10 Factors to Consider Before you Apply for an Education Loan

    Updated on: 26 Sep 2023 12 min read

     

    Did you know that according to a survey 85 out of 90 Indian students are planning their further education overseas. Not only this, as reported by Public Sector Banks (PSBs), in the last 10 years, a total of 4,61,000 students availed of education loans for studying abroad. Clearly, studying abroad is a transformative experience that opens doors to a world of opportunities and personal growth. However, the cost of foreign education can be a significant barrier for many aspiring students. This is where abroad education loans come to the rescue.

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    Frequently asked questions

    What is the maximum loan amount available for abroad education loans?

    The maximum loan amount available for secured abroad education loans is up to INR 1.5 Cr, whereas for unsecured abroad education loans, students can avail up to INR 80 Lakh. Generally, for higher education abroad, banks and financial institutions may offer loans covering the entire cost of tuition and other related expenses, including living costs, travel expenses, and more. 

    Where is the loan amount disbursed?

    Banks disburse the tuition fees directly to the university, while NBFCs disburse the entire loan amount, either in the student's or the parent's account. International lenders, on the other hand, typically send tuition fees and on-campus accommodation charges to the university on a semester-by-semester basis upon receipt of the invoice.

    Does an education loan provide any income tax benefits?

    Yes, education loans provide income tax benefits to borrowers or their co-applicants. Under Section 80E of the Income Tax Act, the interest paid on education loans is tax-deductible for a certain period, typically for the entire tenure of the loan or a maximum of 8 years, whichever is earlier. This can lead to significant tax savings for the borrower or their parents, as the interest component of the loan repayment can be deducted from their taxable income.

    Can I get an education loan if my parents are unemployed?

    Typically, education loans require a co-applicant, often a parent or guardian, who has a stable source of income to ensure loan repayment. If your parents are unemployed, it may affect your eligibility for the loan or require you to find an alternate co-applicant with a stable income source. Some lenders may consider extending loans to students with unemployed parents if they meet other eligibility criteria and can provide collateral or a suitable co-signer with adequate income.



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Written by Ananya Ghai

A post-graduate with over three years of expertise in the education abroad industry, Ananya has a knack for writing blogs. Previously, she has worked as an IELTS trainer and SOP writer. A passionate writer and a literature geek, describe her perfectly.


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Reviewed by Aman Jain

Aman Jain graduated from IIT Kanpur, and currently functions as the CMO at GyanDhan. He is deeply passionate about creating equality in higher education and has directly interacted with 2 Lakh students in his 8-year-long journey.


Specializes in:
Education loan , Study Abroad Admissions


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GyanDhan is India's first education financing marketplace.



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