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Education Loans In India : Procedure, Requirements And Benefits Of Education Loan


Higher education is becoming one of the important requirements these days. The major factors that are considered by most of the students going for higher education are as follows:

  1. Average placement package of the institution
  2. Rank of the institution
  3. Fees and its structure charged by the institution

With the raising level of fees, Education Loans In India have become an equally important point of consideration. It has been noticed that people generally are not aware about the procedure, requirements and benefits of education loans and tries to avoid it. With the recent changes in the government laws and availability of loans, it has become very convenient and beneficial to opt for the education loans in India.

ALSO READ : – Education Loans in India : Process, Documents Required, Tax Implications And More

Prerequisite Knowledge About The Education Loans In India:

  1. Education loans include college fees, hostel fees, computer and other expenses like exam fees, research work and projects etc.
  2. The applicant must be eligible for the loan. It includes:
    • Repaying capability based on financial status of family, previous marks and reputation of institution in terms of average placement package.
    • For studies in India -> maximum eligibility is Rs. 10 lacs.
    • For studying abroad -> maximum eligibility is Rs. 20 lacs.
  3. All the banks have different rates of interest, eligibility criteria and repayment conditions. So, the applicant should go through the terms and conditions of all banks.
  4. All the documents like previous mark sheets, address proof, id proof, joining letter and fees structure proof of the institution and few other documents are required by the bank.
  5. Education loans in India above Rs. 4 lacs are securitized.
    • Loan amount between Rs. 4 and 7.5 lacs -> Individual guarantee is required.
    • Loan  amount above  Rs. 7.5 lacs -> Assets owned by either student or parent’s act as the security.

education loans in India


ALSO READ :- Claim Deduction On Children Education Expenses Under Section 80C Of Income Tax

Tax Benefits on the Interest Paid on Education Loans In India:

The interest paid on education loans in India can claim deductions against taxable income without any upper limit under Section 80E. The deduction is allowed only for the interest and not the principal amount. However under Section 80C, tuition fees of two children can be claimed for tax benefits if the institution is situated in India. The deduction is allowed for the interest paid in the previous year. The tax benefits can be claimed upto eight years of loan repayment. Any further interest payment is not allowed for tax benefits. Initially the tax benefits were available only for full time courses but now after budget 2009, the part courses can also claim for tax benefits.

Tax benefits are allowed only if the loan is taken from a bank, non-banking institutions, Credila, charitable institutions and NGOs. The loan from family, friends and relatives does not fall under this category.

Note: All the information above is in general all the PSU and private banks. Few details might differ from bank to bank.

Weather you are planning to go abroad like UK or USA for your MBA, MBBS, MS etc. or you want to pursue your higher education in India. Education loan will help you to fulfill your dreams by completing your education.

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ALSO READ :- Enlighten Your Future By Resorting To Student Loans – Know Your Options


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