The most important dream of all parents is that their children get a quality education so that they can lead a bright and successful life. Parents are finding it very difficult to self-finance their children's education due to the increasing cost of higher education. For example, for engineering courses, the fees is around Rs 5-10 lakh, for any medical course at a private college, the fees is appox. in the range of Rs. 40 lakh and Rs. 50 lakh and for professional courses like MBA etc, fees could be around Rs 4-5 lakh. Here comes into picture the importance of Education Loan to cover these education expenses.
Students from various disciplines can now take their first step on the path to success and fuel their dreams for professional or technical education in India or abroad with financial assistance in the form of Education Loan offered by banks so that nothing can hinder their progress.
Education Loan provides financial aid to deserving and meritorious students to pursue higher studies in India and abroad. It helps students to pay their tuition fees, examination, library, books, laboratory and hostel while studying. It also covers travel expenses for studying abroad, study tours, project work, refundable deposit, etc.
Almost all banks in India offer education loans on attractive interest rate and easy repayment options and hence there is a huge demand for loans to cover education expenses.
Lesser Known Facts about Education Loan
- Parents can claim tax benefits under Section 80E of the Income Tax Act. They can claim deduction towards interest paid on the loan and not on the principal repayment. The main point to know is that there is no maximum cap on such tax benefit which means one can claim entire interest amount paid from his/ her taxable income. The deduction can be claimed for 8 years.
- Banks charge simple interest on education loan during course period which results into lower EMIs in future.
- Sanctioned Loan amount is directly disbursed to the college or university where the student will be studying as per given fee structure.
- Repaying education loan without any delay or default, helps building good credit score for the student being it is the first loan in his/ her life.
- There is no prepayment penalty in education loan which means that if you close your loan before its maturity, you will not be levied any penalty or charges.
Benefits of Education Loan
- Provides financial assistance to fulfil the dream of higher education of deserving and meritorious students.
- Loans for a variety of courses are available on attractive rates of interest.
- Female students are often offered discounts or lower interest rates when it comes to education loans.
- Government sponsors subsidy schemes to help students from the economically backward sections of society avail the benefits of education loan.
- Education loans below Rs.4 lakh usually are offered by banks without any security or guarantor.
- The interest paid on the education loan can be claimed as deduction without any upper limit under Section 80E of the Income Tax Act of India, 1961.