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Planning To Take An Education Loan? Consider These 5 Tips
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"An education loan is a type of loan given by lenders to meet the cost of education. This may be for school education or for college education i.e both for undergraduate and postgraduate studies. Loans can be availed for studies to be done both in India and abroad. Education loans are given by most of the banks and NBFCs. This loan is directly paid by the lender to the educational institution.
If you’re planning to take an education loan for yourself or your children, consider these 5 tips:
1. Education loan eligibility:
Education loans can be availed by the student. This loan is usually taken jointly by the child along with the parents. The most important precondition for education loans is that the student should be enrolled in the course of his choice, whether it is in an Indian college or a college abroad, or a school. The loan applicant should also be an Indian citizen. The amount of the education loan depends on the course fees and the income of the co-applicants.
2. Tax deduction:
It is possible to get a deduction on the interest paid on an education loan under Section 80E of the Income Tax Act. This deduction has no specified limit which means the actual amount paid as interest can be claimed as a deduction. This deduction can be claimed for eight years.
3. Education loan interest rate:
The rate of interest on the education loan depends on the lender and also on the loan amount. The education loan interest rate also changes depending on whether the loan is for education in India or education abroad. Some banks may give concessional rates of interest for women. There are different Central Government interest concession schemes that can help a student to reduce the rate of interest.
4. Education loan repayment:
Most education loans have a moratorium, which means the repayments do not begin until a specified period after the course commences. This is to reduce the repayment burden on the borrower student. Once the moratorium period ends, the repayment of the loan begins through periodic EMIs.
5. Education loan procedure:
Applying for an education loan is very simple. One needs to collect the form for an education loan and fill it up and submit it to the bank with the relevant documents. Some of the documents required for an education loan are:
• Proof of admission in educational institution
• Estimate of costs. Some lenders may only cover tuition costs while others cover stay and other expenses as well
• Identity proof documents (PAN, Aadhar Card, Passport, Driving Licence, VoterID)
• Address proof (Aadhar Card, Passport, Driving Licence, Voter ID)
• Income proof (Income tax returns, bank statements)
You can also read on how to get an educational loan on the different bank websites online.
Author Bio:- Neha Sharma is an aspiring student in the field of finance. She spends hier free time reviewing the latest apps introduced into the market. Check out her work as she lists some factors to consider before taking an education loan
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