Education Loan

When it comes to all the building blocks that form a complete and successful life, nothing is as important as quality education. However, education in India, at least the commonly perceived ‘quality education’ as imparted by acclaimed and influential educational institutions, is decidedly costly and not easily available to everyone- especially those who deserve it based on merit alone. Thus, education loans are vitally important. A barebones explanation for an education loan is thus, ‘funds offered by financial institutions to meritorious and/or deserving students so that the latter can pursue their basic/higher education, in India or abroad’. Almost all banks in India offer education loans, and the demand for it has remained stable with the Indian student community.

Education Loans from Top Indian Banks

Why Choose Education Loan?

The question should ideally be, why choose an education loan over a personal loan, or the money accumulated in your savings account? The versatility and advantages of education loans are listed below-

• Education is Expensive-It's a matter of instant availability. A comprehensive education loan frees you from the task of accumulating sufficient money to fund your son/daughter’s higher education. And, with inflation and shifting prices, can you ever be 100% certain? A good education is expensive and the expenses aren’t changing in a predictable curve. A good education loan scales accordingly and helps you be safe from unexpected surprises.
• Specialised Help-The expenses incurred through a standard study course are many, caution deposits, library fees, building deposits, laboratory fees, etc. With a comprehensive education loan, individual facets of the course can be better addressed without the risk of running out of money. It’s more organized and seamless with an education loan.
• Widely and Easily Available- Comprehensive education loans are a priority product in most banks’ arsenal of products and the RBI lists them as part of the priority sector lending of banks. Conforming to some basic requirements and confirming your ability to repay the borrowed amount is all it takes to get on-board.
• Timely Assistance- Often, good intent isn’t backed by good monies. A good education loan offers timely help when it comes to a crucial pillar that promises a successful life- education. Nullifying the worry that accompanies the need to gather up the requisite amount, a full-fledged education loan puts you at ease.

Features & Benefits of Education Loans

When it comes to a complete education loan, the features and benefits offered are the designated deal makers. Commonly, the following conveniences are offered as part of the education loan-

• Universally available. Anyone with a will to study can apply.
• Education loans are provided to pursue all types of academic courses, in India and abroad. The courses include graduation, post-graduation, vocational courses and other certificate courses.
• Loan amounts can vary from a minimum of Rs.10 lakhs to a maximum of Rs.15 lakhs. For education abroad, banks will provide loans to the quantum of Rs.20 lakhs.
• The applicant’s annual family income and the course pursued are primary determinants for the applicable loan amount.
• Usually, female students are offered discounts and/or lower interest rates when it comes to education loans.
• Government sponsored subsidy schemes, such as ‘Central Scheme to provide Interest subsidy (CSIS)’ help students from the economically backward sections of society avail the benefits of a robust loan for education.
• The applicant need not repay the borrowed amount immediately. Post the completion of the course, the repayment tenure can stretch upto 5-7 years.
• Generally, loans below Rs.4 lakhs do not require a security or guarantor.

Banks, in their individual capacity, will offer a whole suit of exclusive features and benefits. Check the same before zeroing in on the one that best complies with your requirements.

Why Apply for an Education Loan on BankBazaar?

BankBazaar is a user friendly portal that is dedicated to the comparison of various banking products, including Education Loans. A helpful resource, BankBazaar allows visitors to better understand this loan, its pros and cons, as well as the various banks that offer them in India. Why BankBazaar? The reasons are as follows-

• 100% Hassle Free- Save on time and effort as you ditch legwork and fire up your computer to check out the best education loan options. The process is extremely simple, distraction free and incredibly quick.
• Compare Education Loans- BankBazaar lists almost all the education loans offered by the various banks and other financial institutions in India. The simple comparison option allows you to choose the loan that best suits your limitations and requirements. Plus, detailed information on every available loan option.
• Apply Online- Post the comparison, use the simplistic BankBazaar interface to apply online for your chosen education loan. Kindly note- Currently, you can only apply for Avanse Education Loan on BankBazaar. More options are expected to be available soon.
• Know it All- From important details such as education loan eligibility, documentation and the basic terms and conditions, to informational bytes that relate to the latest happenings across the education loan landscape in India, BankBazaar is a treasure trove of helpful information.
• Always With You- Have a query or concern? BankBazaar’s brand of superior customer support is always just a phone call, email or chat-box away.

How to Apply for an Education Loan on BankBazaar?

Applying for a suitable education loan (currently Avanse Education Loan is available) on BankBazaar is a very interactive and simple process. The following steps list this process clearly-

• On BankBazaar’s homepage, access the ‘Education Loan’ option from the top navigation bar.
• Spread before you, on the drop-down, are popular education loan options. You can directly choose any lender from this list.
• Do you notice the ‘Get Quote’ and ‘Explore’ buttons? These link to wizards that help you, a) find the most suitable education loan for you, and b) find more information about individual loan options.
• Your eligibility for the loan is determined by an interactive wizard that takes just about 3 minutes to complete. At the end, a selection of the most appropriate education loan options are listed before you. Clicking on any of these allows you to explore this option further.
• On a particular bank’s education loan page, the ‘Apply’ button is a prominent fixture. Click on the same to set the wheels in motion. Your information (as provided) will be forwarded to the bank in question and the representative from the latter will contact you in a short while.
• You can also track your loan application via SMS alerts and email notifications.

