NEW DELHI, Mar 9: Not giving in to popular pressure, the Finance Ministry has decided not to open separate bank branches for providing education loans.
“There is proposal on the part of government to set up separate bank branches for providing education loans,” an official source said here.
At present member banks of the Indian Bank Association (IBA) provide education loans through their bank branches as per Model Educational Loan Scheme.
Student loans in India, commonly known as Education loans, have
become a popular method of funding higher education, with the cost
of educational degrees going higher.
The spread of self-financing institutions, which has less to no
funding from the government, for higher education in the fields of
engineering, medical and management and have higher fees than their government aided counterparts have encouraged the trend.
Most large public sector and private sector banks offer educational loans.
Banking sources say an important reason for the popularity of education loans is the Income Tax exemption available to those who avail of the loans.
Under Section 80(e) of the Indian income tax act, a person can exempt the amount paid against the interest of the education loan – either for self or for his or her spouse or children – for eight
years.
The exemption is available when the loanee starts to repay the loan or for the duration the loan is in effect, whichever is lesser.
(UNI)
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