Tax benefit on Educational Loan

• Interest paid on education loan can be claimed as deduction from income of borrower (student) as per Section 80E of the Income Tax Act, 1961
• Rebate can be claimed without any upper ceiling or cap
• Rebate is available for full time courses, part time courses and vocational courses pursued in India and abroad
• Rebate can be claimed within eight (8) years post moratorium period subject to actual payment of interest
• Rebate is available for interest paid on loans for education of self, spouse, children or for the student of whom he/she is the legal guardian
• No rebate is available for principal repayment

Documents Required for Education Loan

• Duly filled the application form along with two passport size photographs of the applicant and co-applicant.
• Admission Letter from the Institute. It should have the institute name and address on the letterhead.
• The detailed cost breakup of the course from the Institute, which specifies the tuition fee, the term of the course, year-wise charges, and expenses.
• The academic record of the applicant/student, which should include 12th Marksheet, certificate of any subsequent education like graduation or post-graduation, mark sheet of the entrance exam (if any), and any scholarship document.
• An affidavit or a declaration that no loan has been availed from any other bank or financial institution.
• Any ID proof like PAN card, Aadhar card, Driving License, passport, etc.
• Any address proof like Ration Card, Driving License, Passport, Aadhaar Card, etc
• For age proof Birth Certificate or 10th Class certificate.

What courses are eligible for education loans?

Some examples of the courses eligible for education loan are:

• Graduation and Post-graduation courses
• Professional courses
• Diploma/degree courses by recognized institutions.

Can I avail tax benefits on education loan?

Yes, you can avail tax benefits under section 80C and 80E of the Income-tax Act, 1961 for education loan’s interest and payment.

Can I transfer my education loan to another bank with a lower rate of interest?

Yes, you can transfer your education loan to another bank. But in such a case, your current bank will charge a certain fee and also the new bank will charge a processing fee. Thus, consider all the factors and expenses before making a decision.

What are the factors that lenders consider for approving an education loan?

Some of the factors that lenders consider while assessing an education loan application are:

• The Institute and the course
• The Loan amount
• Repayment capacity of the family
• Academic Performance
• Estimated income after completion of the course and securing the job.