Fly High with an Education Loan This Makar Sankranti

Jan 14, 2023 / Reading Time: Approx. 4.5 mins

Listen to Fly High with an Education Loan This Makar Sankranti

00:00 00:00

Makar Sankranti is one of the major festivals celebrated across India around mid-January. Different states celebrate their harvest festival with different names, such as 'Pongal' in Tamil Nadu, Magh Bihu in Assam, and 'Lohri' in Panjab. True to India's diverse culture, each state has its customs and practices. The festival symbolizes the end of the long and cold winter months and gives new hope & positivity.

Makar Sankranti marks the transition of the Sun from the zodiac of Dhanu (Sagittarius) to Makar (Capricorn). The festival is observed with social festivities such as praying to the Sun God, exchanging Tilgud - a sweet made of til (sesame seeds) and gud (jaggery), flying colourful kites, exchanging gifts, and many more.

It is noteworthy that the festival calls for a celebration in honour of Surya - the Sun God, who represents the spiritual light of knowledge and wisdom, signifying turning away from the darkness of ignorance to the light of knowledge. Similarly, the colourful kites flying high in the sky are primarily a symbol of our dreams and aspirations.

If you wish to fly the kite of your aspirations high by making a bright and flourishing career, turning towards the light of knowledge, i.e. pursuing higher education, is a must! It is an investment towards your thriving career and a necessity to lead a successful life.


However, pursuing higher education is not as easy as it sounds for everyone, especially considering the education inflation worldwide. Quality education in India can cost you anywhere from Rs 5 lakhs to Rs 50 lakhs, whereas education abroad can cost a minimum of Rs 25 lakhs and can go up to 1 cr or even more!

While some of us can easily shift money from other investments towards an education fund, most of us have to consider breaking our retirement fund, liquidating assets like gold and real estate property, and whatnot! However, liquidating existing investments made for specific goals may not prove to be the right choice, as it can disturb your financial future.

If you want to fly your kite high without breaking the thread, i.e. follow your (or your child's) dreams and aspirations by pursuing higher education without compromising on your other financial goals and risking your future, then there is no better option than an education loan. An education loan can fuel your dream of higher education in India or abroad for career-oriented courses like engineering, management, medicine, etc., at the graduate or post-graduate level.

An education loan covers all the study-related expenses incurred during the course duration. It generally includes admission fees, tuition fees, hostel fees, library fees, the cost of books, a laptop, and travel tickets (if you are studying abroad), etc. You can apply for an education loan from a bank or other financial institution along with a parent, guardian, or guarantor. A student is considered the main applicant, and a parent as the co-applicant.

You, as a student, have to repay the loan after completion of the course. Typically, the banks give the students six to twelve months after completing the course to start paying the EMIs. This relaxation time to pay the EMIs is called a moratorium period.

The interest rate on education loans varies across lenders. It can be anywhere from 7% to 18% p.a., depending upon factors like the type of interest rate (fixed or floating), loan amount, domestic education or education abroad, among others.

Fly High with an Education Loan This Makar Sankranti
Image source:

Join Now: PersonalFN is now on Telegram. Join FREE Today to get 'Daily Wealth Letter' and Exclusive Updates on Mutual Funds


Here are the benefits of availing of an education loan:

  1. A student with no/less financial support from the family, aiming to pursue higher education, can fulfil their dreams with the help of an education loan. Besides, studying with an education loan makes a student more responsible towards education and finances.

  2. Education loans are offered at attractive interest rates (typically 1% to 3.5% above the Marginal Cost of Funds based Lending Rate, i.e. MCLR) for a loan repayment tenure of as long as 15 years. They can be availed from a minimum of Rs 50,000 to a maximum of Rs 1 cr, depending upon the lender's terms and conditions.

  3. The banks do not insist on a guarantor for loans up to Rs 4 lakhs. Besides, the margin money for education in India is 5%, whereas it increases to 15% for education abroad.

  4. A student or a parent/guardian has to pay a simple interest charged by the lender during the study period. And after the moratorium period (relaxation period) of 6 to 12 months, a student is liable to repay the loan.

  5. An education loan typically covers all the job-oriented courses in India and abroad, such as graduation, post-graduation, diploma, professional, vocational, doctorate, and certificate courses for a minimum of six months duration. Apart from the regular full-time courses, an educational loan can also be availed for part-time courses. Banks and other financial institutions usually have a specified list of courses that are eligible for an educational loan

  6. An education loan is offered for the courses offered by government universities and colleges, e.g. Mumbai University, reputed private institutes or government-aided institutes, e.g. IIT, international institutes that are a part of the bank's approved list, and professional institutes, e.g. CFA. It is advisable to check the list of approved institutes with the lender before applying for an educational loan.

