No longer are the times when solely students from prosperous families could manage to pursue higher studies abroad. Presently, an equal or possibly larger proportion of students from modest-income backgrounds are venturing overseas to realize their aspiration of studying at a foreign university, courtesy of education loans for studying abroad.
Benefits of education loan
Education loans have emerged as a popular financing choice for students pursuing higher studies, whether in India or abroad, who face challenges in arranging funds for their education. Beyond the evident advantage, these loans offer additional benefits worth considering:
- Preserving Savings for Contingencies: Opting for an education loan safeguards personal savings for unforeseen circumstances. Even if one can afford to fund their education, having a loan ensures financial security for unexpected emergencies, a crucial consideration in today’s unpredictable times.
- Tax Benefits: Education loans provide tax advantages as students can claim deductions under Section 80E of the Income Tax Act of India when filing their returns after commencing repayment.
- Post-Program Repayment: The flexibility to repay the education loan after completing the program is a significant relief. This allows students to concentrate on their studies without the burden of immediate repayments, fostering dedicated focus.
- Tailored Loan Options: Education loans offer the advantage of choosing from customized loan products. Covering all study-related expenses, lenders provide various loan schemes to meet diverse needs. This flexibility enables students to secure a loan tailored to their specific requirements.
- CIBIL Score Building: Timely repayment of an education loan serves as an initial step in building a favorable CIBIL score. A positive credit history proves invaluable for future borrowing endeavors.
Different options for study abroad loans on India
When it comes to paying for studies abroad, you’ve got choices! Public banks in India offer loans with good deals and tax perks. Private banks give you options, but sometimes the interest rates are a bit higher. NBFCs are quick but might cost a bit more. If you’re thinking international, lenders like MPOWER and Prodigy might help without needing collateral or co-applicants. But, they’re picky about where you study. So, let’s break down the basics of loans from public banks, private banks, NBFCs, and international lenders to help you make savvy money moves for your education.
- Public Bank Education Loans:
- Public-sector banks or government loan for abroad study in India offer education loans for studying abroad primarily based on collateral.
- Loan amounts range from INR 7.5 Lakh to INR 1.5 Cr, requiring collateral as security.
- Public banks provide competitive interest rates and offer tax benefits under Section 80E.
- Notable banks: State Bank of India, Union Bank of India.
- Private Bank Education Loans:
- Private banks extend both secured and unsecured education loans based on factors like country, course, and applicant’s profile.
- Interest rates typically start at 11% per annum, with tax benefits under Section 80E.
- Processing times are usually quicker compared to public banks.
- Leading banks: ICICI Bank, Axis Bank, IDFC FIRST Bank.
- NBFC Education Loans:
- Non-Banking Financial Companies (NBFCs) provide secured and unsecured education loans with shorter processing times.
- Interest rates range from 11.50% to 13.75% per annum, higher than banks.
- NBFC loans do not offer tax benefits under Section 80E.
- Prominent NBFCs: HDFC Credila, Avanse, InCred, Auxilo.
- International Lender Education Loans:
- Certain global lenders like MPOWER Financing and Prodigy Finance offer education loans for Indian students abroad.
- These loans may not require collateral or co-applicants.
- Loan amounts are disbursed in foreign currencies, and limited to specific colleges and countries.
- Noteworthy lenders: MPOWER Financing, and Prodigy Finance.
With a better understanding of various education loan providers, the key is to choose wisely based on your specific needs. Several important factors play a role in this decision. The maximum loan amount is crucial for covering all educational expenses, while paying attention to interest rates and their types significantly affects long-term financial aspects. Assessing margin money terms, processing times, and repayment structures further helps refine your decision.
In navigating this financial landscape, thoughtful consideration of these factors ensures not only obtaining the necessary funds for your education but also empowers you to start your academic journey with financial wisdom. Therefore, by carefully evaluating these elements, you can make an informed and smart choice of a lender that suits your educational goals.
