The Importance of Education Financing in Commerce

As a commerce student, you have many career options in India. You can work in areas like:

• Banking
• Finance
• Marketing
• Business management

Alternatively, you can even start your own consultancy firms. To make a successful career in the commerce field, you can pursue popular courses like Chartered Accountancy (CA), MBA (Finance), Chartered Financial Analyst (CFA), M.Com (Master of Commerce), and more.

However, these courses are expensive, and if you belong to a marginalised community, you might not be able to afford them. But should this be a deterrent to your dreams? At this point, education financing comes into the picture. By availing of education loans, you can pursue your dream course and repay during your employment phase.

Does it sound exciting? In this article, let’s check out how education financing helps commerce students like you.

7 benefits of education financing for commerce students

Education loans are a great way to fund higher studies, especially if you come from a financially weaker background. They help you cover all major education-related expenses and reduce the burden on families. Let’s check out some key benefits of education financing for commerce students:

1. Tax benefits reduce loan burden

When you take an education loan, the government allows you to save money through tax benefits under Section 80E of the Income Tax Act (now Section 129 in the newly drafted Income Tax Bill). This means that the interest you pay on your loan can be deducted from your taxable income for up to 8 years. This helps in two ways:

• First, you or your family will have to pay less income tax
• Second, it reduces the overall cost of the loan

For example, if you take a loan of Rs. 10 lakh and pay Rs. 2 lakh as interest, you can claim this Rs. 2 lakh as a deduction while filing taxes.

2. No immediate repayment (moratorium period)

One of the biggest concerns for students is repaying the loan while studying. But, several education loans come with a “moratorium period”. This means you don’t have to start repaying the loan while you are still in college.

Generally, the bank allows students to begin repaying the loan 6 months to 1 year after they complete their course. This period gives students time to find a job and become financially stable before starting EMI payments.

3. Low interest rates make loans affordable

Be aware that education financing is cheaper than personal loans or credit cards. Banks offer lower interest rates for students (especially if the loan is secured with collateral like property or fixed deposits).

As of February 2025, education loan interest rates start from 8.10% p.a. Whereas, if you take a personal loan instead, the interest rates start from 10.49% p.a. Lower interest rates reduce your overall cost of borrowing as you will have to repay a smaller amount over time.

4. Government subsidy for Economically Weaker Students (EWS)

If your family’s annual income is less than Rs. 4.5 lakh, you can get help through the Central Scheme for Interest Subsidy (CSIS). This means that the government will pay the interest on your loan during the moratorium period.

This is a big relief because education loan interest can add up over time. Without this subsidy, the total loan amount would increase significantly. This scheme is specially designed to help students from marginalised backgrounds complete their education. In India, many public sector banks offer this subsidy.

5. No collateral required

Usually, banks ask for collateral (like property or a fixed deposit) to approve a loan. However, for education financing up to a certain limit (usually Rs. 7 lakh), many banks do not require any collateral.

This is helpful for students whose families do not own valuable assets. It also makes the loan application process faster, as fewer documents are required.

6. Helps in building a good credit Score

A credit score is a record of how well you handle borrowed money. If you repay your education loan on time, your credit score will improve. A good credit score helps you get other loans in the future, like:

• Home loans
• Car loans
• Personal loan
• Business loans

Usually, a score above 750 improves your chances of securing a loan at favourable terms. Since you are a student, it is possible that you do not have any financial history. By availing of an education loan, you can build your credit score and prove you are a reliable borrower.

7. Covers all education expenses

An education loan does not just pay for your college fees. It also covers other essential costs like:

• Hostel fees/ PG rent
• Purchase of books, laptops, and other materials from online marketplaces or offline stores
• Travel and daily living expenses

Please note that if you are not studying in your home town, these expenses can be quite high. Without a loan, managing all these costs can be difficult. Thus, via an education loan, you can focus entirely on your studies without constantly worrying about how to pay for your next semester.

Conclusion

Education financing is a monetary support for commerce students coming from marginalised communities. It helps cover tuition, accommodation, and other study-related expenses without putting financial pressure on families.

The availability of tax benefits, low interest rates, and government subsidies makes education loans more affordable. Additionally, it allows students to build a good repayment record, which helps in building a strong credit score

In India, many leading banks and NBFCs offer education loans at low interest rates with flexible repayment options. Whether you aim to become a Chartered Accountant or a financial analyst, with the right education financing, your dream career is within reach!