5 MinsNov 17, 2022
As we aspire to lead a better and more enriching life, education plays a pivotal role. And given that we are in a knowledge economy, pursuing quality higher education is the passport to a brighter financial future.
However, as you may know, quality education is not cheap. In the current times, the tuition fee for an engineering course -- depending on the college you choose (private or government) and specialisation (mechanical, materials, metallurgical,
civil, electronic, electrical, software, etc.) -- on an average could cost you anywhere between Rs. 8 lakh to Rs. 35 lakh, and if you relocate for the course, the cost on travel, accommodation cost, etc. are additional. With inflation in education
being at around 8-10%, the engineering courses are about to get even more expensive in the times to come.
Now while you or your parents may have planned well, there are always chances of falling short of the desired amount required to pursue an engineering degree in a reputable institution. In such a case or even to reduce your own funding expenses,
availing of an Education Loan may be a smarter option.
An Education Loan is not only provided for the college tuition fee of the engineering course (and many other career-oriented courses), but also covers the cost of books, lab tools/equipment, laptop/computer, travelling expenses and hostel charges,
among others. Further, the loan can be provided for the course in India and even abroad. The Education loan can be worked out to suit your needs at a competitive interest rate, thus avoiding the situation of borrowing from friends, colleagues,
or relatives. You can avail of a loan amount anywhere ranging from Rs. 50,000 to Rs. 75 lakh, along with easy/flexible loan repayment options for effective loan servicing.
The only condition for the loan is that as an applicant or co-applicant, you need to be a citizen of India, over 18 years of age, should have secured 50% marks during HSC/ graduation, secured admission for the career-oriented course (in India
or abroad, as the case may be), and the co-applicant, i.e., parent/s or guardian, need to have a regular source of income.
[Also Read: Chart a new career path with an international Education Loan]
Typically, the documents required at the time of application are KYC documents (viz. Aadhar, PAN, Passport, etc.), bank statements of the past 6 months, a copy of the admission letter of the institution along with fees schedule, mark sheets/passing
certificates of S.S.C. and H.S.C, and guarantor form (optional).
Axis Bank also offers Education Loans to students belonging to the economically weaker section as per the Central Government Interest Subsidy Scheme. You can know more about the education loan subsidy scheme online.
That said, as a prudent loan planning exercise, assess how much will be your Equated Monthly Instalment (EMI). Use Axis Bank’s online Education Loan EMI Calculator, an automated
tool, that will quickly help you know the EMI and plan your future. Avoid deciding in an ad hoc manner.
Finally, when you have availed the Education Loan and it is disbursed, you can even avail a tax benefit under Section 80E of the Income Tax Act, 1961.
Under Section 80E of the Income-Tax Act, 1961, the interest paid on education is allowed as a deduction for a maximum of 8 years or till the interest is paid, whichever is earlier.
The deduction is available for individual assesses from the year you start paying the interest on the education loan, and the seven immediately succeeding financial years or until the interest is paid in full, whichever is earlier.
There is no maximum limit on the amount of deduction allowed under Section 80E. It would purely depend on the quantum of the education loan and the interest paid (which is a component of your EMI). So, effectively, you save on taxes while you
earn.
To know how much tax benefit you can get by availing an Education Loan, use Axis Bank’s Education Loan Tax Benefit calculator. It will help you ascertain the total amount of interest you would pay on your education loan, the tax you would
save under Section 80E, the post-tax effective interest amount over the loan tenure and the effective interest rate on your education loan.
To know how much tax benefit you can get by availing an Education Loan, use Axis Bank’s Education Loan Tax Benefit calculator. It will help you ascertain the total amount of interest you
would pay on your education loan, the tax you would save under Section 80E, the post-tax effective interest amount over the loan tenure and the effective interest rate on your education loan.
Other than the tax benefit, an Education Loan also adduces other advantages:
1) Your existing finances are not exhausted.
2) You don’t have to liquidate your existing investments assigned for other important financial goals.
3) The loan can be worked out to suit your budget and requirements.
4) The Education loan interest rate is competitive.
5) The loan is usually disbursed within 15 working days.
So, apply for an Education Loan today to pursue your personal goal of becoming an engineer and be future-ready.
Disclaimer: This article has been authored by PersonalFN, a Mumbai-based Financial Planning and Mutual Fund research firm. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
