know that ed­u­ca­tion loan has been more or less cus­tomised as a loan prod­uct by RBI. In fact, it was adopted as a model loan prod­uct (for higher ed­u­ca­tion in In­dia and abroad) by In­dian Banks’ As­so­ci­a­tion (IBA) in 2015 so that banks would be able to draft their own ed­u­ca­tion loan schemes based on this model. It is avail­able in the IBA web­site for pub­lic view­ing. Some banks of­fer con­ces­sion for fe­male stu­dents (who opt for a loan) in terms of lower rates of in­ter­est. Some banks are ex­tend­ing in­ter­est con­ces­sion to stu­dents look­ing to re­pay the in­ter­est amount dur­ing the mora­to­rium pe­riod (study pe­riod) so as to re­duce the loan bur­den on them­selves/their par­ents when the time comes for re­pay­ment of the loan plus in­ter­est. The In­come Tax Act pro­vides for suc­cor to stu­dents when they avail bank loans for higher stud­ies, by way of in­come tax ex­emp­tion to be claimed on the amount of in­ter­est paid/payable either by the stu­dent or by the par­ent un­der Sec­tion 80E, for a pe­riod not ex­ceed­ing eight as­sess­ment years.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.