In an interview to CNBC-TV18, Anil Rego of Right Horizons talked about what is the best way for students to avail an education loan. He also gave some options on how one can apply for educational loan if they don‘t have any residence proof.
In an interview to CNBC-TV18, Anil Rego of Right Horizons talked about what is the best way for students to avail an education loan. He also gave some options on how one can apply for educational loan if they don't have any residence proof.
Below is an edited transcript of the interview on CNBC-TV18.
Q: The Reserve Bank has recently instructed banks not to reject any educational loan at all so which is the best way for people to go about securing an education loan? More importantly are there any tax implications, benefits or negatives?
A: One think that you need to keep in mind is what RBI has said. Obviously it has not asked banks to go and give loan, irrespective of credit worthiness, etc. What they have said is there were a lot of cases of rejecting loans. Reason being, residence of the person who is applying for the loan is outside the jurisdiction of the bank. This is a very practical problem. RBI has come back and said that you cannot reject loans on this basis. Education loans are something that you can take because you get tax benefit. The individual who is undergoing studies especially for higher education can end up taking a loan. Under section 80E the interest that you pay on your education loan is deductable. This is over and above some of the other section 80C deduction. It is going to be a nice clean deduction apart from the others. In fact the repayment also is little bit easy for the individual. One can start repaying anyway from 6 months after you have got your job or one year from the completion of the education whichever is earlier.
Q: A family recently moved from Delhi to Mumbai and now since they don’t have any residence proof, what are the options one can apply for an educational loan for his daughter?
A: This is very operational issue. So, one needs to end up working with a bank and trying to understand what all are the proofs that they would accept. Would they for example accept BSNL bill, if he is ended up transferring that. Just look around as to what all are the opportunities which you can see. Maybe a rental agreement can be accepted along with a letter from the company, where one has transferred. In the worst case, let's say one is not able to do any of these then one will probably have to go back to the earlier city and take a loan from there. Though it maybe a little inconvenient, but atleast that is practical and one will be able to get the loan.