Personal loan for education
Pursuing higher studies can be expensive, especially at a university abroad. But it’s also an opportunity that can be a great learning experience and significantly boost one’s career prospects.
If you are unsure about meeting the expenses of higher studies in a foreign location, a loan is perhaps your answer to covering the cost. You can opt for an education loan or a personal loan.
Personal loans are unsecured loans, which means they don’t require any collateral or security. They are easier to avail of and have greater flexibility in terms of repayment. Moreover, opting for a personal loan for education also brings several tax benefits.
Tax benefits on a personal loan for education
Section 80E of the Income Tax Act offers deductions on the interest paid on loans taken for higher education. The principal payments made towards the loan, however, do not qualify for such a deduction.
Whether you’re taking a loan for yourself, your spouse, or your children, you’re eligible for the tax deductions under Section 80E. Even if you’re taking the loan for somebody you are the legal guardian of, you can avail of this tax benefit. However, the loan must be in your name.
To be eligible for the tax benefit, you should take a loan from a bank or a registered financial institution. The advantage is available for up to eight years or until the loan repayment, whichever is earlier.
The best feature of this benefit is that there is no cap on the rate of interest that is eligible for the deductions.
The 30% tax bracket
If you’re in the 30% tax bracket, a personal loan can offer a significant tax benefit for you. There is no cap on the interest amount that is eligible for deduction. For instance, if the interest paid is Rs. 1 lakh in the current financial year, you can deduct it entirely from your taxable income. This would save you almost Rs. 30,000.
Thus, there’s no need to give up your higher education dreams because of financial worries. Availing of personal loans takes hardly any time, thanks to pre-approved offers from Bajaj Finserv. Share a few basic details and get your offer.
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