Section 80E allows a deduction for the entire interest paid on an education loan — no cap at all — for up to eight years. The two conditions people miss: it is available only under the old tax regime, and only the interest qualifies, never the principal.
| Section 80E deduction on interest | No upper limit |
|---|---|
| What it means | For up to 8 assessment years. Old tax regime only. Interest only, not principal. |
as of 2026-08-17 · Income Tax Act, Section 80E · verified
What to know
The eight-year window runs from the year repayment begins, and it does not restart. On a large overseas loan with a long moratorium, that means the clock is running through your highest-interest years — which is exactly when the deduction is worth most, provided you are on the old regime. Because the new regime is the default, run your own numbers through the old vs new regime calculator before assuming the deduction is worth claiming.
The deduction can be claimed by whoever is actually repaying the loan, whether that is the student or the parent, provided they are the borrower or co-borrower. For a family where the parent has higher taxable income and the student has little, that choice is worth making deliberately at the point of sanction rather than discovering it later. It is one of the few decisions on an education loan you cannot easily revisit, so weigh it alongside the education loan interest rates on offer and the shortlist of best education loans.
The deduction reduces taxable income, not tax, so what it saves depends on your slab. The income tax calculator will show the difference on your own figures. For a loan taken to study abroad, the eligibility conditions are set out on education loans for studying abroad.
Frequently asked questions
Is there a limit on the Section 80E deduction?
No monetary cap on the interest amount. The limit is temporal: up to eight assessment years starting from the year repayment begins, or until the interest is fully repaid, whichever is earlier.
Can I claim 80E under the new tax regime?
No. Section 80E is available only under the old regime. Since the new regime is the default, anyone relying on this deduction needs to actively check which regime they are on.
Who can claim the deduction — the student or the parent?
Whoever is actually repaying, provided they are the borrower or co-borrower on the loan. Where the parent has the higher taxable income, structuring the loan so they can claim is worth deciding at sanction.
Sources
- Income Tax Department, Government of India — Section 80E — deduction for interest on education loan (primary source)
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