Education loan

Education is expensive and Higher education is all the more expensive especially foreign education. Hence the need for education loan, which is a financial aid given to meritorious but needy students for meeting the expenses of their higher education in India or abroad. In this article we shall explain education loan, what it is, process of getting education loan, repayment, tax benefits under section 80E.

What is education loan?

Educational loans are available for the purpose of higher education. Higher education means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized   by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so.

·         The course should necessarily be full time.

·         It can be graduate or post-graduate course in technology, engineering, architecture, medicine, management and applied or pure sciences, including mathematics and statistics etc.

·         It can be pursued in India or abroad.

·         One gets tax deduction for education loan taken.

What is covered under the loan?

Education loans take care of all expenses incurred such as :

Admission, tuition, examination and library fees

Cost of purchasing books, computers and other equipment.

Some banks like State Bank of India also offers loan for two-wheeler if hostel and college are far.

If the loan is being taken for studies overseas, travel expense is also included in the loan amount. As medical expenses are high in countries such as the US, the loan also accounts for health insurance. Although the bank is in India, the student gets his amount in dollars for studies overseas, and the amount is paid directly to the institution abroad.

What is education loan subsidy scheme?

On 24th June, 2010 Government of India approved a Scheme to provide full interest subsidy during the period of moratorium on loans taken by students belonging to economically weaker sections under the Education loan Scheme, for pursuing any of the approved courses of studies in technical and professional streams, from recognized institutions in India. The interest will be paid to the banks by the Government of India. It is applicable from the calendar year 2009-10. The benefits under the Schema are applicable to those students b with an annual gross parental/ family income upper limit of Rs. 4.5 lace per year (from all sources). Income proof shall be required from the students from public authorities as authorized by the State Governments for certification of income status for the scheme.

Source: http://www.bemoneyaware.com/education-loans/