Bank of Baroda continues to top the list of cheapest education loan lenders with interest rate as low as 6.75 percent. It is closely followed by Union Bank of India and Central Bank of India, at 6.8 percent and 6.85 percent respectively, as per data from Bankbaazaar.
All about tax benefits on education loans
Besides being a cheap source of funding for higher studies in India and abroad, education loans also offer tax benefits under section 80E. Higher studies in this case also encompasses vocational training courses pursued after the completion of secondary school certificate (SSC) or equivalent examinations. The entire interest paid on the loan is eligible for deduction for up to eight years or till the completion of repayment, whichever is earlier. You can avail of the tax relief if you have taken an education loan for yourself, your spouse or children. Unlike home loans, the principal component of the EMI will earn you no tax deductions.
A note on the tableInterest rate on education loans for all listed (BSE) public and private sector banks have been considered for data compilation. Banks for which data is not available on their websites have not been considered. Data collected from respective banks’ websites as on May 20, 2021. Banks are listed in ascending order on the basis of interest rates, that is, bank offering lowest interest rate on education loan (amount up to Rs 20 lakh) is placed at the top and highest at the bottom. Lowest rate offered by the banks on loan up to Rs 20 lakh is considered in the table. EMI is calculated on the basis of interest rate mentioned in the table for Rs 20-lakh Loan with tenure of seven years (processing and other charges are assumed to be zero for EMI calculation).