Government of India expects to achieve higher education gross enrolment ratio (GER) of 30% by 2020, rising from the current statistic of 25.8%. However, the cost of higher education in India may affect GER in multiple ways. On an average, colleges in India charge a tuition fee of Rs. 4 Lakh for a 4-year self-financed graduation degrees. While pursuing degree courses in colleges like IIT, BITS Pilani and its contemporaries can cost up to Rs. 10 Lakh and Rs. 15 lakh.
To meet this educational cost, availing an education loan is a desirable choice for many. One can easily avail education loan on property by pledging a commercial or residential property as collateral.
Thus, it is important to know about these essential things so that you can reap the benefits in the best possible way-
- Cost incurred for the loan- Financial institutions and non-banking financial companies often charge loan applicants with charges like processing fee, transaction statement amount, foreclosure charges, part prepayment fees etc. So, you should know this hidden cost of loan against property before applying for it.
- Educational loan subsidy- Education loan for abroad studies including both tuition fees as well as fees for accommodation can be substantial and make repayment difficult for students. To address this issue, the Indian government proposed many loan subsidy schemes for education loan applicants in India. These subside schemes include reimbursement of additional charges, concession in interest rate, discount in interest paid during repayment.
- Loan amount eligibility- Based on monthly income, preferred tenor, and monthly financial obligations, education loan eligibility amount is decided. One can make use of an eligibility calculator to find out the maximum loan amount they can avail from a financial institution.
- Tax benefits- Under section 80E of Income Tax Act, the total interest paid on education loan can be claimed for tax exemptions over and above the Rs. 1.5 Lakh exemptions per annum under Section 80C.
Before availing an education loan, make sure you check additional terms such as moratorium period, prepayment and foreclosure charges, etc. offered on the loan.