- In India, for which courses can education loans be availed?
- What is the maximum amount that can be availed through an education loan?
- What is the collateral or security required for education loans?
- What is the collateral required to be submitted for education loans?
- Do all education loans have a moratorium period and how long is it for?
- Is there a prepayment penalty on education loans?
- Can any income tax benefits be availed on education loans?
In India, education loans can be availed for all courses that are recognised by the University Grants Commission (UGC), as of now, and for all regular courses abroad. In fact, you can get a list of educational institutions that are eligible for education loans from any of the lenders that you are applying for.
The maximum loan amount that you can avail for an education loan depends on the lender, but it is usually in the range of Rs.10 lakh to Rs.15 lakh for studies in India while for studies abroad it is in the range of Rs.20 lakh to Rs.30 lakh. However, a higher loan amount may be sanctioned if you are able to provide the collateral that the bank has specified in such cases.
This differs from lender to lender but generally, for loans of up to Rs.4 lakh, there is no collateral required. For loans ranging from Rs.4 lakh up to Rs.7.5 lakh also, there is no collateral required but third-party guarantee would be required. For loans above Rs.7.5 lakh, collateral is required by most lenders.
For education loans, the collateral that is required to be submitted may be fixed deposits that are held by the lender, property documents which are owned by the applicant or a co-signor, or NSC/KVP/LIC documents.
Yes, most lenders offer a moratorium period for education loans during which you do not have to pay the EMI. This period usually ranges from 6 months to 1 year from the completion of the course or when the applicant starts employment, whichever comes first.
There is usually no prepayment penalty on education loans although it is best to confirm with the lender about this as it can differ from place to place.
Yes, there are income tax benefits that can be availed on education loans under Section 80E of the Income Tax Act. These benefits begin once the borrower starts the loan repayment of the interest of the loan. This benefit is above the Rs.1.5 lakh deduction under Section 80C. The deduction is available for a maximum of 8 years or until the full interest component of the loan is paid off, whichever comes earlier.