New Delhi. The expenditure on education is increasing every year. According to an estimate, it is increasing at the rate of 15 percent annually. If a person wants to educate his children abroad, then the expenditure increases manifold. Government and private banks and non-banking financial companies provide education loans for foreign education. Due to education loan, the dream of many students to study abroad comes true.
But, it is not that everyone gets an education loan to study abroad. Before giving loan, banks do thorough investigation and give loan for foreign education only to the candidate who fulfills their terms and conditions. If your intention is also to take an education loan, then before applying for the loan, you should also look at all the aspects of the education loan and see its pros and cons. Only after that you should apply. A loan taken without due diligence can also become a trap for your life.
Also read- Floating Rate FD: Yes Bank links FD rates with repo rate, know what will be the benefit of customers
Which expenses are included?
According to a report by Moneycontrol.com, before taking a loan for studies abroad, it is very important to know for what expenses this loan is being given. Most banks cover tuition fees, living expenses, health insurance and study material expenses in the education loan. For example, Bank of Baroda considers all the above expenditure as project cost. HT Solanki, general manager (mortgage and other retail assets) at Bank of Baroda, says that apart from these, the bank also gives loans keeping in mind the expenses incurred on airfare, laptop and stationery, study tour, project work and theses. Is.
But before taking a loan, you should know that what are the expenses that are not included in the education loan, which you will have to arrange yourself. Additional coaching, personal expenses like buying a car or bike, and traveling to and from home during the course are not included in the education loan.
interest rates of different banks
Make sure to check the interest rates before taking an education loan for foreign studies. It is necessary to do this because, from the interest rate itself, you can get an idea whether you can repay this loan on time or not. Presently, state-owned banks are charging 6.85 to 8.20 per cent interest on education loan of Rs 20 lakh for a tenure of seven years. Private banks are offering education loan at 8.45 percent to 14.25 percent interest rate. SBI’s interest rate is 7.25 percent, Canara Bank’s 7.30 percent and Bank of Baroda’s 7.45 percent. Private banks like ICICI Bank and Axis Bank charge 10.50 to 13.70 percent interest.
Before taking a loan for studies abroad, it is very important to know in how many years you have to repay the loan. The loan tenure should be decided very carefully. The maximum repayment period of education loan is 15 years. Therefore, before taking a loan, you should know that in how many years you will be able to repay this loan.
Take care of tax benefits
Tax exemption is available on education loan under section 80C of income tax. But, the special thing is that this exemption is available only on education loan taken from banks. Therefore, if a person takes a loan from a fintech company, then he is not entitled to tax exemption.
Also read- ICICI Prudential Life Insurance announces bonus, 10 lakh policyholders will benefit
On which asset loan is easily available
Akshay Chaturvedi, Founder and CEO, Leverage Edu, says that banks do not accept agricultural land and open plots as collateral. The same applies with stocks and mutual funds. This is because the price volatility of such assets is very high. It is also not liquid like a fixed deposit. Therefore, if any parent is thinking of getting an education loan for their children on these assets, then they must first go to the bank and talk about it.
Tags: banking, Education Loan, Personal finance
FIRST PUBLISHED : June 22, 2022, 12:34 IST