An education loan is a sum of money borrowed to finance college or other school-related expenses. Payments are often deferred while students are in school and for a six-month grace period after graduation
How does an education loan work?
The loan is repaid by the student. Generally, the repayment starts when the course is completed. Some banks even provide a relaxation period of 6 months after securing a job or a year after the completion of studies for repayment. ... During the course period, the bank charges simple interest rate on the loan.
What are the benefits of education loan?
Here's a look at a few benefits of considering an education loan for funding your studies:
Low interest rates. When taking on any loan, interest rates play a predominant role in the decision. ... Easy Availability of Study Loan. ... Good payment terms. ... Tax Deductible.
Is education loan free of interest?
in most of the cases, it is just subsidized. However, you can still make your way around to avail education loan at 0 interest. ... There is no interest paid until then. This can be availed under the Central Sector Interest Subsidy Scheme and can be availed only from one of the scheduled banks.
Can I repay education loan early?
There are no prepayment penalties on federal student loans or private student loans. You can make extra payments on your student loans or pay them off in-full without paying a fee or other penalty. To make a payment, contact the loan's servicer.
What happens if education loan is not paid?
If you don't make your payment, your loan goes into delinquency status. ... If you still don't pay, your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government can all take action to recover the money you owe for your student loan debt.
Can you go to jail for not paying a student loan?
Technically, you cannot go to jail for not paying your student loans, the Education Department assures borrowers. ... It is true that defaulting on student loan debt can lead to being arrested, but default alone is not a criminal offense.
Is education loan a good idea?
According to Section 80E of the Income Tax Act., the interest paid on the education loan qualifies for a deduction in the income tax for up to eight years. Yes, if you face financial constraints about funding your education on your own, then an educational loan is a good idea.