School time is the most fuss-free period of our lives. The real struggle to carve out an identity of our own, begins thereafter. For most of us, there is always that dream university where we want to study, but the one thing that gets in the way is the money. So an education loan is what comes to your rescue here. For those of you considering taking one this college season or those who are paying one off, here are a few facts about an education loan that you are unaware of.
Tax deduction under section 80E
If you are someone who has taken an education loan, you can avail a deduction under the respective section, and reduce your tax liability.
Look out for rupee fluctuations in case you are planning to study abroad
Though you will apply for the loan in Indian currency, it would be disbursed to you in foreign currency, and the rate applicable would be the exchange rate in force on the date of disbursement.
Research on subsidies
Yes. Please do a thorough research on this topic. If your family income is below a certain threshold, your interest on the loan will be given by Central government to the bank, which is a relief.
Expenses that the loan covers
It is a general notion, that the education loan only covers the fee of the college, while it is not so. It also bears the cost of study material, hostel fees, library fees, exam fees, refundable deposit, travelling expenditure, and building funds.
The Bank
Be choosy about your bank and research well before applying. No matter how attractive the rates, your education loan can become a serious pain, if the bank is stiff and staff is not customer service focused.
Margin money
The banks usually ask for a certain percentage (currently, 15%), as the margin money, if your education loan is above a certain amount (currently, 4 Lacs). If the amount is between 4-4.75 Lacs, you will need a third party guarantee, and if the amount of loan is more than 7.5 Lacs, then you will be required to submit certain documents to the bank, for approval.
Go ahead and live your dreams, and don’t let the funds stop you. Just make sure though that the prospective career you choose will help you to pay the loan off.
Author: Kadambari Srivastava
