Education Loan for Higher Studies and Coaching: Eligibility, Interest and Tax Benefit
A good degree or professional course can raise your salary for the rest of your career, but fees keep rising. An education loan lets you pay for the course now and repay from your future salary. This guide covers who can get one, what it covers, how interest and repayment work, and the tax benefit available on the interest.
On this page
Who can get an education loan?
- Indian students with confirmed admission to a recognised course in India or abroad, usually through an entrance test or merit-based selection.
- A parent, guardian or spouse normally joins as co-borrower. Their income and credit history matter a lot.
- Courses usually covered include graduation, post-graduation, professional degrees (engineering, medicine, law, management), diplomas from recognised institutes, and some job-oriented and vocational courses.
Short coaching programmes for competitive exams are generally not covered by standard education loans. For coaching, students usually use a small personal loan, an instalment plan from the institute or family savings. Read the fine print of any “zero-cost EMI” offer from a coaching centre.
What the loan covers
- Tuition and admission fees paid to the institute
- Hostel and examination fees
- Books, equipment and a laptop where the course requires one
- Travel and living costs for study abroad
- Insurance premium for the borrower, if the bank requires it
Collateral, interest and the moratorium
| Point | How it usually works |
|---|---|
| Collateral | Smaller loans are often given without collateral; larger amounts need property, fixed deposits or a third-party guarantee. Limits differ by bank and scheme. |
| Interest rate | Floating rates linked to the bank’s benchmark rate. Public sector banks often offer concessions for girl students and premier institutes. |
| Moratorium | No EMI during the course plus a grace period afterwards (commonly 6 to 12 months). Interest still builds up during this time. |
| Repayment | Spread over several years after the moratorium, depending on the amount and the bank. |
Tip: if you can, pay the simple interest during the course. This stops interest being added to the principal and can cut your total cost noticeably.
Government schemes and the Vidya Lakshmi portal
The Vidya Lakshmi portal lets you see and apply for education loans from several banks in one place. Central and state governments also run interest-subsidy schemes for students from lower-income families; eligibility and income limits change, so check the current scheme on the official portal before you apply.
Tax benefit under Section 80E
Interest paid on an education loan from an approved lender can be deducted from taxable income under Section 80E of the Income Tax Act. There is no upper limit on the deduction amount, and you can claim it for up to eight years from the year repayment begins. Only the interest qualifies, not the principal. The deduction is available under the old tax regime, so compare regimes when you file.
How to improve your approval chances
- Choose a co-borrower with a steady income and a good credit score.
- Keep admission letters, fee structures and mark sheets ready.
- Apply to two or three banks, including the bank where your family already has accounts.
- Borrow only what you need; a smaller loan is easier to approve and repay.
- Read the terms on prepayment, processing fees and rate resets.
Frequently Asked Questions
Can I get an education loan for SSC, UPSC or bank exam coaching?
Standard education loans rarely cover short coaching courses. Students usually rely on savings, institute instalments or a small personal loan.
When do I start paying EMIs?
Usually after the course ends plus a grace period. Interest builds up during that time unless you pay it.
Is there a limit on the Section 80E deduction?
There is no limit on the amount of interest, but the deduction is available for up to eight years and only under the old tax regime.
