Education Loan: 5 Costs You Must Plan Before Borrowing

Higher education costs in India have shot up fast. Before taking an education loan, you need to understand interest rates, repayment rules, moratorium traps, and hidden costs — so your degree doesn't become a debt burden.

Here's what happened: The cost of professional degrees — engineering, medicine, MBA — has risen sharply, with top private colleges charging ₹15–50 lakh for a full programme.. Public sector banks offer education loans from 8–11% per annum, while private lenders and NBFCs can charge 12–16%, significantly impacting total repayment.. Section 80E of the Income Tax Act allows full deduction on education loan interest for up to 8 years, but only for the student or a parent who is the borrower..

What you should do: Compare at least 3 lenders — check whether moratorium interest is simple or compounded, as compounding can silently add ₹3–6 lakh to a ₹15 lakh loan.. Apply for your loan 2–3 months before the admission deadline — collateral verification for loans above ₹7.5 lakh takes time and delays can cost you your seat.. Claim Section 80E deduction on your ITR every year from the first year of repayment — there is no upper limit on the deduction amount, unlike Section 80C..

If you start paying interest during the moratorium period itself — even small amounts — you reduce the principal that gets capitalised, saving significant money over the full loan tenure.

If this affects your borrowing choices, compare current personal loan options from 100+ lenders on GoCredit.