Busting 3 myths about educational loans.

Higher education is a pathway to a strong and smooth career. It teaches necessary skills to students and builds them to serve the society in a meaningful way through their professions. But higher education is expensive, so much so that many students do not have money to pursue it. To help such students, financial lenders offer educational loans.

But many myths engulf the subject of education loans and mislead students into believing wrong facts about it.

To keep students from misinforming themselves, we have come up with an article about 3 myths about education loans and how they are false.

1) The student is supposed to pay margin money

Students believe that they have to pay margin money while getting educational loans for their higher studies. This is true in some cases, but not all. Margin money is the amount of money the student has to pay to cover some expenses of his or her higher education apart from the money the bank gives for the same reason. Some banks ask students to pay margin money.

But many financial lenders, like NBFCs, offer to cover the student’s education expenses holistically. They cover everything from the student’s course tuition fee to the travel expenses, lodging and boarding expenses and so on. They do not expect the student to look after his or her education expenses; they just expect the student to study earnestly.

2) Getting unsecured education loan is not possible

Students believe that getting unsecured educational loans is too difficult. This is not true. Getting unsecured educational loans has its own conditions.

Financial lenders consider 3 factors before sanctioning education loans. They check the academic profile and achievements of students before they give them education loans. Students should maintain as healthy an academic record as they can. They should display academic merit.

They should choose a reputed university and a course that has a lot of potential for them to earn money. This factor plays a huge role in helping them get education loans because students of reputed universities have high chances of getting a job or starting a successful business venture.

The co-borrower of students should have good credit scores, good credit history and decent financial worth to help their children get education loans for higher studies. In short, getting unsecured educational loans depends on the co-borrower’s creditworthiness.

3) Tax benefits are applicable on the education loan EMIs

Some students believe that they get tax benefits on their education loan EMIs. This is false as well. Students do not get tax benefits on their repayment EMIs.

They get tax benefits on the interest levied on their education loans. They can get these tax benefits for duration of 8 years from the time the repayment tenure begins or until the whole education loan is repaid, whichever comes earlier. So, these are the 3 myths about educational loans and how they misinform students.

We hope that after reading this article, your views about education loans have been straightened out and you know more about it than you did before. All the best!