Children Education Loan

Invest In Tax Saving Mutual Funds Online

Download Tax Saving Mutual Fund Application Forms

Buy Gold Mutual Funds

Call 0 94 8300 8300 (India)

You've wisely earmarked certain investments for your child's education. For some reason, though, a shortfall looms. Perhaps the cost of the course selected by your child is more than what you planned. Or s/ he wishes to go abroad for higher studies. And you were unprepared for that. An education loan can bridge the gap.   In their eagerness to embark on a career, children may not grasp the significance of taking loans – or of repaying them. Its perhaps the first time they face a loan officer – and the first ever situation of negotiating a loan. This, therefore, calls for greater parent participation. But first, heres the lowdown on education loans. A primer Education loans are available for studies beyond the plus- 2 or higher secondary school. They can be availed of by a student with parents/ guardians as co- applicants, or by a parent for a child. Various banks and financial institutions provide loans for education, both in India and abroad. Though each institution has its own set of rules, they are fairly standardised across the board. The limit for education in India is ₹ 10 lakh and ₹ 20 Lakh for education abroad. Interest rates on the loan vary from 9 to 14 per cent per annum. Of the cost of the education 15 per cent is to be provided by you; the balance can be funded by a loan if the total cost of education crosses ₹ 4 lakh. If you intend to take a larger loan amount, you may have to provide third- party guarantees or additional collateral. Such loans generally cover costs of admission, tuition, boarding and books; for studies abroad, travel cost is included. Payments are made directly to the college every year. Of course, good academic performance constitutes one of the terms and conditions in order to continue to be eligible for the loan. Progress reports need to be submitted regularly during the period of the loan. Details of such terms and conditions are available on websites of banks and financial institutions. Courses that usually get preference Generally medical, engineering and MBA courses figure higher on the list of approvals for loans. While for banks, education loans are considered part of priority- sector lending. they have to ensure that such loans do not turn into non- performing assets (NPAs). In the last few years the number of education loans becoming NPAs has risen, primarily because of the unfavourable economic environment. One of the factors for the provision of loans is the repayment capacity of an applicant. It is usually easier, therefore, to secure loans for courses which have a greater chance of employment and income generation. The repayment capacity of a parent taking on a loan for a child will be taken into consideration. The reason is that there is the greater likelihood that the parent already has loans to his/ her name like a home loan or a vehicle loan. This naturally affects repayment capacity and reflects in an application for an education loan. What parents should take cognizance of? Parents are advised to have open discussions with their children about money and taking loans. Both affordability and willingness to fund a child's higher education should be openly discussed. Parents should consider several aspects before they sign for educational loans for their children. The primary one is their own preparedness for retirement. A retirement corpus should not be touched in order to fund any other goals. In such cases, a student taking an education loan would be a far better idea. S/ He can start repaying the loan once s/ he starts earning. Most banks provide a pause period for re- payments. Repayments are generally due on securing a job or six months from completing a course, whichever is earlier. If you actually begin paying off the interest component during the course period, you will get one per cent on the interest rate. If a person is unable to secure employment on completing a course, the parent will have to start repaying the loan. So parents have to prepare for the worst case and judge how such payments will affect their own finances. Of course, a student will start life – and a career – with the burden of debt. S/ He will have up to eight years to repay the loan in full. Naturally, that will affect her/ his own financial goals. For them, the prime responsibility would be to pay off the student loans as quickly as possible so as to free up cash flow towards their own financial goals. The person who has taken the loan (parent/ child) will be eligible for tax benefits under Section 80E of the Income Tax Act, 1961. This offers deduction of the interest amount from your income, the benefit only applicable on the interest. This tax benefit comes over and above the benefits available under Section 80C. However, tax benefit should not be the primary reason for taking a loan; and instead should be looked on as a byeproduct of fulfilling a need.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

1. ICICI Prudential Tax Plan Invest Online
2. HDFC TaxSaver Invest Online
3. DSP BlackRock Tax Saver Fund Invest Online
4. Reliance Tax Saver (ELSS) Fund Invest Online
5. Birla Sun Life Tax Relief '96 Invest Online
6. IDFC Tax Advantage (ELSS) Fund Invest Online
7. SBI Magnum Tax Gain Scheme 1993 Invest Online
8. Sundaram Tax Saver Invest Online
9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Birla Sun Life Front Line Equity Fund
2. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
2. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
3. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
4. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
5. Tax Saver MutualFunds Invest Online
1. ICICI Prudential Tax Plan
2. HDFC Taxsaver
3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund
6. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund