Hi Sahil,

Its a paradox. Loan and benefit.

But definitely Loan helps in easing the pressure of reaching your goals by providing monetary suppport. But mind you repaying it back can be a tardent task.

Because when you repay, you not only repayt the amount loaned but also the interest charged for it.

Please note that, once you opt for a loan, do your best in your academics and be the best student of your batch. Also opt for a course / college that provides placement. Getting a good job opportunity will help you recover the loan sooner.

But I would suggest, that unless the course you wish to pursue is from abroad or for studies like medical or engineering or MBA, opt for scholarships from various institutes.

Hope this helps.

Wish you good luck..

Hi,

Benefits of taking EDU Loan:

1.You will have constructive pressure ,since you are investing money and you have to repay the amount  so you will plan to get  your dream job ASAP   

2.When funds are not sufficient ,still you are seeking higher education ,you can take the help of EDU loans,where Various repayment options available like Simple interest, Partial interest , EMI & set up EMI)

3.Tax exemption

4.You will have clear road map about your career..

Hi Sahil,

These benefits help you to reduce the overall cost of your education loan.

The deduction under section 80E is available to an individual if following conditions are satisfied:

1. Deduction available only to Individual not to HUF or other type of Assessee.
2. Deduction amount: – The amount of interest paid is eligible for deduction and moreover there is no cap on the amount to be deducted. You can deduct the entire interest amount from your taxable income. However there is no benefit available on the repayment of principal amount of the loan.
3. Deduction available if Interest is been paid during the previous year and was paid out of income chargeable to tax which means if repayment is made from income not chargeable to  tax than deduction will not available.

Note: – Earlier to previous year 2006-07 the above deduction was available only for Interest on loan taken and repaid by the assessee for his own studies.

4. Interest should have been paid on loan taken by him from any financial institutionor any approved charitable institution for the purpose of pursuing his higher education. Interest on Loan taken from relatives or friends will not be eligible for deduction under section 80E.
5. approved charitable institution means an institution specified in, or, as the case may be, an institution established for charitable purposes and  [approved by the prescribed authority] under clause (23C) of section 10 or an institution referred to in clause (a) of sub-section (2) of section 80G;
6. financial institution means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf;
7.  Loan should have been taken for the purpose of pursuing higher studiesof Individual , Spouse, Children of Individual or of the student of whom individual is legal Guardian.

Higher studies means full-time studies for any graduate or post-graduate course in engineering, medicine, management or for post-graduate course in applied sciences or pure sciences including mathematics and statistics;

Income tax department has added (W.e.f. A.Y. 2010-11)  additional fields of studies (including vocational studies) pursued after passing the Senior Secondary Examination or its equivalent from any school, Board or University recognised by the Central or State Government will also be covered under deduction in respect of interest paid on loan taken for higher education.

6. Interest should have been paid for the loan taken for the purpose of   pursuing his higher education or of the spouse and children. From A.Y. 2010-11 Relative also includes student for whom the individual is the legal guardian.
7. Deduction period: -Deduction shall be allowed in computing the total income in respect of the initial assessment year* and seven assessment years immediately succeeding the initial assessment year or until the interest is paid by the assessee in full, whichever is earlier.

The tax benefits on education loan are only valid once you start the repayment and moreover they are only available up to eight years. For instance if your loan tenure exceeds eight years, you cannot claim for deductions beyond eight years.

Hence it is better that the education loan is repaid within eight years. Unless if the loan amount is very high and it is difficult to afford a high amount of equated monthly installment (EMI), one should not opt for education loan with longer tenure.

*Initial assessment year means the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan.

8. Loan should be in the name of Individual: -Deductions on education loan can only be claimed if the loan has been taken in your own name. If your parents, spouse or sibling has taken the loan for your studies, then you are not entitled to get tax benefit.
9. The loan includes not only tuition or college fees but also other incidental expenses for pursuing such studies like hostel charges, transport charges etc.
10. Repayments of education loan NOT covered under Section 80C.
11. There is no condition that the course should be in India.