Last updated 12 Nov 2026
Interest on a loan taken for higher education may qualify for an income tax deduction, claimed by the person who repays the loan. In the earlier Income-tax Act this was known as section 80E, which is why people still search for it by that name. The Income-tax Act, 2025 renumbered the sections, so this guide describes the relief in general terms and tells you what to confirm. It covers who may claim, for whom, which loans count, how long the claim lasts, and which papers to ask your lender for.
It is general information, not tax advice. Check each point with the Income Tax Department or a tax adviser before you rely on it. Read it with the main education loan guide.
The idea in one paragraph
In general terms, the interest you pay on an education loan can be deducted from your total income for a limited number of years starting from the year you begin to repay. There is generally no upper limit on the amount of interest, but the principal does not qualify, and the benefit depends on the tax regime you choose. Many of these points have changed or been reworded over the years, so confirm the current terms.
What to confirm before you rely on it
Checklist
| Question | What to check |
|---|---|
| Is the loan eligible? | The loan generally must be taken for higher education from a bank, a notified financial institution or an approved charitable institution. A loan from a relative or friend generally does not qualify |
| What counts as higher education? | Usually courses after secondary school; ask your adviser whether your course counts, including studies abroad |
| Who can claim? | The person who is liable to repay and pays the interest from their own income, generally an individual, not a company |
| For whom was the loan taken? | Generally for your own studies, or for a spouse, children or a person you are legal guardian of; check the current wording |
| Which tax regime? | The deduction generally sits with the older regime; the default regime generally does not allow it. Compare both |
| For how many years? | A limited period from the year repayment begins; check the current period |
| Is there a limit? | The earlier rule had no cap on interest; do not assume. Check |
Who usually claims: student or parent
The claim belongs to the person who repays the loan. For most education loans, the student is the borrower and a parent is the co-applicant. If the parent pays the EMIs from their own income, the parent may be the one who can claim. If the student starts to earn and pays the EMIs, the student may claim on their own return. A student who has no taxable income gets no benefit. Plan who will repay, because it decides who benefits. Read Co-applicant vs guarantor.
Common situations
| Situation | Who may be able to claim | What to keep |
|---|---|---|
| Parent is co-borrower and pays EMIs from salary | The parent, for a child's education | Loan statements, interest certificate, proof of relationship |
| Student earns and pays EMIs | The student | Bank statements showing payment from the student's own account |
| EMIs paid by both | Each for what they pay, subject to the rules | Proof of who paid which instalment |
| Spouse studying | The earning spouse, if the rules allow | Marriage proof, interest certificate |
| Loan from a relative | Generally not eligible | Not applicable |
The moratorium and the first year of claim
During the moratorium you usually pay no EMI, but interest builds up. The claim is for interest actually paid, and the period of claim generally starts from the year you begin to repay. If you pay interest during the course, ask your adviser whether and when that can be claimed. If unpaid interest is added to the principal at the end of the moratorium, the rules may treat later payments in a particular way. Ask for the lender's statement to show how interest and principal are split.
A worked example of the steps (no tax figures)
A salaried parent in Nagpur is the co-borrower on a loan for a child's engineering course. Repayment begins the year after the course ends. The parent keeps three things from the first year: the lender's certificate of interest paid, the loan statement and bank records showing EMIs paid from the parent's own account. The parent compares total tax under the older and default regimes before telling the employer which one to use. They then ask the adviser how many years the claim runs for in the current law. Nothing here quotes a figure.
Papers to ask your lender for
Documents
| Document | Why it is needed |
|---|---|
| Annual interest certificate | Shows the interest paid in the year; the main proof for the claim |
| Loan statement | Shows principal and interest split, with dates |
| Sanction letter | Shows the purpose and the lender |
| Proof of the education course | Admission letter and fee receipts |
| Bank statements | Show who paid the EMIs |
Many lenders issue a certificate each year after the financial year ends. If yours does not, request it in writing. Check that it separates interest from principal, because only interest generally qualifies.
Education loans and the new tax regime
The default tax regime generally gives lower rates and fewer deductions. If you choose it, the education loan interest deduction generally does not apply. If most of your other deductions are small, the lower rates may leave you better off even without this deduction. If you pay large interest on an education loan, the older regime may suit you better. You need to work out both. A tax adviser or the calculators on the Income Tax Department website can help.
Common mistakes
- Assuming a student can claim when the parent pays.
- Claiming on principal repayment, which generally does not qualify.
- Claiming interest on a loan from a relative.
- Missing the interest certificate, or not asking for it.
- Choosing a regime without comparing tax under both.
- Using an old article that quotes limits from the earlier Act.
LOANZ 360 is a loan aggregator, not a lender, and does not give tax advice. For the cost of the loan itself, see Key Fact Statement and APR and for ways to reduce the amount borrowed, see Education loan subsidies, schemes and scholarships.
Frequently asked questions
Is there a tax benefit on an education loan?
Interest on a loan for higher education may qualify for a deduction, claimed by the person who repays it, under conditions. It depends on the regime and the current rules, so confirm with the Income Tax Department or an adviser.
Is section 80E still the right name?
Under the earlier Act the deduction was in section 80E. The Income-tax Act, 2025 renumbered the sections, so the number differs now. Search the current Act or ask an adviser for the new reference.
Does the principal qualify?
Generally only the interest qualifies. The principal repaid does not, according to the earlier rule. Confirm in the current law.
Can a parent claim for a child's loan?
If the parent is liable to repay and pays the interest from their income, the parent may be able to claim for a child's education. Keep proof of who paid.
Does an education loan from a friend or relative qualify?
Generally no. The loan has to come from a bank, a notified financial institution or an approved charitable institution.
Do I get the deduction if I choose the default tax regime?
Generally not. Compare your tax under both regimes before you choose.
Related reading: Education loan guide for Indian students, Education loan subsidies, schemes and scholarships, Home loan and tax, Co-applicant vs guarantor, Loan documents and KYC, Domestic education loan, Study abroad education loan, Moratorium, Interest rates, EMI calculator.
See Domestic Education Loan Ask an advisor about it