Education Loan Tips for Higher Education Planning

Given that more than 54% of our the total population is below 25 years of age, our youth must be encouraged to pursue higher education supported with adequate employment opportunities. But higher education has increasingly become quite expensive, especially in cases of professional courses. It creates a financial barrier in accessing higher education at multiple levels in our country. New academic year is starting now in July and this problem of financial constraint is resurfacing as a perpetual challenge for both the parents and the students.

?Education loans appear a reasonably good option to fight the financial barrier towards pursuing higher education. This Edition of the Newsletter will help you in addressing the Education Loan issue.

Central Government Sponsored Programme for Financial Support

The Government of India runs the Pradhan Mantri Vidya Lakshmi Karyakram to a support students with a single window electronic platform for Scholarships and Educational Loans. Vidya Lakshmi is a first of its kind portal for students seeking Education Loan in India.

?Basic Features of Vidya Lakshmi Scheme

• The scheme envisages loans up to Rs.7.5 lakh for studies in India and up to Rs. 15 lakh for studies abroad.
• For loans up to Rs. 4 lakh no collateral or margin is required and the interest rate is not to exceed the Prime Lending Rates (PLR). For loans above Rs. 4 lakh the interest rate will not exceed PLR plus 1 percent.
• The loans are to be repaid over a period of 5 to 7 years with provision of grace period of one year after completion of studies

Tax Benefit Available Under the Scheme

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 deduction. The deduction will be available for a maximum of eight years starting from the day you start repaying.

University Grants Commission also promotes this Scheme and has curated all banks related information on a single page on its website for easy access. This page provides relevant links of various commercial banks which offer Education Loan Scheme

[Note: Sometimes the banks links do not work through third party websites, therefore be wise in reaching out to the banks website directly if needed].?

For more details, feel free to reach out to the CareerRun Team. We will be happy to assist you with more details and guidance.

Join my Network for Regular Updates:

WhatsApp | Telegram ?| LinkedIn