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5 Unknown Facts About Education Loan

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By Author: Arjit Chalmela
Total Articles: 25
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Whether you’re looking to get admission into your dream course in India or abroad, you can opt for an education loan to finance your education. With many lenders offering these loans to students, financing your dream course is now possible. 

Education loans are loans given to primarily finance the cost of education. Lenders give loans for courses both in India and abroad. The education loan interest rate depends on the lender that gives the loan. Some lenders provide a concessional rate of interest to women students looking for an education loan. This concession is 0.5% of the interest rate as compared to male students. 

While an education loan seems fairly standard like other types of loans, there are some facts about this loan that you must know before you make an application. 

Here are some relatively unknown facts about education loan: 

Vidya ...
... Lakshmi Portal:

The Ministry of Human Resources set up the Vidya Lakshmi portal in the year 2015 for students looking for an education loan. This portal has 110 loan schemes from 36 banks. To apply for a loan through this portal, you need to create an account and upload the required documents. You need to upload a photograph to your account. There is a common loan application form that needs to be filled up that can be submitted to different banks. Some information required in the common loan application form is:

Personal information
Bank details
Any relationship to a chairman or director from the registered banks
Particulars of course and educational institution
Cost of the course
Any security offered for the loan
Supporting documents such as previous educational institution’s marksheet, schedule of expenses from the institution, proof of income

The banks assess these loan applications and can approve them on the portal itself. The education loan amount will then get transferred to the educational institution, thus allowing the student to pursue his education.

Tax benefit:

The applicants of an education loan get a tax deduction on the interest amount paid to the lender. This deduction is available under Section 80E of the Income Tax Act. There is no limit on the deduction and it is available for 8 years from the time repayments under the educational loan begin. This deduction is available for loans taken for education in India and abroad.


Most lenders have a limit up to which they don’t require any security for the education loan. However, for loans that go above that limit, lenders insist on some security being placed. It is recommended to put in a joint application for an education loan with a parent or guarantor whose income and assets work as a form of security for the lender. Generally, loans above Rs. 4 lakh for education in India and loans above Rs. 8-10 lakhs for international education require some form of security.


For students coming from economically weaker sections of the society, the Government of India provides interest subvention on education loan. In this type of subsidy, the Government pays the interest on the loan whereas the student has to repay only the principal amount. This is generally for education loan in India.

Costs covered:

An education loan covers not only the tuition costs but other costs such as book costs, library fees, hostel and other accommodation fees etc. This depends on the lender.

You can find out your education loan eligibility from an education loan emi calculator which is available for free on the lenders websites. Using this calculator, you will be able to find out the loan amount that you are entitled to and also the rate of interest on such type of loan.

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