Indian Education Loan Simplified Information

Indian Education Loan Simplified Information

Indian banks provide education loans to students who are Indian nationals and are pursuing approved graduate, post-graduate and professional courses in the country and abroad. The repayment starts after a year of course completion or six months after the student gets a job, whichever is earlier.

Banks provide education loans to pursue academic and job-oriented courses approved by them. They cover the tuition fee, hostel expenses, books and useful equipment, travel for overseas courses and other expenses essential to completing the course.

The maximum amount of the loan ranges from Rs 10 lakh for Indian courses to Rs 20 lakh for studies abroad. Banks may consider a higher loan depending on the course. Margins are required for loans more than Rs 4 lakh.

While no margin is required for loans up to Rs 4 lakh, a 5% margin is applicable for amounts more than Rs 4 lakh for studies in India, and 15% in case the studies are pursued in a foreign country.

For loans up to Rs 4 lakh, no collateral is required, while for those between Rs 4 lakh and Rs 7.5 lakh, a third-party guarantee for 100% of the value of loan is needed. In case the loan value is above Rs 7.5 lakh, a suitable collateral security would be required.

Repayment commences one year after the course ends or six months after the candidate gets a job, whichever is earlier. The EMIs are calculated with a tenure not exceeding 10 years for loans up to Rs 7.5 lakh, and 15 years for higher amounts.

The entire interest paid on the education loan is tax-deductible under Section 80E. The deduction for interest payment is available for eight consecutive years, the first year being the year in which the repayment starts.