Frequently Asked Questions about Education Loans
An education loan is a type of financial assistance provided by banks and financial
institutions to students to cover the cost of their education, including tuition fees,
accommodation, books, and other related expenses.
Students who have secured admission to a recognized educational institution in India or
abroad can apply for an education loan. Generally, a co-applicant (usually a parent or
guardian) is required to apply along with the student.
Education loans typically cover tuition fees, exam fees, accommodation costs, travel
expenses (for studies abroad), cost of books and study materials, laboratory fees, and other
related educational expenses.
Eligibility criteria may vary by lender but generally include:
o Admission to a recognized institution or university
o Good academic record
o The co-applicant must have a steady income and good credit history
o Age limit as specified by the lender
o Admission to a recognized institution or university
o Good academic record
o The co-applicant must have a steady income and good credit history
o Age limit as specified by the lender
The loan amount depends on factors such as the course, institution, and location (India or
abroad). Typically, lenders offer up to ₹10-15 lakhs for studies in India and up to ₹20-30
lakhs or more for studies abroad.
Interest rates for education loans in India vary based on the lender, the loan amount, the
course, and other factors. Generally, interest rates range from 8% to 15% per annum.
Loan tenures for education loans usually range from 5 to 15 years, including the course
period and a moratorium period (grace period) of 6 months to 1 year after course
completion or employment, whichever is earlier.
Required documents typically include:
o Admission letter from the institution
o Proof of identity (Aadhaar card, PAN card, passport, etc.)
o Proof of address (utility bills, rental agreement, etc.)
o Academic records (mark sheets, certificates)
o Co-applicant's income proof (salary slips, bank statements, tax returns)
o Cost estimate of the course (fee structure, living expenses)
o Admission letter from the institution
o Proof of identity (Aadhaar card, PAN card, passport, etc.)
o Proof of address (utility bills, rental agreement, etc.)
o Academic records (mark sheets, certificates)
o Co-applicant's income proof (salary slips, bank statements, tax returns)
o Cost estimate of the course (fee structure, living expenses)
Yes, under Section 80E of the Income Tax Act, the interest paid on an education loan is
eligible for tax deduction. There is no upper limit on the amount of interest that can be
claimed as a deduction, and it is available for a maximum of 8 years.
Defaulting on an education loan can lead to serious consequences, including a negative
impact on the credit score of both the student and the co-applicant, legal action by the
lender, and difficulties in obtaining future loans. It is essential to communicate with the
lender if facing repayment difficulties to explore options like restructuring the loan or
extending the moratorium period.