A student loan or education loan is one of the major supports for bright students falling into the middle-class segment of society. This idea of the government successfully implemented by the banks has made middle-class students strive to get a better education and thereby improve their job prospects. Now, they can think of getting enrolled in the educational institutions which were earlier considered for the high society students. However, if we go by the tax and investment experts, there are some facts and features involved in the student loan or home loan, which a loan applicant must know. The loan can be paid either by the student or by his or her relatives. In case of a student paying the student loan, the applicant can avail the moratorium period as the student won't be able to pay back the loan availed for education purposes during his or her studies. The interest paid while repaying the student loan is completely tax exempted and it has no limit.

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Speaking on the features of a student loan Kartik Jhaveri, Director — Wealth Management at Transcent Consultants said, "A student loan or an education loan can be availed by a student either for higher studies or for the professional courses like IIT, IIM, MCA etc. But, the institution chosen by the student has to be of good repute as it makes easy sanction of the student loan. It can be repaid either by the student himself or by his or her relatives." He also said that the interest paid while repaying the student loan or education loan is 100 per cent tax exempted under Section 80(E) of the Income Tax Act.

Elaborating upon the interest rate being levied by various banks on student loan or education loan Jitendra Solanki, a SEBI registered tax and investment expert said, "A student can avail student loan or education loan up to Rs 20 lakh, depending upon the requirement of the tuition fee that has to be paid by the student during his or her studies. Various banks levy different interest rates on it, which varies from 10 per cent to 12 per cent." 

Solanki said that a student loan applicant need not give any collateral if the loan amount is less than Rs 4 lakh. "In student loan or education loan, one needs to give collateral if the amount is big. Different banks have different rules for collateral. Government banks are giving collateral free student loans for up to Rs 7.5 lakh loan amount while in case of private banks or NBFC it goes down up to Rs 4 lakh." So, a student loan can be collateral-free if it is in between Rs 4 lakh to Rs 7.5 lakh. Thus, a student loan applicant must keep a check on it while applying for an education loan.