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    Education Loan

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    bbanik82
    Education is the foundation for individual success. Education loans provide financial assistance to students for tuition, fees, books, supplies, and living expenses. There are several benefits to education loans, such as tax deductions for interest paid on the loan and delayed repayment while in school. However, education loans also have disadvantages like high interest rates that result in debt lasting decades and negatively impacting credit if default occurs. While loans can increase access to education, high debt burdens limit individuals' financial flexibility after graduation.

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    Education Loan

    Uploaded by

    bbanik82
    202 views3 pages
    Education is the foundation for individual success. Education loans provide financial assistance to students for tuition, fees, books, supplies, and living expenses. There are several benefits to education loans, such as tax deductions for interest paid on the loan and delayed repayment while in school. However, education loans also have disadvantages like high interest rates that result in debt lasting decades and negatively impacting credit if default occurs. While loans can increase access to education, high debt burdens limit individuals' financial flexibility after graduation.

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    Education is the foundation for individual success. Education loans provide financial assistance to students for tuition, fees, books, supplies, and living expenses. There are several benefits to education loans, such as tax deductions for interest paid on the loan and delayed repayment while in school. However, education loans also have disadvantages like high interest rates that result in debt lasting decades and negatively impacting credit if default occurs. While loans can increase access to education, high debt burdens limit individuals' financial flexibility after graduation.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    202 views3 pages

    Education Loan

    Uploaded by

    bbanik82
    Education is the foundation for individual success. Education loans provide financial assistance to students for tuition, fees, books, supplies, and living expenses. There are several benefits to education loans, such as tax deductions for interest paid on the loan and delayed repayment while in school. However, education loans also have disadvantages like high interest rates that result in debt lasting decades and negatively impacting credit if default occurs. While loans can increase access to education, high debt burdens limit individuals' financial flexibility after graduation.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    The key takeaways are that education loans provide financial assistance to students for higher education expenses like tuition fees, books, and living expenses. However, education loans are expensive and can burden students with debt for decades if not paid off promptly.

    Some benefits of education loans include tax deductions on interest paid, the bank directly pays fees to the college, and repayments can start after completing studies or getting a job. There is also flexibility to switch lenders for better rates.

    Disadvantages include high costs over the long run, difficulty repaying if not graduating, ruined credit if defaulting, and interest accumulating on the principal over time. Loans must be repaid whether graduating or not.

    Education is the foundation for the success of any individual.

    Education loans is the financial assist for the students during there course of study such as any kind of fees payable to the educational institution like tuition fees, examination fee, lab fee etc, Hostel Security, caution money or any kind of institutional fund, purchase of Laptops or any other electronic equipment essential to the course, Purchase of books and uniform, travel expenses (in case of studies overseas), Miscellaneous expenses like project work etc.

    Benefits of availing Education Loan Main purpose of availing an educational loan is to provide financial assist for the students in gaining degrees or education but there are so many benefits associated with the education loan. The following are the benefits of Education Loans Under section 80 E one can claim deductions from taxable income (Deduction is only for the interest paid and not for the principal amount) One would get tax benefit only if the loan is in his/her name and is taken for the purpose of pursuing higher education for self, spouse or children. Only full-time course holders are eligible for tax benefits, neither part-time holders and nor correspondence holders are not eligible for tax exemption. One can claim deductions for as many loans he has taken for educational purpose. For example, if you have taken a loan for self as well as spouse, you can claim both deductions from your income, provided it is you who is paying both the EMIs. These deductions are only available for a period of eight years starting from the financial year when you start paying the installments.

    The bank directly gives the total fee of the entire course to the concerned educational college/institute. The procedure goes like this, Once the loan application form is submitted, the bank compares the applied loan amount with the estimate expense for the entire course; at times its possible that bank might reduce the loan amount on the basis of various grounds. Bank also might charge a remittance fee for payment to education institutions aboard which are in dollars. Incase the applicant is unemployed and cant start paying the EMI immediately after disbursement of loan then the repayment starts approximately six months one year after your course has been completed or when he/she gets a job, whichever is earlier and the interest will be compounded and added to the principal. While this option carries a high interest rate, its beneficial for the students who are going abroad or those who are financing their studies by themselves and education loans do not attract the pre-payment penalty. Incase the applicant as opted for the floating rate of interest for loan, he is not allowed to switch over to the fixed rate. However he can change his borrower i.e. the bank from where he has taken the loan, in case he get the better deal, with some part of the loan amount paid by him to the bank which would be deducted from the amount he has to pay.

    Many times peoples opt for personal loans for educational use, because they want more than the loan amount that has been approved by the bank due to numerous reasons. It is to be noted that rate of interest and repayment option of educational loan is lesser, easier and convenient than the personal loan. Therefore one should go for education loan for all the expenses related to studies. The Disadvantages of Educational Loan are as follows: Education loans Are Expensive The primary disadvantage of a education loan is the cost of getting one. Depending upon where you go to college, a education loan can leave you hundreds of thousands of dollars in debt. Many of the top tier institutions have tuitions that range from $40,000 a year and up. That does not include the cost of items like books, lab fees, and residential housing. A college student can come out of school with an undergraduate degree and a massive debt burden. Education loans can Last for Decades Education loan debt can make it difficult for a young person to get out of debt for a long period of time. Some people have education loan debt 20 to 30 years after graduating from college. This can make it very difficult to build up an emergency savings account and to save money for retirement. Education loans are impossible to get rid of without paying them off even if you have financial hardships. Education loans can ruin Your Credit Defaulting on a education loan can ruin your credit and your chances of obtaining employment in certain professions. Education loan defaults are not removed from your credit history after seven years and are not wiped away. They are not discharged during bankruptcy proceedings and can lead to wage garnishments if not paid as agreed. A simple four year loan can lead to years of bad credit and debt repayments. Education loans Have to Be Repaid Whether You Graduate or Not Education loans have to be repaid by borrowers even if you do not graduate from the college where they were taking classes. There are a large number of people making education loan payments despite never receiving a degree. These payments are a hardship for many people whose income levels do not match up with their monthly loan repayments. Education loans Carry Interest All education loans charge interest on the money borrowed. Repaying the interest owed on a education loan can be a costly endeavor depending upon the type of loan that you get. Private Education loans have much higher interest rates than regular education loans and can leave you paying 10% or more annually in interest. There are a number of reasons why education loans should be your last option when financing a college education. It is much better to use savings accounts and college savings plans to pay for the costs of college. They will keep you from having to repay a massive sum of money after you graduate.

    CONCLUSION The great variety of student loan schemes and other forms of financial supportthat exist around the world demonstrate that there is no single model that is appropriate for all countries. Certainly no government is yet satisfied that it has solved all the problems summarized in this paper and designed the idealsystem. There are still skeptics who argue that student loan schemes do not work particularly in Africa. I believe there is evidence to the contrary, and that loan can contribute to revenue diversification and make cost-sharing more feasible. But there is still much to be done, to improve the efficiency and effectiveness.

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