STUDENT LOANS FOR STUDYING ABROAD

The Advantages of Getting a Student Loan Even if You Can Afford The College Fees. Avail Tax Benefits, Investments, Capital Preservation and Affordability.

6/26/20252 min read

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🎓 SHOULD YOU TAKE A STUDENT LOAN EVEN IF YOU CAN AFFORD IT? HERE'S WHY THE ANSWER IS OFTEN "YES"

INTRODUCTION: STUDENT LOANS ARE NOT JUST FOR THOSE IN NEED

When people think of education loans, they usually imagine families struggling to afford rising tuition fees. But today, many financially stable families and business owners choose education loans strategically—not out of necessity.

This blog explains:

  • What student loans are

  • How they offer tax and liquidity benefits

  • Why high-net-worth families still use them

  • Eligibility and documentation details

WHAT ARE STUDENT LOANS

Student loans are financial products that cover:

  • Tuition fees

  • Living and travel expenses

  • Health insurance

  • Other study-related costs

They are available in India for:

  • UG & PG programs (India or abroad)

  • Vocational/diploma courses

  • Full-time professional degrees

WHY TAKE A STUDENT LOAN WHEN YOU CAN PAY UPFRONT?

💸 Preserve Your Capital for Business or Investments

Why pay ₹50 lakh all at once? That same money could earn more in:

  • Mutual funds (10–14%)

  • Your business (often 15–25%)

  • Real estate or fixed income

If your investment ROI is higher than the loan interest (e.g., 9–11%), you win.

📊 Spread Out the Cost

Pay in EMIs instead of lump sums. This protects your cash flow and avoids liquidity crunches—especially helpful during volatile economic conditions.

🧾 Tax Deduction on Interest – Section 80E

  • 100% interest deduction, no cap

  • Valid for 8 financial years

  • Covers loans for yourself, spouse, or children

  • Must be from a recognized Indian bank or NBFC

Note: Only interest is deductible, not principal.

💼 Build the Student's Credit Score

Responsible repayment builds a credit history:

  • Improves future loan eligibility

  • Helps with visa/residency in some countries

  • Boosts financial credibility

💱 Avoid Foreign Exchange Risk

You borrow and repay in INR—even as USD education costs rise. If INR depreciates, you actually save in dollar terms over time.

ELIGIBILITY CRITERIA FOR INDIAN EDUCATION LOANS

Criteria Details Nationality

Indian citizen

Course type Full-time UG/PG or diploma courses

Institution Accredited Indian or foreign university

Co-applicant Parent or guardian with stable incomeCollateral (if required)Property, FD, insurance, etc

.Loan amount₹4–₹50 lakh without collateral (higher with collateral)

Repayment tenure5–15 years

MoratoriumCourse + 6–12 months

DOCUMENTATION CHECKLIST

Student:

  • Admission letter from university

  • Academic records (10th, 12th, etc.)

  • Passport, visa, ID and address proof

Co-Applicant:

  • Income proof (ITR, Form 16, salary slips)

  • ID proofs (PAN, Aadhaar)

  • Bank statements (6–12 months)

  • Collateral documents (if applicable)

Pro Tip: Submit a clear fee structure with your application for faster approvals.

REAL-LIFE SCENARIO: STRATEGIC BORROWING WORKS

Example:
Priya’s parents are business owners with ₹75 lakh in liquid funds. She’s admitted to NYU. Instead of paying ₹60 lakh upfront, they:

  • Take a ₹40 lakh student loan

  • Invest ₹60 lakh in business at 18% ROI

  • Save ₹4+ lakh per year via Section 80E

  • Priya builds her credit score from age 19

Net Result: Capital preserved, tax saved, better returns earned.

FREQUENTLY ASKED QUESTIONS

Q: Can I take a loan if I have savings?
Yes. Many do it for smart capital use and tax savings.

Q: Is my child’s UG degree in the US eligible?
Yes, most Indian banks offer loans for UG and PG courses abroad.

Q: Is interest tax-deductible while studying?
No. Section 80E applies only after repayment begins.

Q: Can I prepay the loan?
Yes. Most banks allow early repayment, often without penalty.

FINAL THOUGHT: LEVERAGE ISN’T LUXURY—IT’S STRATEGY

Taking a student loan doesn't mean you're short on funds. It’s a financially intelligent move for those who want to:

  • Free up capital for high-return investments

  • Spread out costs

  • Maximize tax benefits

  • Build the student’s credit score early

Don't ask: “Can I afford to pay upfront?”
Ask: “Is there a better way to use my money?”

NOTE: The above are guidelines only and do not constitute any approval, terms and conditions vary and please call to get a personalized quote and be prequalified with no cost or obligation at

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