Education loans play a pivotal role in providing education and in turn boosting the employment prospects of an individual. Human resource development is a major policy agenda of the government, and educational loans work in furtherance of such policies. They bridge the gap between dreams, ambitions, affordability and access. In India, education loans act as a positive step towards not only achieving literacy, but also qualitative human capital.
What Is An Educational Loan?
Education loans are financial assistance and arrangements made by banks or financial institutions for students seeking to pursue higher education, both in India and abroad. The loans cover the educational expenses incurred by students including tuition fees, course fees, accommodation and other living expenses.
What Are Some Features Of Education Loans?
Several different features make education loans lucrative. Loans can be obtained for amounts up to 1.5 crores on preferential interest rates. Such interest rates are usually based on the rankings of colleges and universities.
Education loans have moratorium periods implying that you don’t need to repay the loan during the duration of the course and a little time beyond that. Unlike other loans where collateral options are usually limited, education loans offer multiple collateral options such as residential property, mutual funds, fixed deposits, insurance policies, etc.
Certain education loan schemes offer a repayment tenure of up to 15 years. The most glittering part of education loans is that their interest payment is entirely deductible under the taxation laws.
What Are The Tax Benefits Available To Education Loan Holders?
Under the Indian taxation regime, interest incurred on the repayment of tax is entirely deductible under Section 80E of the Income Tax Act. This has been done to lift the burden of repaying the loan along with the principal amount.
While calculating tax payable at the end of the year, individual taxpayers can claim a deduction of the interest and reduce the amount of tax which is payable. More information about claiming tax benefits on and from education loans is available at Jaagruk Bharat’s guide to claim tax benefits on education loans.
Things To Keep In Mind While Applying For Education Loans
Choosing the right education loan is very necessary. The financial institution that you are going to choose must have accommodative moratorium periods to allow you to comfortably repay the loan. Any processing fees that the bank may charge must also be understood and studied carefully.
Conclusion
To choose from different education loans available in the financial markets, you must study the features and benefits provided by each of the financial institutions. Education loans provide multiple benefits to the loan seeker, most importantly the tax benefits. Providing and availing education loans can make India a global leader in Human Resources and their development.
To gather more information and for detailed information about such loans and schemes, tune in to Jaagruk Bharat.
