Education Loan Benefits
What is education loan?
The cost of secondary education is rising every year. The cost of inflation in education is much higher than the overall consumer price inflation. In such a scenario it is very difficult for parents to fund the education requirements of their kids. So, many of them have to resort to education loan. It is loan which h can be taken either by the parents or the student or the spouse for higher education.
Higher education here means education after higher senior secondary education. Student loan can be taken to fund the education cost both in India and abroad.
What are the benefits of taking an education loan?
Education loan not only help you fund your higher education but also provides various other benefits. Read further to know how you can benefit from taking education loan.
- The assessee on whose name the education loan is taken can claim deduction for the entire interest part of the loan if he or she is repaying the loan under Section 80E of Income Tax Act.
But if you want to avail the deduction, you have to fulfill the following two conditions: –
- The loan should have either been taken from a scheduled commercial bank or the two gazette financial institutions – Credila Financial Services Ltd and HDFC Ltd. If you take educational loan from any other institution, you won’t be able to get any tax deduction
- It can only be taken for higher education that is after passing senior secondary exam.
- The education loan not only covers the cost of the course but almost the entire expenses of education. Majority of the banks generally fund upto 90% of the cost of education. Following are the expenses that will be covered under the education loan
- Tuition fees as well as hostel expenses
- Exam, library, and lab fees if applicable
- Any refundable fees paid to the institute
- Cost of uniforms, books and other essentials
Generally banks offer 0.5% discount on the education loan interest rate to girl students pursuing higher education
- You get a holiday period in case of education loan. That you don’t have to repay the loan immediately after the completion of the course. There is a holiday period of generally 6 months to 1 year after which the EMI will start. Or if you get a job early, your EMI will start.
Eligibility criteria for an education loan
Every bank has its own eligibility criteria for an education loan but following are the few common parameters:-
- The applicant should be an Indian National.
- At the time of application, the applicant should possess the documents confirming the admission
- Applicant should fall in the age bracket of 16-35 years.
What are the documentation requirements for education loan?
- Two passport size photograph
- Age proof
- Identity proof
- Residence proof
- Bank account statement for past 6 months
- Papers validating any scholarships the applicant has qualified for and admission confirmation letter
- Expense for the course
- Mark sheet of test
- Foreign exchange permit copy