Education loan decisions should extend beyond institutional fee structures, according to financial experts. Vikas Puri, Senior Partner at Complete Circle Capital, emphasizes that students must assess whether their chosen course will generate sufficient income to repay the loan. As reported by TopNews, the decision should compare course costs with likely salary outcomes after completion, rather than focusing solely on admission to specific colleges.
Education loans encompass far more than tuition fees, with miscellaneous expenses potentially reaching 20-30% of total costs. According to Puri's analysis reported by TopNews, additional expenses include hostel accommodation, laptops, books, insurance, visa charges, and flight tickets. Students pursuing education abroad face significantly higher requirements due to tuition fees, living expenses, and travel costs, often requiring loans in the ₹10-50 lakh range.
Premium educational institutions can justify larger loan amounts due to stronger career prospects and placement opportunities. As reported by TopNews, Pratibha Girish, Founder of Finwise, explains that banks primarily evaluate future earning potential before approving education loans. Students from institutions like IITs and IIMs may receive better loan terms and easier approval, as their career prospects typically support faster loan repayment through higher salary packages.
Education loans offer specific tax advantages under Section 80E of the Income Tax Act. According to Girish's explanation reported by TopNews, borrowers can claim deductions on the entire interest component paid on education loans, though the principal amount does not qualify for deduction. Experts warn against misunderstanding moratorium periods, as interest continues to accumulate during study periods and gets added to the principal amount if not paid.
Financial experts recommend comparing multiple lenders and evaluating interest rates, processing fees, prepayment charges, and repayment flexibility before finalizing education loans. As reported by TopNews, Puri advises borrowers to compare dedicated education loan products rather than regular loans, as education loan products typically offer better conditions. The key principle remains borrowing only what is necessary while ensuring expected income after graduation can comfortably support loan repayment.
