Students aspiring for higher education but worried about the high amount of fees need not worry any more, With education loan is the way to go. Not only it provides you the money for your higher education but also makes you eligible for availing the income tax deduction, As a major benefit a full deduction of the interest cost is available, thus reducing the income tax.
According to the government recommendation from government, the students an not only avail the benefits of Education Loan however may also avail tax benefits on the amount of interest paid. As such, higher the taxable income the higher is the tax benefits. As an illustration, if an individual falls in tax bracket of 30.9% and takes a loan for hs education at the rate of 12%, the effective rate will be 8.71% which is undoubtedly a far better than personal loans ranging between 15 to 20%.
Though their is no limit of tax deduction in case of education loan however generally banks cap it to the amount of Rs. 10 lacs thus also limiting the tax deduction value. Education loans are not only meant for domestic education only but it may also be availed for higher education abroad. Also you may include your other expenses such as hostel charges, cost of books, etc along with tuition fees, college fees etc.
Refer to section 80E to know more about tax exemption which says that entire amount of interest paid on educational loan is eligible for deduction. You may repay you loan, availing the benefit of tax deduction, for 8 years. This period of 8 years begins when you start repaying your loan. So if your repayment period if more than that, then you will not be able to avail benefit of tax deduction beyond that period.
It is a welcome move for the aspiring professional to fulfill their dreams via education route. As such it is helping the entire country to grow a rapid pace and preparing the human resources to prove their excellence in various fields. It also removes the burden from the shoulders of parents who cannot afford such high costs. Thus you should use such a tool to unleash your talent and prove your worth. All the best!!!
