Higher education is a stepping stone to achieving your dream career, but it is often expensive. Education Loans are crucial in making college affordable by covering tuition and other costs. These loans bridge the financial gap, allowing you to pursue your academic goals without the immediate burden of paying for everything. This support enables you to concentrate on your studies and future career without financial stress.
Interesting facts about an Education Loan
1. It covers more than just tuition fees
Student Loans not only cover tuition fees, but also covers costs such as accommodation, books, supplies and equipment necessary for your course. It also covers travel expenses, especially if you are studying abroad, as well as daily living expenses to ensure you can focus on your studies. By covering these diverse expenses, Education Loans provide comprehensive financial support, enabling you to fully immerse yourself in your education and make the most of your academic opportunities.
2. Subsidy schemes for the financially needy
There are subsidy schemes for the economically weaker sections that make higher education more accessible and affordable. One prominent initiative is the Central Sector Interest Subsidy Scheme (CSIS), which offers full interest subsidy during the moratorium period on Education Loans for students with a family income of up to ₹4.5 lakh per annum. Many other similar initiatives significantly reduce the financial burden on students and their families.
3. Loan repayment doesn't start immediately
A unique fact about student debt is that you are given a moratorium period, which includes the course duration, plus a grace period of 6-12 months (in certain cases). During this time, no principal or interest payments are required, although interest continues to accrue. This grace period allows you to secure employment and stabilise your finances before beginning repayment, easing the transition into your post-education financial responsibilities.
4. You can claim tax benefits
Under Section 80E of the Income Tax Act, you can claim tax deduction of the entire amount of interest paid on an Education Loan from your taxable income, reducing your overall tax burden. The deduction is available for a maximum period of 8 years or until the interest is fully repaid, whichever comes first. It applies to loans taken for higher education in India or abroad for your self / spouse / children, or a student for whom you are the legal guardian. By leveraging these tax benefits, you can significantly lower your taxable income, making Education Loans more affordable.
5. All Education Loans don't need high-value collateral
A significant fact about Student Loan debt is that some banks provide them without insisting on collateral security. For instance, Axis Bank's Prime Abroad offers unsecured loans up to ₹1 crore for premier courses abroad, with the loan tenure extending up to 15 years. So, if you qualify the bank's Education Loan eligibility criteria, you don't have to worry about keeping any high-value property as collateral.
Also Read: How to get an Education Loan in 6 easy steps?
Conclusion
Understanding the various aspects and lesser-known facts about student debt will help you in making informed financial decisions. From tax benefits under Section 80E and the absence of foreclosure penalties to options for unsecured loans and flexible repayment plans, Education Loans offer numerous advantages.
It’s important to check key factors such as Education Loan interest rates, repayment terms and processing fees before finalising your loan. When used wisely, an Education Loan is a strategic tool that can unlock a world of opportunities for you.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
