Education is one of the key aspect of a student’s life. But many students are unable to study in good college because of financial limitations in their family. One of the finest solutions to this problem is education loan.
But students have doubt in their mind about whether to take education loan or not. So let’s look at points to be considered before getting education loan:
1. Salary after job – Students should ask themselves whether their future salary would be able to repay the loan in five to eight years or as per their convenience.
What is the point of taking loan where your salary is almost getting used in paying loan.
2. Good financial condition – If family have good financial condition, then it is better to not take loan and pay unnecessary interest. In other words never take loan if your family can afford to pay for education without loans.
Loan should be taken only to meet gap not fulfilled by family finances.
3. Unnecessary courses – Students should not choose a course just because loan is offered for the course. Loan is secondary to course or college.
Students should first determine the course they want to enroll in. Then decide whether to take loan or not. It should not be other way.
4. Take rational decision – Many students and parents take loan just because their student is getting a prestigious college. But they forget to check the placement potential of the college.
Prestigious college do not guarantee good placements. Parents need to rationally research whether average annual package of college is good. Never take loan just because student is getting a prestigious college. Never have college bias.
5. Tax benefits – Section 80E of income tax act provides deduction of interest in respect of loan for higher education in India or abroad.
Assessee get tax deduction of interest for 8 consecutive years. It is important factor to consider and understand what will be the interest and resulting tax benefit of obtaining respective loan.
6. Never forget to check if your state government has launched any scheme for subsidy in education loan.