22 June 2016
Respected experts,
I would like to know that who can get education loan. is there any conditions for it and if is then pls tell and what is process of this also tell about interest rate with period
Thanks in advance
(I m student of b.com H and want to join ICAI)
22 June 2016
you can take education loan for that cources specified in u/s 80E 80E. (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education 97[or for the purpose of higher education of his relative]. (2) The deduction specified in sub-section (1) 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 referred to in sub-section (1) is paid by the assessee in full, whichever is earlier. (3) For the purposes of this section,— (a) “approved charitable institution” means an institution specified in, or, as the case may be, an institution established for charitable purposes and 98[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; (b) “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 Gazette99, specify in this behalf; 1[(c) “higher education” means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do so;] (d) “initial assessment year” means the assessment year relevant to the pre-vious year, in which the assessee starts paying the interest on the loan;] 2[(e) “relative”, in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.]
21 July 2024
Education loans are typically provided by banks and financial institutions to students who wish to pursue higher education in India or abroad. Here are the general conditions and processes associated with education loans:
### Eligibility Criteria: 1. **Student Eligibility:** - Indian nationals or students with Indian citizenship are eligible. - Students should have secured admission to a recognized course in India or abroad. - The course should be from a recognized institution and should lead to a diploma, degree, or post-graduate degree.
2. **Course Eligibility:** - Education loans are generally available for courses in fields like engineering, medicine, management, etc., offered by recognized institutions. - Some loans also cover vocational courses and courses pursued through correspondence.
3. **Margin Money:** - Banks may require a margin amount, which is the percentage of the loan amount that the student must finance from their own resources. This varies by bank and can be up to 15% for loans above Rs. 4 lakhs.
4. **Security and Guarantor:** - For loans up to Rs. 4 lakhs, typically no security is required, but a third-party guarantee might be needed. - For loans above Rs. 4 lakhs and up to Rs. 7.5 lakhs, a third-party guarantee is required. - For loans above Rs. 7.5 lakhs, collateral security such as property, LIC policy, or fixed deposits may be required, along with a suitable third-party guarantee.
### Process: 1. **Application:** - Students or their parents can apply for an education loan by submitting an application form along with the required documents to the bank or financial institution. - The application form should be accompanied by proof of admission to the course.
2. **Documentation:** - Documents required typically include proof of identity, address, admission letter from the institution, mark sheets of the last qualifying examination, and proof of income of the parent/guardian.
3. **Loan Sanction and Disbursement:** - After verification of the documents and course details, the bank or financial institution sanctions the loan amount. - The loan amount is disbursed directly to the institution or the vendor providing services like tuition fees, hostel fees, etc., in stages as per the requirement.
4. **Repayment:** - Repayment typically starts after the completion of the course or a grace period of 6-12 months after getting employment, whichever is earlier. - The repayment period can vary from 5-7 years or more, depending on the loan amount and terms agreed upon.
### Interest Rates: - Education loan interest rates can vary from bank to bank and are influenced by factors such as the loan amount, repayment tenure, and whether collateral is provided. - Currently, interest rates can range from around 7% to 15%, with some banks offering lower rates for certain categories or under government schemes.
### Loan for Individual Students without Income: - For individual students without any income source, banks typically look at the creditworthiness of the student's parents or guardians. - The loan eligibility and amount are determined based on the repayment capacity of the parents or guardians, considering their income, assets, liabilities, and credit history.
### Additional Points: - **Moratorium Period:** Some banks may offer a moratorium period during which only the interest is payable, and the principal repayment starts after the course completion. - **Tax Benefits:** Interest paid on education loans qualifies for deduction under Section 80E of the Income Tax Act, which helps reduce the tax liability of the borrower.
It's advisable to visit the nearest bank branch or financial institution offering education loans to get detailed information about their specific terms, conditions, and interest rates. Each bank may have slightly different criteria and processes, so comparing options can help in making an informed decision.
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