Since the rate of inflation in education is much higher than the general consumer inflation, with each year, higher education becomes more expensive. In such a position, it is challenging for parents to pay for their children's education. So, many of them thus go for education loan.
An education
loan can be availed to pay for higher education in India or abroad by
either the parents or the borrower. This includes the expenses of the course
and other related costs. The loan amount and other terms vary from lender to
lender.
What are the advantages of taking an
education loan?
Education loan not only enables you to pay for your higher
education but also gives various other benefits. As per section 80E of the
Income Tax Act, the individual on whose name the education loan is taken in
India may demand deduction for the entire interest portion of the loan.
However, to make the most of the deduction, abide by the
following two conditions:
The loan must have been taken from a specific financial
organization that includes banks and any other financial institution that the
Official Gazette may designate in this context. You would not be entitled to
receive any benefit from a tax deduction if you take educational loans from
some other organization.
Higher education can only be taken after the secondary
examination has been completed.
The loan covers not only the course expenses but also all
the educational costs. Most banks usually fund up to 90 per cent of educational
costs. The expenses to be covered under the study loan are as follows:
Tuition fees and accommodation costs
Exam fees, library and laboratory charges where necessary
Any charges owed to the Institute
Price of uniforms, books and other essential items
Travelling costs
Also, education
loan interest calculator will give you a rough estimate of the loan that
you can avail from the bank
You get a vacation period known as the cessation period
under which you do not have to repay the loan. This means that you do not have
start the repayment process immediately after the completion of the course.
There is a vacation period of generally six months to 1 year after which the
EMI process will commence. However, you have the alternative of serving the
interest cost of the loan during the vacation period. If you do so, the bank
may consider lowering your interest rate. It is prudent to use an education
loan EMI calculator to understand the payment of the loan better.
Eligibility for an Education Loan
Every bank has its eligibility terms for an education loan,
but the following are a few common ones -
The applicant should be of Indian nationality.
During application, you should have the documents authenticating
the admission.
Applicant should be in the age of 16-35 years.
