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Pursuing higher education is often a financially draining affair. To an extent, education loans ease the burden as students are able to finance their studies within the country as well as across the globe. To get you up to speed with what options are available, here is a complete guide to the best banks providing education loans in 2024, along with their interest rates and other essential factors that must be taken into account before applying.
| S.No. | Bank | Interest Rate |
|---|---|---|
| 1 | State Bank of India | 8.05% p.a. onwards |
| 2 | Punjab National Bank | 8.10% p.a. onwards |
| 3 | ICICI Bank | 9.50% p.a. onwards |
| 4 | Bank of Baroda | 8.15% p.a. onwards |
| 5 | Bank of India | 8.25% p.a. onwards |
| 6 | HDFC Bank | 8.64% p.a. onwards |
(Note: Interest rates may vary. Always check the latest rate at the bank before making an application.)
POINTS TO REMEMBER BEFORE APPLYING FOR EDUCATION LOAN
1. Government Subsidy Schemes
There are many central government schemes that offer subsidies in interest rates for education loans. Some popular schemes include:
- Credit Guarantee Fund Scheme for Education Loans (CGFSEL): Provides credit guarantees for education loans.
- Dr. Ambedkar Central Scheme for Interest Subsidy: Intended to bring in subsidies for students coming from the weaker economic classes.
- Padho Pardesh Scheme: Granting interest rate subsidies to students who have taken their education to foreign soil and belong to minority communities.
These schemes would make the borrowings cheaper which in turn would make education even cheaper to the eligible students.
2. Tax Benefits Under Section 80E
The facility of tax exemption under Section 80E of the Income Tax Act is available in respect of interest paid on education loans availed by the borrower. This facility for availing tax benefit is available for a period of eight years or, whichever is earlier, till the interest is completely paid.
3. Concessions for Existing Customers
Most banks grant interest rate waivers to their loyal and creditworthy customers. It will substantially decrease the cost of the loan, therefore rendering it easy for loan borrowers to pay back the loan amount.
4. Payment of Interest During the Study Period
Some banks offer an interest rate concession, up to 1%, if the borrower pays the interest during his or her study period. This can gradually reduce the total interest burden, which in turn decreases the overall loan amount payable post-graduation.
5. Risk Premium Charges
Banks may also charge the borrower an additional interest rate of as much as 0.05%, with the condition that he or she has not availed himself or herself of credit life insurance, which pays off outstanding debt upon the borrower’s death, thus reducing the risk to both parties.
6. Lower Interest Rates for Female Students
There are so many banks that offer special education loan schemes for girls with lower interest rates to encourage female education. These concessions can prove to be an essential factor in choosing the best bank for an education loan.
BENEFITS OF EDUCATION LOAN
The education loan is really helpful for students who wish to pursue higher studies. Here’s why choosing an education loan when required is the smartest financial choice:
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Lower Interest Rates
Loans for education provided in India have the lowest interest rates as compared to all loans. Such interest rates make it quite manageable for students to bear, and the stress is eased to their families too.
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Flexible Repayment Tenures
Repayment terms of education loans are usually for longer periods, which permit the borrowing to repay it gradually at small amount intervals. This gives ease to students in post-graduation financial life. It provides relief and breeds confidence among the student populace.
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Tax Benefits
Tax benefits can be availed of under the Income Tax Act, which works out to be a cost-reduction factor or lowering the cost of borrowing, thus making it much more affordable.
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No Collateral for Small Amounts
Education loans in India do not require collateral up to a certain amount, which works better for students who have no valuable possessions and need a lot to finance their education.
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Comprehensive Coverage
Education loans cover all the expenses of higher education, tuition fees, accommodation, etc. It is useful to students who are studying abroad because they usually have to pay much more.
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Building a Credit Score
The payment of an education loan builds up good credit score for the students, which proves beneficial while taking future loans or other financial products.
CONCLUSION
Choosing the right bank for your education loan in 2024 requires extremely careful consideration of interest rates, government schemes, and concessions provided by banks. You must further analyze terms of repayment and fringe benefits such as offering a better rate of interest to the girl or being eligible for certain tax benefits under Section 80E. Proper information and planning will allow you to make the right choice for an education loan that helps you in your academic journey and secures your future successes.
It is always a good idea to check with the bank on the current interest rate and term applicable before making your decision.