Benefits of Obtaining an Education Loan for Studying Abroad

Going abroad to study is a significant step that costs money. From tuition fees and accommodation charges to travel and living expenses, the total cost of living abroad can be overwhelming. Fortunately, students can easily obtain a loan for studying abroad. Several banks and non-banking financial companies (NBFCs) offer education loans. Whether one is planning to study in the US, UK, Canada, or Australia, financing higher education abroad with the help of a loan would be a good idea. Borrowers do not even have to start repaying such loans immediately. They benefit from a moratorium period that gives students the time to complete their course and find a job before making repayments.

Benefits of Education Loans

Covers a Variety of Expenses

Student loans in India typically cover a variety of expenses. Rather than having to arrange funds from multiple sources, students can rely on a single loan to manage almost every type of expense they would incur while pursuing higher studies abroad. In addition to the tuition fees, education loans may cover living expenses, accommodation charges, and travel costs.  This helps ensure students can fully focus on their studies throughout the duration of the course, without juggling their financial responsibilities.

Preserves Family Savings

Many families feel compelled to sell assets, dip into savings, and liquidate investments to fund their child’s higher education. However, doing so can hurt their financial security and hinder them from achieving goals related to retirement. However, as one uses an education loan to fund their higher education, their families will not have to sell assets or break FDs and compromise their financial security. Parents can continue pursuing financial milestones while their child enjoys a world-class education and builds a career.

Flexible Repayment Options

EMI repayment of these loans does not start before the course is completed. The majority of lenders provide a moratorium or grace period for education loans. This grace period is usually 6 months from the day the borrower completes the course or 3 months from the day they get a job, whichever is earlier.

Tax Benefits Under Section 80E

The interest one pays on a student loan in India is tax-deductible. Under Section 80E of the Income Tax Act, 1961, students can claim a deduction on the entire interest amount paid on an education loan. It is vital to note that the paid interest must be mentioned in the "Deductions under Chapter VI-A" section while filing the Income Tax Return (ITR).

Develops Financial Discipline

As a student obtains an education loan to pay for their studies, it becomes their responsibility to ensure that repayments are made on time. This sense of accountability goes a long way in fostering budgeting skills and responsible spending habits.

Applying for an education loan would be a great way of financing higher education. Interested borrowers can use tools like an education loan EMI calculator to compare and finalise the ideal loan option. A student loan is the best financial tool for those who aspire to study abroad without creating financial stress for their families.