Educational Loan

Government of India in consultation with Reserve Bank of India (RBI) and Indian Banker's Association (IBA) has framed a Comprehensive Educational Loan Scheme to ensure that no deserving student in the Country is deprived of higher education for want of finances. The new scheme covers all type of courses including professional courses in schools and colleges in India and abroad.

The Salient features of the scheme are as under:
  1. The scheme envisages loans up to Rs.7.5 lakhs, for studies in India.
  2. For loans up to Rs.4 lakhs, no collateral or margin is required.
  3. For loans above Rs.4 lakhs, the interest rate will not exceed PLR plus 1 percent.
  4. The loans are to be repaid over a period of 5 to 7 years with provision of grace period of one year after completion of studies.
  1. Should be an Indian National.
  2. Secured admission to professional/technical courses in India through Entrance Test/Merit based selection process.
  3. Good academic career.
  4. The student should not have outstanding education loan from any other Institution.
  5. Father/Mother should be co-borrower.
  6. Branch nearest to the permanent residence of student will consider the loan.
  1. Fee payable to college/school/hostel*.
  2. Examination/Library/Laboratory fee*.
  3. Purchase of books/equipments/instruments/uniforms*.
  4. Caution deposit/building fund/refundable deposit supported by Institution bills/receipts*.
  5. Purchase of computers - essential for completion of the course.
  6. Insurance cover for the student*.
  7. Any other expense required to complete the course - like study tours, project work, thesis, etc.
* As per demand letter (Fees Structure) from the institution.
  1. Bonafide certificate from the Institution.
  2. Fees structure from the Institution.

Repayment of an education loan is deductible under section 80E of the Income Tax Act. The yearly limit for deduction is Rs. 40,000 (for both the principal and the interest). The deduction will be available for a maximum of eight years starting from the day you start repaying.