Availing a loan is not a crime. It is a finance option where an individual is required to take at the time of any financial requirement. But if you take this debt for granted, it sure will consume your life savings. In case of an education loan, things are pretty simple in this case as well.
Every parent’s dream is to see their children achieve things in life and reach heights much more than what they could achieve. But, in these times, where cost of education is gone so up, sometimes these thoughts are hampered. But, availing an education loan can put an end to all your worries.
Advantages:
- Given that full deduction of the interest cost is available, for a person paying taxes in the 30% bracket, this means that the effective interest cost on the loan is reduced by 30%. Under Section 80E, for the interest paid on loans taken for higher education, such interest is payable out of the taxable income.
- This education loan is used to finance not only full time higher education needs in India as well as abroad but also provides for finances for hostel charges, book costs, etc.
- The deduction is available for a period of up to 8 consecutive years, beginning from the year in which the interest is paid on the loan and is available only in when the loan is taken from financial institutions like HDFC and approved charitable institutes. Thus loans from family, relatives and employers are not covered.
So, instead for opting for a personal loan, which does not carry a tax deduction benefit, avail an education loan as it can prove to be much easier on your finances in the long run.