Education and Career Forum

Hello,
My son wish to go for MBA course. Please let me know how he can avail Education Loan at the cheapest rate of interest and its tax benefit? Waiting for your reply.

Identify the right lender for competitive interest rates. Government banks like SBI, PNB, Bank of Baroda offer education loans at lower rates. Private banks and NBFCs like ICICI bank, HDFC Bank, Avanse Financials also offer education loans but interest rates may be slightly higher. Compare rates and chose a lender with a suitable rate for your budget.

Apply for education loan under the government scheme Education Loan Interest Subsidy scheme (ELISS) which provides interest subsidy for up to 5% per annum. Both government and private lenders offer this. This brings down the overall interest cost significantly. Check eligibility and apply through the lender of your choice.

Consider part-time jobs or internships during studies to reduce the loan amount. Even part-time earnings, TA/DA or stipends can help lower the loan burden by reducing the loan principal amount.

Apply for scholarships, fellowships or grants to reduce out-of-pocket costs. Though MBA scholarships are limited, apply to private colleges, NGOs, trusts and employers offering educational assistance. Every bit helps.

Under Section 80E of Income Tax Act, the interest paid on education loans is tax deductible up to Rs. 1,00,000/- per annum. Your son can claim this deduction in the tax returns to boost cash flows. Loan EMIs can also be adjusted against annual income for tax computation.

Repay the education loan on time as per the schedule to avoid penalties and damage to credit score. Early repayments can also save on interest costs if repayments are made on time.

With a suitable lender, interest subsidy benefits, additional earnings and tax benefits, an education loan for MBA can be managed well at a lower cost. Do analyze various options with pros and cons to ensure your son gets a high quality MBA degree at an affordable price. Please let me know if you have any other questions.