What is Education Loan?
An education loan is a specialized, often secured or unsecured loan designed to cover higher education expenses—including tuition, fees, accommodation, books, and study materials—for courses in India or abroad. They offer long repayment tenures (often up to 15 years) and tax benefits under Section 80E.
Key Aspects of Education Loans:
- Coverage: Covers tuition fees, accommodation, travel, and study materials.
- Loan Types:
- Domestic Loans: For studies within India.
- International Loans: For studies abroad.
- Interest Rates & Repayment: Interest rates range from4.00% to 16.00% p.a., with repayment typically starting after a moratorium period (usually 6 months to 1 year post-course completion).
- Collateral: For high-value loans, lenders may require security or a co-applicant.
- Tax Benefits: Interest paid on the loan is deductible under Section 80E of the Income Tax Act.
- Subsidies: Government schemes (like CSIS or PM-Vidyalaxmi) exist for eligible students, which may waive interest during the study period.
- Eligibility: Generally for meritorious students, with some banks offering concessions for female students.