Solution for students seeking higher studies


The main two major concerns that the youth generation should poses are the ever-changing and dynamic attitude. To live in this VUCA environment, people must pursue higher education.

Opting for higher education will also require a higher amount, which is a major concern for both parents and students.

Previously, the expense of higher education was paid by the parents, who either used their previous savings or mortgaged/sold their assets to finance the tuition. However, according to finance experts, instead of depleting assets or past savings that may be invested in profitable investment possibilities, education loans from financial institutions can be obtained.

Education loans, in addition to fostering financial responsibility in students, can provide tax benefits. According to Section 80E of the Income Tax Act of 1962, any individual requesting an education loan can deduct the interest paid on the loan for eight consecutive years beginning with the year of repayment.

There is no cap on the amount of interest that can be deducted. This decreases the tax burden of the education loan applicant, therefore boosting the students’ discretionary income during the early term of their wages.

The lockdown caused by the pandemic has had a significant influence on the cash flow of the businessman, and as a result, the salaried class is also suffering from salary reductions.

Due to the scarcity of work possibilities, students and recent graduates are also dealing with their existing college loans. As a result of these bad conditions, borrowers’ credit scores have suffered significantly, resulting in either a delay or full default in EMI (Equated monthly installment) payments. 

With its circular DOR.No.BP.BC/3/21.04.048/2020-21 dated August 6, 2020, on “Resolution Framework for COVID-19-related Stress,” the RBI attempted to alleviate the financial stress of both borrowers and bankers. Borrowers were given the chance to restructure their loans once without being labeled as NPA (Non-Performing Asset).

According to the rules, the loanee has the option of combining their accumulated interest with the principal amount, rescheduling the payment schedules, or requesting a moratorium for a maximum of two years. As a result, the circular provides borrowers with the chance to modify their loan in its entirety without compromising their reputation.

Recently, the University Grants Commission created a webpage called “Vidya Lakshmi” for students who want to take out an education loan, with the help of the Ministry of Finance, the Ministry of HRD, and the Indian Banks Association. The portal’s primary goal is to assist students in getting a hassle-free education loan of up to Rs 7,50,000 for studies in India and Rs 15,00,000 for studies globally. Students who apply for a loan through this site are also eligible for a remission of margin or collateral for loans up to Rs 400,000. If the loan amount exceeds Rs 4,00,000, the interest rate can be set at the prime lending rate (PLR). In addition, a one-year grace period following the end of studies is available.

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