The cost of education is touching the roof. Further education, whether it is in India or abroad, is getting expensive by the day. These high expenses can put a dent on the aspirations of bright students wishing to pursue further education and carve exciting careers. However, all is not lost. Banks and NBFCs provide education loan in India for further education within the country and abroad. This loan can help pave the path that leads to realising your ambitions. Here are five interesting facts about higher studies loans that you must know.
A student loan is known as all-around loans because they include more than just your tuition fees. The loan covers you for the entire cost associated with the degree – from the time you start the course until you graduate. As such, the loan covers you for expenses related to hostel or dormitory charges, and even rent. Moreover, it also includes the costs of books, study equipment, travel, food and other expenses you have to bear during your student life.
While an Indian bank or NBFC may sponsor the education loan, you can avail it for further education abroad. Students who go abroad to study have a good chance of finding employment in a foreign country where they have studied. As such, you can earn in foreign currencies and take advantage of the depreciating value of INR. Let us say you went to the USA and took out the loan when the value of INR to USD was INR 65 to 1 Dollar, and you start repaying at INR70 to 1 Dollar. This currency depreciation works in your favour.
Student loan in India is provided to students from affluent families and deserving students who come from families without sufficient annual incomes. Students coming from families with annual incomes less than INR 450,000 can avail subsidies on their loans. Subsidised loans are those wherein the student only has to repay the principal loan amount while the Indian Government pays the loan’s interest component. However, these loans are only available for further studies in India, not abroad.
Typically banks charge a prepayment penalty if you decide to repay your student loan before the chosen tenure. However, as per RBI mandate, lenders are no longer allowed to charge a prepayment penalty on these loans. You can easily prepay your loan without worrying about incurring any penalties. That said; you can close the loan after repaying a minimum of 6 EMIs.