Education loans don't just cover tuition fees and exam costs. They also help with other expenses related to your studies. Here are some things these loans usually cover:
- Money for buying books, uniforms, tools, and equipment needed for your course.
- If you need a computer or laptop for your studies, the loan can cover that too.
- Fees for things like exams, library access, lab use, and hostel accommodation.
- Other expenses like building fees, refundable deposits, or caution deposits (you'll need receipts for these).
- If you're studying abroad, the loan can help with travel costs.
- Any extra expenses needed to finish your course, like study tours, thesis work, or projects.
So, education loans cover a lot more than just tuition fees. They help make sure you have everything you need to succeed in your studies.
Courses covered under the Education Loan:
If you're getting an education loan from a bank or finance company in India, you can use it for a bunch of different courses within the country. This includes things like getting your bachelor's or master's degree, doing diploma programs, technical courses, management courses, or other professional courses. But if you want to study abroad, the loan can also help with that. You can use it for things like bachelor's or master's degrees, as well as certificate courses from well-known educational organizations like CIMA in London or CPA in the USA. So whether you're studying in India or abroad, there's likely a loan option to help you out.
Education loans in India support various courses offered by recognized universities. This includes:
- Professional courses like Engineering and Medicine.
- Management courses, whether full-time or part-time.
- Professional qualifications such as ICWA, CA, CFA, and others.
- Courses offered by prestigious institutions like IIMs, IITs, IISc, XLRI, NIFT, NID, etc.
- Basic degree programs like B.A, B.Com, M.A, M.Com, MCA, MCM, etc.
- Specialized fields like Architecture, Agriculture studies, Fine Arts, and Designing.
- Hotel and Hospitality courses.
- Specialized training programs like SAP, ERP, GNIIT, Air Hostess Training, etc.
- Distance learning programs and online certifications.
- Degree or Diploma courses in fields like Aeronautical studies, pilot training, shipping, etc.
- Courses like Aircraft Maintenance Engineering, Pre-Sea Training, and similar programs.
- Nursing and Para Medical courses, including those with admission via management quota.
- Courses offered by reputed institutes that ensure employment and hold government certification.
- Programs offered in India by renowned and certified foreign universities.
Education Loan: Features and Benefits
- Loan financing is available for amounts up to Rs. 1 crore.
- Loan repayment tenure can extend up to 15 years.
- Education loans are offered for studies both in India and abroad.
- Some lenders provide loan disbursals before applying for a Visa.
- Door-step service is available to collect required documents.
- Children of the bank's employees may benefit from preferential rates at several banks.
- Certain banks offer concessional interest rates to female students.
- A moratorium period of up to 1 year after course completion allows borrowers to postpone payments on the loan.
- Tax benefits on the interest paid are available for up to eight years.
Education Loan Interest Rates
The interest rates on education loans can vary between different banks. They depend on factors like how long you're taking the loan for, how much money you're borrowing, and what the current rates in the market are. If you're a girl student, you might get a discount of 0.5% on the interest rate compared to boys. Usually, the interest rate is a certain percentage above the base rate, typically between 1.5-2.5%, so it can start from as low as 11.25%. But in India, education loans usually have floating interest rates, which means they can change over time. These rates usually range from 12.00% to 16.00%, and you can pay back the loan over up to 10 years.
Top Banks Offering Education Loans in India
HDFC Bank Loan Amount/Interest Rates:
- Up to Rs. 4 lakhs: 12.00% p.a.
- Rs. 4 lakhs to Rs. 7.5 lakhs: 13.00% p.a.
- Above Rs. 7.5 lakhs: 12.50% p.a.
Max. Amount offered
- For studies in India: Up to Rs. 10 lakhs
Repayment Tenure: Up to 15 years
SBI Bank Education Loans
Loan Amount/ Interest Rates
- Up to Rs. 4 lakhs: 13.35% p.a.
- Rs. 4 lakhs to Rs. 7.5 lakhs: 13.60% p.a.
- Above Rs. 7.5 lakhs: 11.60% p.a.
Max. Amount offered
- For studies in India: Up to Rs. 10 lakhs
- For studies abroad: Up to Rs. 30 lakhs
Repayment Tenure: 5 to 7 years
Axis Bank Education Loans
Loan Amount/Interest Rates:
- Up to Rs. 4 lakhs: 16.95% p.a.
- Rs. 4 lakhs to Rs. 7.5 lakhs: 17.95% p.a.
- Above Rs. 7.5 lakhs: 15.95% p.a.
Max Amount Offered:
- For studies in India: Up to Rs. 10 lakhs
- For studies abroad: Up to Rs. 20 lakhs
Repayment Tenure: Up to 7 years
PNB Bank Education Loans
Loan Amount/Interest Rates:
- Loan amount: Rs. 4 lakhs to Rs. 10 lakhs
- Interest rates: Calculated on an individual basis
Max Amount Offered:
- For studies in India: Up to Rs. 10 lakhs
Repayment Tenure: Up to 15 years
Avanse Education Loan
Loan Amount/Interest Rates:
- Loan amount and interest rates are calculated individually based on the course being pursued and the accompanying cost.
