In today’s fast-paced and competitive job market, upgrading or upskilling is the new keyword. A professional certification, learning a new language, or taking a tech course are just some of the ways to upgrade skills on your resume. However, this requires financial investment. Hence, education loans for short-term courses are the best choice. But how can such situations help one get educated without depleting personal savings? Are education loans worth it for short-term courses? Is an education loan good for a quick certification that looks good on a resume for a potential career?
Through this blog, we will discuss what an education loan is, the eligibility criteria, the CIBIL score required for obtaining an education loan, and the documents needed for the application process. We will also determine whether applying for a student loan is worthwhile for short courses, discussing its pros, cons, and tax benefits. If you are thinking about upgrading your career through short-term courses, this blog will help you decide.
What Is an Education Loan for Short-Term Courses?
An education loan is a type of loan provided to students by various banks, non-banking financial companies (NBFCs), or digital lenders to finance their education. It is generally associated with long-term degrees, but now they are also available for short-term courses, such as certificate programs in coding, management, digital marketing, and other professional fields.
So, how does an education loan for short-term courses work? It covers tuition fees, learning materials, and all other costs related to the study program, running from a few weeks to a year or more. The conditions for eligibility for an education loan are set by lenders, such as age, income, academic qualifications, and sometimes employment status for salaried professionals.
Unlike traditional loans, the criteria for eligibility for education loans are simple, with quicker disbursement times and minimal documentation.
Benefits of Taking a Student Loan for Short-Term Courses?
Here are the various benefits of applying for an education loan for a short-term course:
- Quality Education Made Accessible: If a student gets the required financial help for the right course at the right time, they do not have to postpone their education simply because of a lack of funds. For an international certification or a specific online course, quality education can be made accessible with an instant education loan.
- Flexible Repayment Period: Many lenders offer a grace period that begins at the start of the personal loan. That means you do not have to repay any loan overnight. Instead, you may finish the program and find a job before the repayment begins.
- Tax Benefits: Student loans are eligible for the income tax benefit available under Section 80E of the Income Tax Act. The interest paid on the loan is eligible for deduction and reduces your taxable income.
- Saving Your Money: Education loans are available without consuming any of your emergency funds or liquidating any assets.
- Improves CIBIL Score: Typically, a CIBIL score of 700 or higher is preferred for an education loan. But timely payments of an education loan will increase your score and improve your eligibility for more credit in the future.
Who Should Opt for an Education Loan and Why?
Educational loans are a great financial help for-
- Middle-Income Students: An education loan helps fill the financial gap without affecting family finances.
- Working Professionals: For those switching careers or acquiring additional skills, short courses often require immediate financing, and an education loan is a practical alternative.
- Study-Abroad Aspirants: Study loans can cover the high costs of travel and living expenses for those wishing to enroll in international programs.
Choosing the Right Education Loan for Short-Term Courses
- You might now be thinking, what is required for an education loan? The following are the important things to consider before applying for education loans:
- Loan Amount vs. Course Value: Recheck the loan amount in relation to the total cost of education and any additional expenses associated with the courses. Also, check relevance with post-certification earning potential.
- Eligibility of Education Loan: Understand the lender’s requirements regarding age, academic qualifications, and financial background for the education loan.
- CIBIL Score Requirements: The most asked question is how much CIBIL score is good for an education loan? So, always remember, the higher the CIBIL score, the better the rate of interest. You must have a CIBIL score of 700 or higher, as digital lenders offer some flexibility regarding the score.
- Tax Benefits: It should be a loan eligible for the education loan income tax benefit under Section 80E.
- Delay and Repayment Terms: Ensure the EMI schedule and the penalty on repayments (if any).
Are Education Loans for Short-Term Courses Worth It?
The key to determining whether an education loan is suitable for short-term courses lies in weighing the potential returns on the educational investment.
If it enables you to earn a higher salary, switch jobs, or get promotions, then why not consider an education loan? It means that the education loan will help you acquire the skills that can instantly boost your market value without worrying about finances in the present. Added education loan benefits include tax advantages and an improvement to your credit profile.
Ascertain how far this course can really be beneficial for your career, along with your exact capacity for repaying that loan with comfort once you start earning.
Drawbacks of Taking an Education Loan?
Before you proceed with an education loan, let us also explore potential disadvantages:
- Debt Pressure: An education loan can cause debt-related pressure if repayment is not made according to the agreed-upon schedule.
- Foregone Interest: The interest during the moratorium will be added to your total repayment. Are you sure your salary can comfortably cover it?
- ROI on the Course: If the course does not guarantee you a well-paying job, you will still have to repay the loan. Therefore, it is crucial to carefully assess whether student loans are worthwhile.
Conclusion
In conclusion, an education loan for short-term courses can be used very aptly for the personal and professional betterment of candidates if taken responsibly. Understanding what education loans are, the eligibility of education loans, and carefully comparing lenders will allow you to undertake education without worrying too much about cash and kind.
The loans also keep your cash flow healthy and increase your credit score. However, it is important to determine if the course would bring you a reasonable rate of return and withstand the burden of repayments.
If you have long been contemplating taking one, Stashfin offers a set of flexible digital loans for education designed to ease this journey. With quick processing, competitive rates, and minimum paperwork, Stashfin allows you to upskill and not bother with finances. Ready to invest in your future? Check out Stashfin’s education loan schemes today.
Frequently Asked Questions:
1. Can I Get a Loan For Online Courses?
Yes, many lenders, including Stashfin, offer education loans for certified online programs, provided they are from recognised institutions.
2. Is Interest Higher for Short-Term Loans?
Generally, short-term education loans tend to have higher interest rates than long-term ones. However, repayment is more flexible, and the loan amounts are lower, making it more manageable.
3. What Documents Are Needed?
For approval of the education loan, ID proof, address proof, a letter for the course, details of the fee structure, and financial statements are required.
4. Are These Loans Tax-Deductible?
Yes, under Section 80E, the education loan income tax benefit applies to most education loans covering higher studies, including short-term certifications.
5. What Will Happen If I Do Not Complete the Course?
If you fail the course, you still have to pay back the loan. Some lenders may reschedule EMIs or allow a partial waiver in such genuine circumstances.