Reduce Your Education Loan Burden
Three sure-fire ways to help you reduce your education loan burden easily
The cost of higher education is increasing with every passing day. Even though it is a relatively low-interest loan and offers a tax break on the interest, the overall debt burden may still be higher than what most people would prefer. This means that you need to find ways to reduce it.
So, let us give you 3 options to reduce your student loan burden. You can choose the option(s) that best suit your needs.
Option #1: Pay the Interest During the Moratorium Period.
For student loans, most banks offer a moratorium period (course period plus a period of 6 months to 12 months) during which interest accrues on the loan. It factors into the EMIs that the borrower has to pay once the repayment period commences. However, some banks offer a discount of 0.5% to 1% if the borrower services the interest during the moratorium. This is a double win for you since you get a reduced interest rate and your loan EMI is lower as the interest accrued during the moratorium has already been paid.
Option #2: Set the Loan Tenure to 8 Years.
As per the extant laws, the maximum time for which you can avail of deductions under Section 80E of the Income Tax Act, 1961 is 8 years. This option helps you reduce your education loan burden since it offers maximizing the usage of tax breaks available in India. If you can repay the loan within 8 years, you are likely to get tax benefits on all the interest you have paid.
Option #3: Apply for Scholarships.
This one may sound obvious to some but many students do not understand how beneficial a scholarship can be in terms of reducing the debt burden. The simple rule is that the lower your loan amount, the better it is. So, apply for scholarships whenever applicable. Some colleges and universities hold special tests that waive off a considerable part of the college fees, if not all. Even reducing your fees by 10% will save a lot in the long run.
Now you know 3 options to reduce your education loan debt. You can choose any path depending on your needs.
A Final Word
If you want to know more about education loans offered by major banks in India, please check out our education loans section. We have also shared tips on how to select a study loan, documents required and other details.