Max Amount Offered:
- Minimum: Rs. 50,000
- Maximum: Based on the educational requirements and costs
Repayment Tenure: 1 to 10 years
Education Loan- Eligibility Criteria
The eligibility criteria for education loans can vary depending on the lender, but some basic requirements include:
- Being an Indian citizen, or if you're a Non-Resident Indian (NRI), holding a valid Indian Passport.
- Falling within the age range specified by the bank.
- Having a confirmed admission offer from a recognized college or institution (the bank usually maintains a list of eligible institutions).
- Applying for the loan with a co-applicant who has a steady source of income.
- Having a good academic record and a positive credit history for the co-borrower (usually a parent or guardian), which can speed up the loan approval process.
These are the general criteria, but it's important to check with the specific lender for their exact requirements.
Education Loan- Documents Required
To apply for an education loan, along with a completed application form and photographs, you'll need to provide the following documents:
- Confirmation letter of admission from the college or institution.
- A breakdown of fees, detailing tuition fees and other charges as provided by the college or institution.
- Identity and signature proof, such as Passport, Pan Card, Driving License, Voter ID Card, Adhaar Card, or Employee identity Card (for government employees).
- Age Proof, which could be Voter ID Card, Secondary School Certificate (class 10), Birth Certificate, Passport, or Aadhaar Card.
- Address Proof, which could be a Bank statement, Rent Agreement, Voter ID Card, Ration Card, Passport, Driving License, utility bills, Credit Card Bill, or Property Tax document.
- Copies of mark sheets from class 10th onwards up to your last qualifying exam.
- A declaration or affidavit confirming that you have not availed of any other loan for the same or another course.
- Income proof of the co-borrower or the applicant if employed.
- For salaried individuals: Latest salary slip with Form 16 or Salary account bank statement for the six months prior to the loan application.
- For self-employed individuals: Latest Income Tax Return (ITR), computation of income, Profit & Loss statement, and Balance Sheet certified by a Chartered Accountant, along with proof of business continuity.
- Proof of the highest professional degree acquired.
Make sure to have these documents in order when applying for an education loan.
Loan Guarantor
When taking out an education loan, a co-applicant is required. This co-applicant can be a parent, spouse, sibling, or in-law of the applicant. For loans up to Rs. 4 lakh, many banks don't require any guarantor or security. However, some banks may ask for security such as gold, shares, fixed deposits, LIC policies, real estate, or other investments. Additionally, some banks might request a third-party guarantee from someone who isn't a blood relative. This third-party guarantor could be an uncle, father's friend, or another relative.
The applicant and co-applicant are the first and second guaranteed persons, respectively. The third-party guarantee ensures that if the first or second guaranteed person is unable to pay, the third-party guarantor will bear the loan burden. This setup provides added security for the lender.
The following table applies for most educational or student loans offered by various banks and financial institutions.
| For loans up to 4 lakhs | Co-obligation of parents is required. |
| For loans above Rs.4 lakh and up to Rs7.5 lakh | Co-obligation of parents together with third party guarantee is required. |
| For loans above Rs.7.5 lakh | Co-obligation of parents together with tangible collateral security of suitable value. |
Calculate EMI Interest Rates for Education Loans
Are you finding it hard to figure out how much you'll have to pay each month for your education loan? Don't worry! You can easily calculate your monthly installment using the MybankingTips EMI calculator. It helps you see if you can afford to repay the loan after you take it. It's a quick and easy way to plan your finances and make sure you're comfortable with the loan payments.
When does the repayment start?
Usually, when you take out a loan, you start repaying it right away with monthly installments. But for education loans, it's different. To make it easier for students, repayment begins 6 months after they finish their course or start a job, whichever comes first. This time when you don't have to make payments is called the moratorium period. During this time, interest starts adding up on the loan amount, but you don't have to pay it back yet. The bank calculates this interest on a simple basis, and it keeps adding up until the moratorium period ends. Some banks might offer a lower interest rate if you agree to pay the interest during this period.
Education Loan FAQs
1. What courses are covered by an education loan?
An education loan covers all courses recognized by the University Grants Commission (UGC) within India. Additionally, most banks maintain a list of colleges and courses for which they provide loans to students seeking to pursue studies abroad.
2. How does the bank track my educational progress through the study course?
The applicant is required to submit progress reports periodically, which could be in the form of mark sheets or a suitably attested letter from their school or college.
3. Who is eligible for an education loan?
Any Indian citizen who is at least 18 years old, has a good academic record, and has received a confirmed admission letter from either an Indian or international institute is eligible to apply for an education loan.
4. Are there age restrictions for borrowing an education loan?
In general, most banks and financial institutions do not impose any restrictions on the age of education loan applicants. However, some lenders may have an age limit ranging from 16 to 35 years.
5. How is the education loan disbursed?
Education loans are provided to the applicant in the form of a draft payable directly to the educational institution. The draft amount is determined based on the fee structure provided by the institution.
6. What if one doesn’t get a job after completion of the course?
In special cases where a student is genuinely unable to find a job, lenders may allow for an extension of the repayment period. Typically, education loans have repayment periods of 5 to 7 years. However, according to the guidelines, the repayment period can be extended up to 10 years for loans up to Rs 7.5 lakh and up to 15 years for loans above that amount.