Education Loan Accessibility for All Indians

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The ‘National Skill Development Mission’ as envisaged by Shri Narendra Modi highlights the importance of skilled manpower and the impact that youth can have on India’s future. This mission resonates with us – a group of early stage professionals planning to upskill ourselves by learning from global experts in the field of management. We aim to study at top global universities and move back to India immediately post our MBA(s) to invigorate existing enterprises or work on new ideas.

The high expenditure incurred when studying in some of the global programs deters us from returning immediately to our country. Our aspirations and future plans are under question due to the following reasons:

1.Education Financing – Indian financial institutions do not offer sufficient loans and low interest rates at terms similar to those of foreign lending institutions.

2.Tax Benefit(s) – Education loans taken from foreign financial institutions are not covered under Section 80E of the Income Tax Act.

We would like to make the following recommendations:

1)Educational Lending – Educational lending should be prioritized as they are matter of national importance. Loans should be offered at rates similar to agricultural or infrastructure funding.

a.Collateral Backed Loans – Indian Bank Rate (current 6.5%) + 75 basis points.
b.Non Collateral Backed Loans – Indian Bank Rate (current 6.5%) + 225 basis points.
c.Term – Up to 15 years.

2)Changes to Section 80E

a.Foreign loans to be covered under Section 80E.
b.Term length for claims to be increased from 8 to 15 years.

3)Additional Benefits – The following benefits may be offered to students moving back to India immediately after their education abroad:

a.Interest Forgiveness – Simple interest accumulated during the study period to be forgiven.
b.Additional IT Incentives Under Section 80C – Loan principal repayment up to 2 lakhs/annum to be tax exempted (beyond the initial limit of 1.5 lakhs/annum).

We recommend that the above points be valid for any education loan taken by Indian Citizens for any course at any institution globally. These changes would go a long way in upskilling both Indians and India.

Thank you for your time!