Significant effort goes into selecting the right education loan. It should suit your needs and help you apply to your desired university. Before applying for an education loan to finance the degree of your choice, you must consider the eligibility criteria, tax benefits, interest rate, and other features. It helps you decide on the bank or financial institution to finance your education.
What are the different types of education loans?
Education loans can be taken for financing a graduation or post-graduation course. Graduate student loans are available for students who plan to pursue their graduation, while a post-graduate loan helps students get into a post-graduate course. Many banks and financial institutions also offer professional education loans, which provide loans to students who want to opt for career education.
While taking an education loan has many benefits, saving tax is a significant advantage. You can use your education loan to claim a tax deduction, which helps lower your taxes.
What are the eligibility criteria for an education loan?
A bank or an NBFC (Non-Banking Financial Company) disburses an education loan to a student only if the following eligibility criteria are met:
- The student applying for the loan must be an Indian resident.
- The student must be between 18 and 35 years of age while applying for the education loan.
- The student should have confirmed admission to a recognised educational institute in India or abroad.
- The student must be enrolled in a graduate or a post-graduate degree.
- Students who wish to pursue full-time courses need a co-applicant to apply. This co-applicant can be their parent, guardian, or spouse/parent-in-law.
Which tax benefits can I get from EMIs paid towards an education loan?
Any student who has an education loan can benefit significantly from tax deductions. Section 80E of the Income Tax Act, 1961 allows borrowers with an education loan to claim a tax deduction on the interest paid on their education loan. For the total EMI (Equated Monthly Instalment) paid in a year, you can claim a tax deduction of ₹48,000 in a financial year. This tax deduction, however, can only be claimed for a total of eight years.
How is an education loan calculator helpful?
Before applying for an education loan, you must be sure about the EMI you must regularly pay after the loan period. An education loan calculator helps you calculate the EMI before applying for the loan. It helps you plan your EMIs, which, in turn, enables you to manage your future expenses better.
Which education loan is the best?
While the decision depends entirely on your decision, the best education loan considers the requirements and needs of applicants. IDFC FIRST Bank’s education loan is one such well-rounded offering of education loan, catering to a wide variety of education finance needs for graduate and post graduate courses.You can apply at 3200+ universities across 25+ countries with IDFC FIRST Bank’s education loan.To help you in your decision-making, IDFC FIRST Bank websiteprovides an education loan calculator that you can use to estimate your potential EMIs.