Education Loans

Education loan interest rates are probably the most talked about aspect of student loans. After all, they are the cost at which these loans are made available to you. Having said that, there are some interesting things about this cost you should know about before taking the dive into debt – knowing these facts might help you make better borrowing decisions, so read on!

1. Good grades can get you lower rates.

That’s right. Many lenders will offer you better deals if you have an exceptional academic record. They will do so even if you have done outstandingly well in your entrance exams. So if you tick any of these two boxes, remember to make it obvious to your lender and try and negotiate a better rate. Some lenders might also provide higher loan amounts in addition to lower rates.

2. Women get lower rates.

Some lenders offer lowered rates for women aspirants. They will offer up to 0.5% reduction in their usual rate. This might not seem like much but over the tenure of the loan, this reduction will help aspirants save a truckload of money that they otherwise have spent on interest & EMI.

3. You can forget about interest rates for the first few years.

Yes, that’s right – Education loans come with the unique benefit of a moratorium period. During this period, you do not need pay even a single EMI. Your repayment will start only 6 months after you’ve finished your course or found a job, whichever one of these events comes first. Basically, you do not have to worry about education loan interest rates for the first few years.

4. Rates can be lowered even after the loan is sanctioned.

Most students think that they are stuck with poor rates after they’ve applied for a loan. They give up on the hope of ever getting lower rates, when actually there is a huge scope to get lowered rates, even after they’ve applied and started repaying a loan at higher rates. All you have to do is transfer your outstanding balance to the new lender and enjoy their rates. It’s a simple process called refinance and it’s an option to one and all!

5. You can negotiate lower rates.

Education loan interest rates depend heavily on your financial profile. If you or your guarantor has a strong financial background, you can negotiate a better interest rate. If you are providing collateral to secure your loan even it is not required of you, you may again be able to negotiate lower rates. Even if you or your guarantor has exceptional credit scores, you should be able to get lowered rates.

6. Interest helps you save!

Under Section 80E of the Indian Income Tax Act, you use the interest you pay towards an education loan in a year to claim an equal amount of deductions on your taxable income. The best part is that there is not limit on the amount you can claim, how much ever interest you pay, you can claim an equal amount of deduction on your taxable income!

We hope these facts have helped paint a better picture of education loan interest rates. Moreover, we hope they help you in your decision making. Good luck and all the best!