  7. A legal guardian can avail of a tax benefit for the interest paid under Section 80E of the Income Tax Act for a maximum of 8 years. However, there is no tax benefit on the principal amount of the loan.

Here are the things to consider when applying for an educational loan:

1. Eligible institutes and courses:

While enrolling for a course, you must check with your preferred lender if the institute and the course you aspire to complete are eligible for an education loan. Any confusion can put you in a challenging situation and even waste your academic year.

2. Interest rate:

While the interest rates of education loans are generally affordable, they range from 7% to 18% p.a. Hence, it is crucial to check the education loan interest rate before applying. Furthermore, you must carefully choose the type of interest rate as it can make a considerable difference in the amount of EMI.

3. Other fees and charges:

While some banks do not charge any processing fee or prepayment fee, others charge 1% to 3% of the loan amount as a processing fee. The loan prepayment and foreclosure fee can vary largely from lender to lender.

4. Loan tenure:

Most borrowers believe that the longer the loan tenure, the lower will be the EMI. This is why many borrowers choose the longer loan tenure. However, take note that the longer the loan tenure, the more interest you pay towards the loan. Shortening the loan tenure by a few years can significantly lower your total interest outgo.

5. Customer service:

While many of us do not pay much attention to customer service when applying for a loan, take note that you will need to approach the lender multiple times during the loan tenure. You might have to request to extend the moratorium period, reduce or extend the loan tenure, prepay or foreclose the loan, need duplicate statements, negotiate on the interest rate, etc. Therefore, the ease & convenience to apply for & repay the loan and excellent customer service should be your priority when choosing the lender.

To conclude:

Hundreds and thousands of students are flying the kites of their aspirations high with an education loan by pursuing their dream education and careers. It is the most convenient way of financing quality education that often comes at a high cost without burdening your parents. In the long term, an education loan will prove to be the best investment that offers the best returns.

So, this Makar Sankranti, start your journey towards the light of knowledge and fly the kite of your aspirations higher with an educational loan!


Warm Regards,
Ketki Jadhav
Content Writer

PersonalFN' requests your view! Post a comment on "Fly High with an Education Loan This Makar Sankranti". Click here!

Most Related Articles

How to Open a Current Account without GST in India Discover the steps to open a GST-free current account in India effortlessly.

Jun 12, 2024

7 Risks of Availing a Personal Loan Online banking has made easy access to Personal Loans very easy. But it’s vital to borrow responsibly and be aware of the risks involved.

May 24, 2024

7 Things to Do When Closing Your Loan Account Discover the essential steps to ensure a smooth transition when closing your loan account in our comprehensive guide.

Apr 06, 2024

Will Home Loans Get Cheaper During General Elections Home loan borrowers eagerly expecting a Repo Rate cut are now shifting their gaze towards the upcoming bi-monthly policy meeting scheduled for April 2024 with heightened anticipation, especially considering it coincides with the time of general elections.

Mar 27, 2024

10 Things Every Car Loan Applicant Should Remember for a Smooth Ride Ahead By meticulously comparing different lenders based on factors such as interest rates, additional fees, eligibility criteria, and loan terms, you can select the most suitable car loan to meet your needs.

Mar 21, 2024

Most Popular

Manufacturing Mutual Funds Shine. Are they Worthy of Your Investment Portfolio?Currently contributing around 17% to the GDP, the manufacturing sector is expected to grow to 21% in the next 6-7 years.

May 06, 2024

6 Equity Mutual Funds to Benefit from India’s Defence SectorThe potential to benefit by sensibly taking exposure to defence sector stocks is huge!

Apr 17, 2024

Top 5 Mutual Funds with High Exposure to EV RevolutionThis article will evaluate the top mutual funds to invest in 2024 that have a high allocation to EV stocks.

Feb 06, 2024

Top 5 Mutual Funds That Are Betting on the Manufacturing BoomThis article will evaluate the top mutual funds to invest in 2023 that have a high allocation to Manufacturing stocks.

Sep 01, 2023

HDFC Mutual Fund launches HDFC Manufacturing FundHDFC Mutual Fund launches HDFC Manufacturing Fund

May 08, 2024