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Key factors to consider before applying for an education loan

Before taking a loan, check and confirm with your lender on what all expenses are covered under the education loan. 

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During the moratorium period, you will also have the option of paying interest to lessen the burden of the loan. 

With mounting inflation, combined with higher fees, quality education has become enormously expensive today. In this scenario, an education loan comes in handy to finance higher education for aspiring students.

Apart from banks, various fintech companies have also started offering education loans for graduate, post-graduate, short term, upskilling or professional courses, at attractive interest rates. 

Mayank Batheja, Founder of, Credenc says, “Although education loans are extremely useful, they can also be a significant burden if not handled properly. The first thing one needs to finalize is a course and then choose the right institution or University to pursue that course.” 

He further adds, “As different financial institutes have different sets of terms and conditions, it is essential to get a thorough understanding of the eligibility criteria, all associated charges such as processing fees, any penalty charges for pre-payment or late payment of EMIs, etc.”

You should also check and confirm with your lender on what all expenses are covered under the education loan. 

Another important aspect to get clarity on is loan repayment tenure. Usually, loan repayment starts once you have completed your course and have started working. Batheja says, “Depending upon one’s agreement one may also get a moratorium of 6 months or one year for repaying the loan post joining a job.” Therefore, “while one does not have to make payments on their loan, the interest payable on the loan will accumulate throughout this period,” adds Batheja. 

During the moratorium period, you will also have the option of paying interest to lessen the burden of the loan. 

Experts say an education loan should be looked at as an investment that helps you choose a course of your choice from your preferred institutes, thereby letting you choose your career path. Apart from easing the financial burden on your family, education loans also offer tax benefits. The interest paid on education loans is deductible u/s 80E of the Income Tax Act, 1961. 

Batheja says, “It is encouraging to see that today more and more youngsters are becoming independent and are preferring to bear the expense of their education on their own, even when their family have the means to support them financially.”

He points out, “In addition to ensuring that one is fully invested and committed to one’s education, education loans also helps in building a good credit score.”

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