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There are many benefits of taking an education loan from a bank to help with future academics.
Here are some of the Education Loan benefits:
1 Good education
The primary benefit of taking an education loan is that the individual gets to afford a good education that can help them life long by helping them get a good career and getting set in life. It helps them achieve academic excellence that adds to the resume to help them get into a reputed company thereby giving them job security and job satisfaction for life.
2 Tax benefits
The interest paid on the education loan can be claimed as a tax deduction as per section 80 E of the Income Tax Act that was passed in the year 1961. However, the income tax benefit can only be claimed on the interest of the loan and not the principal amount as it does not qualify for it.
3 Government subsidy
The Government of India has a scheme to help the weaker sections of society to enjoy education and not deprive them of the same due to insufficient monetary funds. According to this, the Government of India provides full interest subsidy during the moratorium period, which is during the entire course period plus an additional six months or one year after getting a job, whichever is sooner.
4 Moratorium period
The repayment on the education loan does not begin right after an individual finishes their course. The banks provide a holiday period of one year or six months after course completion, which is called the moratorium period. So, one does not need to repay the loan during this one year, but the interest rate will be applicable for the year. This helps the student get a job to help repay the loan and this lessens the burden on the student by a great deal.
5 Collateral free loans for premier institutions
A very big advantage in an education loan is that if the student gets an admission into a premier institute such as IIT or IIM, then the entire loan amount can be taken collateral free. If the institute is not a premier institute, then only up to 4 lakhs can be taken without collateral. Loan amounts that are higher than 4 lakhs require collateral.