What Are The Benefits Of Student Loans

 Benefits of student loans

We have all, at one time or the other, taken a loan to facilitate for pending financial reasons, and as such, we are aware of the importance of loans. Of particular interest here is the use of student loans.

By definition, student loans are made to assist students cater for their needs in their educational institutes. Some of these needs include tuition fee, accommodation, as well as learning material .

It is important to note that the specifics provided for student loans vary from one scheme to another. In fact, for some students, the scheme available is such that the interest rates are significantly lower to allow students flexibility once they have embarked on repaying the loan.

There are two broad classifications of student loans; those sponsored by the government as well as those served by the institution. In the latter category, the loans provided for by non-governmental organizations also fall in this class. Many students the world over rely on government student loans, also known as federal loans in USA. These loans may be subsidized or unsubsidized, in which case the difference lies in whether or not interest is charged when the student is still in college or in the higher education institution. This is often a relief for students as the amount to be paid is not as high during repayment.

  The following are some of the importance of student loans .

• A Means to a Higher Education

It’s pretty obvious but it needs reiterating: student loans are important because they are a means to obtaining a higher education.

Some believe college isn’t a necessary stepping stone for success. Other staunchly argue that to find a career that’s meaningful and lasting, a college education is necessary.

The truth is, getting a college education is a form of security. You are ensuring that more job options are open for you once you complete your higher education. With college-level skills, you are more qualified compared to someone who didn’t complete their college degree. More skills and knowledge lead to a better-paying job which will aid in the repayment of student loan debt.

Top 5 Benefits of Study Loan

1. Low interest rates

2. Easy Availability of Study Loan

3. Good payment terms

4. Tax Deductible

5.Self-dependence

No investment bears a higher return than the one on your education. A study loan facilitates a student to complete their education even if they are unable to afford it at present. By keeping in consideration the future earning potential of an educated individual, it helps them live up to their true potential.

Top 5 Benefits of Study Loan

Apart from purely economic reasons, there are multiple benefits associated with Education Loans, making them the apt choice for funding your education. Here’s a look at a few benefits of considering an education loan for funding your studies:

1. Low interest rates

When taking on any loan, interest rates play a predominant role in the decision. The interest rates for study loans are generally lower across the world, and in India too, can be quite low, especially from public sector banks. For those belonging to an underprivileged background, they can be even less expensive, thanks to a government subsidy that pays the interest on the loan for the period of the course studies, and up to 6 months after gaining employment.

2. Easy Availability of Study Loan

Loans are easily accessible to a majority of the population due to their availability from multiple sources. Along with banks – both public and private – a large number of NBFCs (Non-Banking Financial Corporations) also offer education loans with comparatively simplified processes. Many other organizations, too, help out students by offering endowment loans and other benefits.

3. Good payment terms

Another important consideration before taking on a loan is the repayment plan. For most loans, you need to start paying back immediately, but considering a study loan is based on future earnings, many banks allow for flexible repayment options making it easier for students to pay back the loan themselves once they get a job.

4. Tax Deductible

The associated tax exemptions are another great benefit of education loans. The interest paid on the loan is completely tax deductible, under Section 80E of the Income Tax Act, 1961. This helps a student save some money during the repayment period.

5.Self-dependence

The most beneficial aspect of a study loan is it teaches a student to take responsibility for their studies. Apart from saving their parents from a great financial burden, Study Loan has an added benefit. Taking on a student loan also ensures they’re fully invested and committed to their studies.

There couldn’t be a better preparation to be an adult in today’s world than for students to fund their own higher education