Is it good to take out an Educational Loan or Not?

Educational Loan: There have been times when children had to give up their education because of financial problems faced by their parents. Education loans have solved this problem greatly and helped various students from different backgrounds achieve their dreams of higher education.

Numerous banks and financial institutions give loans to students who wish to pursue their higher education or study abroad. It helps secure a bright future for many students and provides them with significant financial support once their education is completed. It is much like an unsecured personal loan where the loan amount is utilized on the higher education of children by their parents.

Educational Loan

Different Kinds of Educational Loans

There are different types of education loans offered by financial institutions nowadays-

  • Loans for undergraduate courses
  • Graduate loans
  • Career development education loans 
  • Subsidized and unsubsidized Stafford loans

Through these loans, financial support is provided for some of the premier courses like MS, MBBS, MBA, CA, etc. Students can apply for suitable loans and get quick loans on easy terms and conditions. Due to the neck-to-neck competition, taking an education loan has become a prerequisite for most students who wish to study further.

Education Loan Benefits

Parents have also warmly accepted the ecosystem of education loans for funding their children’s education. It is a more logical approach to finance their education by taking a loan because of its multiple benefits. In addition, these loans can help the students to get a step closer to their dream careers.

  • Low–Interest Rate– The interest rates on education loans are lower than those on home loans. Most of these loans have higher interest rates. When you are looking for low-interest rates, sites such as Purefy is a good resource to find the best and most sustainable loans. Female borrowers also get a special discount at all Government banks.
  • Moratorium period– It is also referred to as the repayment break. When the EMIs don’t begin, the student doesn’t need to pay the lender. This period includes course duration and additional six months or a year to focus on their studies. This is one of the best aspects of an education loan
  • Necessary expenses– Such loans cover almost every necessary expense that a student might incur, including tuition fees, travel, house rent, university fees, food expenses, living costs, laptops, or any other device required for a student’s education.  
  • Credit Score– A good credit score will help you quickly avail of an education loan in the future. It generally ranges between 300-900, and above 750 is considered a good score. Repayment of EMIs at the given time also increases your credit score.
  • Liquidation of Valuable Assets– To bear education expenses, most parents liquidate valuable assets, which eventually leads to disturbance in long-term financial goals such as buying a land or flat, children’s marriage, etc. When you take an education loan, banks retain your liquid assets like FDs, insurance, Government bonds as security and grant you a loan based on that security.
  • Tax benefits– Under the Income Tax Act of 1961, loan applicants or co-applicants for educational loans get income tax redemption. The applicant can claim a certain percentage of the interest paid on his student loan as a deduction from the taxable income.
  • Independence– The loan repayment responsibility to the lender after completing their education lies with the students. This guarantees that the student focuses on their career and studying hard to not fall into debt in the future. Students have to take care of all their personal loan documentsand required identity proofs themselves.
  • Loan Burden on parents– Taking any loan causes stress. Still, as students need to repay the amount taken via education loans after completing their studies, there is less burden on parents.

Hence, taking an education loan is beneficial for the student, as well as for their parents. Personal loan documents of the student would be required when applying for the loan. The student should be between 18-35 years of age. They must be pursuing an approved course in a recognized university or college.


Various sources are coming up nowadays for students to apply for student loans. Apart from the government, many private players also believe in providing loans and other financial help in various forms for the students who cannot afford the required amount. Moreover, educational loans can be availed in different formats like scholarships, rewards, funds, etc.


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