An education loan is a sum of money borrowed to finance post-secondary education or higher education-related expenses. Education loans are intended to cover the cost of tuition, books and supplies, and living expenses while the borrower is in the process of pursuing a degree. Payments are often deferred while students are in college and, depending on the lender, sometimes they are deferred for an additional six-month period after earning a degree. This period is sometimes referred to as a “grace period”.
What is covered under Education Loan
All you need to know
Education loans are issued for the purpose of attending an accredited college or a university and pursuing an academic degree. Education loans can be obtained from the government or through private-sector lending sources. Federal loans often offer lower interest rates, and some also offer subsidized interest. Private-sector loans generally follow more of a traditional lending process for application, with rates that are typically higher than federal government loans
- Indian nationals only.
- Secured admission/invite from university in approved university/college in degree/diploma course.
- Education: Should have completed 10+2 (12th standard) for an undergraduate course and degree for a postgraduate course.
- Approved courses leading to graduate/post-graduate degree and PG diplomas were conducted by recognised colleges/universities recognised by UGC/Govt./AICTE/AIBMS/CMR.
- Courses like ICWA, CA, CFA etc.
- Courses conducted by IIMs, IITs, IISc, XLRI, NIFT, and NID.
- Regular degree/diploma courses, such as aeronautical, pilot training, shipping
- Degree/diploma in nursing or any other discipline approved by Director General of Civil Aviation/Shipping/Indian Nursing Council or any other regulatory body as the case may be if the course is pursued in India.
- KYC documents
- Mark sheets of 10th, 12th, graduation and entrance exams
- Admission letter
- Fee structure
- Co-applicant KYC and income proof in some cases
When you start repaying the education loan, the interest segment you pay towards the loan every month can be used to claim income tax deduction under Section 80E. However, the deduction cannot be claimed on the principal repayments.
Also, there is no limit on the amount you can claim for interest repayment on an education loan. As proof of this, you need to obtain a certificate from the bank. The facility is available only for eight years from the year you start repaying the loan or until the interest is fully repaid, whichever comes first.