Quality education is a must for a successful and a secure future. For most of us, quality education means studying either from a premium institution of India or from abroad. The fees of the premier institutions of India are at a hike. According to the studies, the cost of education is increasing at an average of 15% per annum. The tentative cost of pursuing MBA is up from Rs 2.5 lakh to Rs 20 lakh in 15 years. And studying from abroad is in itself expensive. It becomes difficult for some of the students, who are deserving, to afford the fees of such institutions. Thus, education loans are vitally important.
Education loans came into existence in 1995, started by the SBI Bank and after that many banks started offering education loan. The Indian banking sector began giving education loan from 2001 onwards. Education loan is thus, ‘funds offered by financial institutions to meritorious and/or deserving students so that the latter can pursue their basic/higher education, in India or abroad’. At present, almost all banks in India offer education loans.
Features and Benefits of Education Loan


Courses covered in India

Courses covered outside India

Life Insurance
Life Insurance is mandatory to get the education loan.
Expenses Covered
This is a brief list of expenses covered by the financial institutions, you can ask your financial institution for a comprehensive list of covered expenses.

  1. No voucher/ receipt required, purpose (end use) need to be self-certified.
  2. Expenditure not to exceed 25% of the loan amount (up to a lump sum amount of max Rs. 1 Lac).
  3. Expenditure beyond 25% cap permitted subject to production of voucher/ receipt.

Margin refers to the actual loan amount that you receive i.e. your share:

The security required is as mentioned below:


Tax Benefit
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). Only loans taken for higher education – full-time studies in any graduate or post-graduate, professional, and pure and applied science courses – may claim a deduction. The deduction will be available for a maximum of eight years starting from the day you start repaying.

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