Today, to become successful and competent it is essential to have a quality education, which sometimes comes with a hefty price tag. The cost of education rising at an unwavering speed can be challenging to handle. To deal with such expenses, you can opt for an education loan.
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But, before you opt for an education loan, there are specific things like the following which you should keep in mind:
1. Utilize Vidya Lakshmi Portal For Multiple Loan Applications
Not all are aware of the Vidya Lakshmi portal while applying for an education loan. In an event where you apply to one bank but get denied, you will have to opt for applying to another bank. But, Pradhan Mantri Vidya Lakshmi Karyakram (PMVLK) portal is a single-window system that you can use to apply to multiple banks at once. With this portal, you can apply for an education loan to three banks saving considerable time and effort. The Vidya Lakshmi portal has over 40 registered banks and about 71 education loan schemes for you to choose from as an applicant.
2. Apply with your Parent as a Co-Applicant
There are rising cases of defaults and non-performing assets (NPAs) for education loans. Thus, banks are being diligent while reviewing applications for new loans. As an education loan applicant, there are ways to maximize the approval chances. One way is to apply with your parent as a co-applicant. With a good credit history and your parent’s stable financial health, the chances of loan approval increase.
3. Try to Seek Loans in Installments.
Keep in mind that banks charge interest on the amount of money that is disbursed for education loans. Generally, institutes and universities have a semester-wise fee-payment system. In such an event, you can also opt for the loan to be disbursed in installments. Thus, the overall interest you will require paying with such a loan will be more pocket-friendly for you than a one-shot disbursal.
4. Ensure Interest Payment in the Moratorium
Moratorium period or the time between finishing your education and starting your loan repayment does not call for loan repayments. But the interest gets accumulated on a simple interest basis. In the event where you have taken a loan with a two-year moratorium period, the loan with accumulate for those two years. Then, the final loan EMI will be calculated with the accrued interest on the loan amount from the day the moratorium period ends. Further, paying the simple interest component during the moratorium period will make your loan EMI budget-friendly. It will reduce the amount that you need to repay when due.
5. Prevent the Overlooking of Tax Benefits
An advantage of education loans is that you can avail of tax benefits under Section 80E of the Income Tax Act. One thing that is overlooked in most cases is that the deduction is offered only if the loan is taken from a registered bank or Non-Banking Financial Company (NBFC). It is a renowned financial establishment. The deductions on education loans are offered only for a maximum period of eight years. So, if you plan to have a long tenure education loan, the tax benefits will be applicable for eight years or until the interest is paid. It depends on whatever happens first.
Get your Dream Education This Way
The education world can get competitive, and it is during this time, an education loan comes to the rescue. You may research online and gather information about different banks and the loans that they are providing. Some banks offer education loan calculators on their websites to help you compare and determine the right option. Reliable banks like Axis Bank offer education loans both for studies in India and abroad.
With their education loan policy, you can enjoy a host of advantages like simple documentation, quick loan disbursal, tax benefits, and others. They can also provide a sanction letter before admission. If you face any difficulty, you can contact them, and their customer service will guide you through the procedure!