What is Education Loan?
An Education Loan is a specialized financial product designed to fund a student’s higher education expenses at domestic or international institutions. The student acts as the primary borrower, while a parent, guardian, or third-party sponsor serves as a co-applicant to secure the financing.
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.