With the blooming neck to neck competition and with rising inflation, taking an education loan has become a pre-requisite to most of the students who dream of studying abroad. Earlier, most parents were accustomed to utilize their savings to finance their child’s education by liquidating assets like Gold, Fixed Deposits, land, etc. Nowadays parents have accepted this paradigm shift of funding their children's education by taking an education loan

Education loans will help the student to get a step closer to his/her dream career as considering taking an education loan adds up numerous advantages for a student. This article will cover all the advantages a student can get by taking an education loan. 

Advantages of taking an education loan

1. Lower Interest rates

When taking any loan like home loan, car loan, personal loan, etc. interest rates are predominantly higher compared to education loans. The interest rates on study loans are lesser. Also, female borrowers get a special discount of 0.5% in all Government banks.

2. Moratorium Holiday- Pay after your education

The moratorium period also known as the repayment holiday is the time until which the EMIs don’t start or the student is not impelled to make any payments to the lender. Generally, the moratorium period includes course duration plus 6 months/1year so that the students can concentrate on their studies instead of burdening themselves.

3. A wide range of expenses covered

Education loan for abroad studies covers almost every necessary expenses that a student might need which includes tuition fees, travel (tickets), house rent, university fees, food expenses, living expenses, laptop, or any other apparatus required for your education.

4. Build your CIBIL score 

CIBIL is the credit information report i.e. summary of your credit history till date. CIBIL score generally ranges between 300-900, where above 750 is considered a good score. Timely repayment of your study loan will maintain your CIBIL score. Subsequently, it will help you to get a loan easily based on your CIBIL score.

5. No need to liquidate valuable assets

Mostly parents liquidate valuable assets to bear education expenses which eventually disturbs long-term financial goals like buying a land or a house, children’s marriage, etc. By taking an education loan, banks retain your liquid assets like Gold, FDs, insurance as security and grants you a loan against that security. Therefore, the loan taken for your education would not muddle in between your long term financial goals.

6. Tax benefit- Section 80E

In Section 80E of the Income Tax of 1961, loan applicant or the co-applicant can avail of the education loan income tax exemption. In simple terms, the loan applicant or the co-applicant can proclaim a definite percentage of the interest paid towards your education loan as non-deductible.
So students who can avail this tax exemption, watch the 15th Episode of our informative Web-series- “Education Loan Income Tax Exemption, Section 80E on Youtube.

7. Independence to pay the loan

When you take an education loan, students have the responsibility to repay the loan to the lenders after their education. This certainly guarantees that the student is completely devoting his time towards his studies and focusing on his career.

8. Liberating your parents from loan burden

Taking an education loan can liberate parents from all financial burdens as the student is responsible to repay his education loan after the completion of his studies and moratorium period.


To conclude, most students consider taking an education loan because of the following advantages mentioned in the article and to avoid exhausting their savings as availing an education loan offers multiple advantages. However, even at WeMakeScholars our financial experts suggest taking an education loan to fund their child’s higher education. If you find yourself in such a situation where you are hesitating to avail of an education loan, or thinking that it can become a financial liability on your parents, connect with our team to get professional advice on education loans.

Note: WeMakeScholars is an organization funded and supported by the Government of India and is associated with 10+ public/private banks/ NBFCs in India. We have helped millions of students by connecting them with the best education loan lenders across India. We have a dedicated financial team to assist you with any education loan related query. As we are Government funded, there is NO FEE charged for the services offered.