Quality education from a reputed educational institution lays the foundation of a successful career and life. Studying at a globally renowned college with a culturally diverse student and staff community helps students gain unmatched skills, superior confidence and international exposure. Education from a premier institute also helps students acquire high-paying jobs with some of the best organizations around the world.
However, with the promises of a bright future comes the dilemma of funding higher education. The choice between self-finance and education loanis a dilemma all students and their families face.
In recent times, education loans have gained much popularity due to the numerous advantages associated with them. In addition to helping you keep your savings intact, education loans also offer savings in the form of tax benefits. Flexible and easy terms have made repayment of education loans easy, so students and their families are not financially burdened. Collection of documents is done from home to avoid multiple visits to the branch that makes the loan process hassle-free.
Education loans are a much smarter way to fund higher education than self-finance because –
Education Loan Helps You Save Tax!
Under Section 80E of the Income Tax Act of India, 1961, any individual who takes an education loan for higher education of self, spouse, children or a student of whom the individual is a legal guardian can claim deductions for a period of 8 years. This implies that the entire interest amount paid on the education loan can be deducted from the taxable income thereby significantly lowering the effective rate of interest.
To avail tax benefits, education loan must be availed from a bankor financial institution notified in the Official Gazette or an approved charitable institution. HDFC Credila is the only NBFC that lets its education loan applicants enjoy tax benefits under Section 80E. You can view the Gazette Notification of HDFC Credila at www.incometaxindia.gov.in
Education Loan Covers the Complete Cost Of Education!
The complete cost of your higher education includes various expenses in addition to tuition fee. These include – living expenses, cost of books/uniform/equipment, travel fare, library/examination fee and other college deposits etc. These expenses can be as high as 30% of the complete cost of education. Your education loan can significantly ease your financial burden by covering these additional expenses in the education loan amount.
Moreover, financial institutions like HDFC Credila offer up to 100% finance with no margin money.
Education Loan Repayment is Easy with Flexible Terms!
Self-financing higher education essentially requires you to pay a large amount of your savings towards tuition fee, accommodation, travel, food etc. at the beginning of the study period. However, with an education loan, the repayment begins only after the completion of studies hence reducing the financial burden on the student.
Besides these, education loans also help in building a good credit score making students responsible for their own education. Hence, education loans are a much smarter and wiser way of funding higher education than self-finance.