The Pros and Cons of Taking Out an Education Loan

The Pros and Cons of Taking Out an Education Loan: Nowadays, education loan has become an important option for education. Most of the students resort to education loan to continue their education or to get higher education. This is a great opportunity for those students who do not have enough money to meet the expenses of education. 

However, just like everything has its advantages and disadvantages, education loan also has its advantages and disadvantages. Let's know about the advantages and disadvantages of taking an education loan.

The Pros and Cons of Taking Out an Education Loan:

Advantages of Education Loan:

Financial assistance-

Education loan is a very important financial assistance. Many families do not have enough money to give higher education to their children, but through education loan they can give their children a chance to study in good colleges and universities. This loan provides the necessary resources to the students to complete their education.

Expansion of education-

With the help of education loan, students can pursue higher education in various fields. This gives them the opportunity to get admission in good colleges and universities, which they might not be able to go to due to their family's financial condition. With the help of education loan, students can pursue their studies in the fields of medical, engineering, law, commerce etc.

No need for any kind of property-

To take an education loan, students do not have to provide any kind of property or guarantee. Students can get this loan based on their capacity. Therefore it is very beneficial for those students who do not have property.

Payment in easy installments-

The feature of education loan is that it can be paid in easy installments. Students have to repay this loan only after completing their studies or after getting a job. Apart from this, many banks and financial institutions have very convenient interest rates on education loans, which helps in repaying it.

Tax Benefits-

Tax benefits are available on the interest paid on education loan. Under the Indian Income Tax Law, tax exemption is given on the interest of education loan, which provides financial relief to the student and his family. This benefit can be availed for up to 8 years, which is a big benefit.

Self-reliance of students-

Education loans help students develop a sense of self-reliance and responsibility. They understand that they have to take care of their expenses and repay the loan on time. It teaches them financial discipline and prepares them for difficult experiences in life.

Disadvantages of Education Loan:

Loan burden-

The biggest disadvantage of education loan is that it can be very heavy to repay, especially if the student's job or income situation is not stable. Sometimes students do not get a good job even after getting higher education, and then they find it difficult to repay the loan. This loan burden can take a toll on their mental and financial condition.

Interest rates-

Interest rates on education loan can be high. Many times the interest rates on loans given by banks and financial institutions are very high, which increases over time. If students do not get good results or are unable to get a job quickly, they may have to pay more interest. This can also be a big disadvantage.

Financial pressure-

While paying off the education loan, the financial pressure on the student and their family can increase. Despite working to repay the loan, if they are unable to arrange for additional income to repay the loan, it can cause mental stress. Due to this pressure, students may also face problems in their studies and career development.

Inability to repay the loan-

If for any reason the student is unable to repay his education loan, then the bank or financial institution can take legal action against them. This can also affect the student's credit rating, which can cause problems while applying for another loan in the future. Apart from this, students may also have to face mental and legal stress due to this.

Terms and procedures-

Many conditions and procedures have to be followed to take an education loan. Students have to go through documentation and verification processes for their eligibility. Sometimes this process can be time-consuming and complicated, due to which the student has to face trouble in the beginning.

Bank related problems-

Sometimes students face many problems in getting an education loan from a bank or financial institution. Banks sometimes do not approve the education loan, or there may be some kind of deficiency in the documents, which delays the loan process. Additionally, if for some reason the loan installment is not repaid on time, a penalty or charge may be levied by the bank.

Conclusion:

Education loan is an important and useful financial tool, which helps students to pursue higher education. Through this, students can pursue their studies and make their future better. However, it is important to use and repay it correctly. Along with its benefits, it also has disadvantages, which should be kept in mind while taking a loan. 

Therefore, the student should take a decision with complete information and understanding before taking a loan, so that they can avoid its burden in the future. By using the education loan properly, students can pursue their education and move towards a better future. But, caution and planning is necessary in this process.