1. Here’s how you should take education loan and avail tax benefits

Here’s how you should take education loan and avail tax benefits

Education costs - especially those of higher education – are rising day by day, and anyone who wants to pursue higher education from a renowned college has to generally take an education loan to fulfill one's dream.

By: | Published: April 19, 2017 1:23 PM
Deductions under 80E of the I-T Act allow one to take the benefit of tax deduction on repayment of interest for up to 8 years.

Education costs – especially those of higher education – are rising day by day, and anyone who wants to pursue higher education from a renowned college has to generally take an education loan to fulfill one’s dream.

Is an education loan good for students? Yes, it is, but only in cases when one is sure of repaying the loan on time. Taking an education loan also makes one independent by helping one’s parents to get funds for the education of their child. This is how one learns to become financially responsible. The education loan also helps in getting tax benefits under section 80E of the I-T Act.

However, before opting for an education loan, one should know whether the institution has tie-ups with any of the banks which are providing education loans or not. This helps the student get a loan at a lower rate compared to the rate offered by banks which do not have any tie-up with the institution.

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List down the requirement

While opting for the loan, one should list down the costs which are included in the overall loan amount. The costs are mainly related to library fee, laptop expenses, hostel charges and may more things which sum up to a size-able portion of the total cost of your program.

Tax benefits of education loan

Deductions under 80E of the I-T Act allow one to take the benefit of tax deduction on repayment of interest for up to 8 years. Some good lending organisations also provide a grace period for repayment of loan where one can get a discount of up to 1 percent which can be beneficial for students. Hence, it is suggested that one should try to repay the loan within this moratorium period only.

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Avail loan from a trustworthy bank

One should take the loan from a reputed bank like State Bank of India, United Bank of India, Bank of Baroda, Punjab National Bank, HDFC Bank, etc., where there is flexibility in repaying the loan.

  1. W
    White Money Club
    May 1, 2017 at 12:33 pm
    Agreed education is getting costly day by day, and one has to take education loan to complete higher studies specially professional courses. One should also take advantage of tax benefit to its maximum.
    Reply
    1. V
      Vandan
      Apr 19, 2017 at 1:51 pm
      Can i claim tax emption for education loan on my wife's education??
      Reply

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