Students pursuing higher education can avail benefits of the education loan to fund their fees or ease the burden of financial constraints. As per the Government of India," Section 80E of the Income Tax Act, 1961 provides for a deduction to an assessee (being an individual), out of his income chargeable to tax, on account of any amount paid by him in the previous year by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursing his higher education or for the purpose of higher education of his relative."
Ahead of the announcement of the Union Budget 2025, experts from the education sector share their insights on how the government is expected to simplify the tax benefits for education loans.
Poshak Agrawal, Co-founder, Athena Education notes, "Section 80E allows individuals to claim deductions on interest paid for loans taken for higher education, including studies abroad. To simplify the claiming process, the government may implement clearer guidelines, streamline documentation requirements, and enhance online platforms for filing claims. These changes aim to make it easier for families to access these important financial benefits."
Explaining the existing education loan system, Sumit Kumar, Chief Strategy Officer, TeamLease Degree Apprenticeship says, "Currently, Section 80E allows deductions on the interest paid for education loans for a maximum period of eight years, but this limit often falls short for families facing prolonged repayment periods or significant financial commitments. To address this, the government could consider extending the deduction period to 10 or 12 years, increasing the deduction cap, and including the principal amount under the ambit of deductions. "
"The last Budget provided financial support for loans up to Rs 10 lakh for higher education in domestic institutions, which is not even close for a high-quality Indian education," says Vinu Warrier, Managing Partner & Founder, eduVelocity. Further noting he adds, "The need of the hour in India is a nationwide financing scheme that includes grants, loans, low or zero-interest financing options, as well as work-study options across both the public and private sectors for students pursuing higher education."
