Professional qualification has the potential to impact the entire life of an individual. It can facilitate lifelong employability and financial independence. However, the higher education comes at a high cost. The ever rising cost of higher education can severely impact the finance and savings of a family. An Education Loan comes in handy to cover these costs.
Low interest rates - As against other conventional loans, the education loans are funded at a lower interest rate with comparatively easier terms and conditions.
Deferred repayment - The repayment of education loan starts post completion of the course. Thus the student can take charge of their financial responsibilities without any financial impact on parents
Income Tax benefit - The education loan attracts tax benefit under section 80E of IT Act
Build good credit history - It also becomes a good way to start off building one-s credit history that shall help in achieving financial objectives in long run
Since the education loan requires the parent to be a guarantor/co borrower, their credit score is vital for sanctioning of loan.
The eligibility of education loan is calculated on the following factors:
1. Debt to income ration of co borrower
2. Valuation of property put up for mortgage
3. University where admission is being sought
The basic documents required for education loan are as follows:
1. Income proof of co applicant (parent in most cases)
2. Bank statements
3. Immovable property documents
4. Regular KYC documents (Photo ID and address proof)
5. Academic papers
6. Proof of admission to a university
There are various types of education loans:
1. Education loan for higher studies in India
2. Loan for studies in USA
3. Loan for study abroad
4. Loan for Executive MBA