Top Banks Offering Education Loans in India

The following banks are listed at the top of their class when it comes to education loans in India-

• SBI Education Loan-India’s largest public sector bank is also a firm favourite when it comes to education loans. Offering upto Rs.10 lakhs for studies in India and Rs.30 lakhs for studies abroad, the SBI Education Loan is a full-fledged offering with customer friendly features and benefits. Some of the key highlights of the SBI Education Loan are as follows- friendly interest rates, coverage of a wide spectrum of educational courses in India and abroad, immensely student friendly terms and the backing of SBI’s legendary name and reliability.
• Axis Bank Education Loan- India’s third largest private sector bank is a strong contender when it comes to student friendly loans for education. The Axis Bank Education Loan is a full featured offering that is characterised by friendly interest rates, quick turnaround times, loan amounts of Rs.10 lakhs for studies in India and Rs.20 lakhs for studies abroad, a comprehensive listing of funded educational courses (in India and abroad) and Axis Bank’s famous brand of customer support and banking innovation.
• HDFC Education Loan- India’s fifth largest bank is a veteran when it comes to offering comprehensive and student friendly education loans and also commanding absolute devotion towards its loan schemes from students aspiring for higher education in India and abroad. Competitive interest rates, a whole range of student centric options and features, funding for an elaborate list of educational courses in India and overseas, alongside HDFC’s constant popularity and new-age banking methodologies, are some of the fundamental reasons why HDFC must be on your scanner when talking of good education loans.
• Avanse Education Loan-The first thing that hits you about education loan offerings from Avanse is the sheer number of options on offer. Loans for studies in India, abroad, executive education, pre-admission loans, pre-visa disbursement loans and fast track loans are popular offerings, while a number of student friendly terms and conditions make the aforementioned loans very popular. Avanse Education Loan is focussed on top notch customer service that is backed by an interactive and robust loan processing and disbursal system that will ably match the best on offer in India.

Education Loan Interest Rates

Many factors determine the attractiveness and acceptability of any standard loan product, a competitive interest rate being one of the more important factors in this regard. In India, education loans usually command an interest rate from anywhere “Between” 12.00 % to 16.00 %, depending on the bank’s base lending rate and other factors. The base lending rate for banks in India, as directed by India’s apex bank, the RBI, is around 9.00- 10.00%. Some private education loan lenders/ financial institutions offer interest rates that are based on their own base lending rates (often very dynamic) and calculation of interest rates are accomplished on a case-to-case basis.

How to calculate EMI interest rates for education Loans?

The generally tedious task of calculating Equated Monthly Installments (EMI) on your subscribed education loan is easily accomplished (minus the sweat) with the friendly Education Loan EMI Calculator on BankBazaar. This useful tool offers the following advantages,

• Saves Time- Calculate your applicable EMIs, for varying inputs, in mere seconds! Massive saving of time and patience.
• Know it All- Unearth all the information you need about your education loan, including applicable EMI amount, amortization details, etc.
• Find your Sweet Spot- Calculate EMI for different interest rates and applicable tenures. Find the combination that works the best for you.
• 100% Free- Using this handy tool is completely free of cost.

Education Loan Application Checklist:

Education Loan Eligibility

Listed herein are the basic requirements that qualify your application for an education loan,

• The applicant must be a resident Indian.
• He/she must have secured admission into a recognized course of study, in India or abroad, through an entrance test or other such qualification procedure.
• If the applicant is a Non-Resident Indian (NRI), he/she must hold a valid Indian Passport.
• Courses applicable in India- Graduation, Post-Graduation, Diploma programs, Technical courses, Management courses and other professional courses. All from recognized universities.
• Courses applicable Abroad- Graduation, Post-Graduation, Certificate Degree courses from CIMA- London, CPA-USA and other such well known educational entities.
• The applicant must provide a collateral/security that is enforceable in India.

Note- This above listing is a basic eligibility requirement. Banks, in their own capacity, may request for more documentation and proof.

Documentation Required When Applying for an Education Loan

When applying for the loan, the lender in question will ask for a number of documents that prove your eligibility in terms of your student status, family income, ID and address proof, course applied for, and other such factors. Listed herein is the basic list of required documents-

• Completed loan application form.
• Documents for proof of age (self-attested).
• ID and Address proof.
• Passport sized photographs of the applicant, guarantor, etc.
• Copies of highest educational qualification (degree/post-graduation, etc.)
• Proof of income (IT returns of parents/guarantor).
• Six months bank statement for account held by applicant/parent/guarantor.
• Details of collateral security marked by a Government approved valuer (if applicable).
• Passport/Visa copy, airfare cost as established in documents (for studies abroad).

As noted, banks in their individual capacity can request for additional documents. Submission of the same, in their required format, is crucial for the smooth sailing of your application form.

Educational Loan FAQs

1. What are the courses in India for which education loans are available?

   Any of the following courses, as offered by recognized universities, is eligible for an education loan in India-

• Professional courses including Engineering and Medicine
• Management courses (both full time and part time)
• ICWA, CA, CFA etc.
• Courses conducted by IIMs, IITs, IISc, XLRI. NIFT,NID etc.
• B.A/B.Com/M.A/M.Com/MCA/MCM etc.
• Architecture, Agriculture studies, Fine Arts and Designing etc.
• Hotel and Hospitality.
• Courses such as SAP , ERP , GNIIT , Air Hostess Training programmes etc.
• Distance learning programs and online certifications.
• Degree/Diploma courses like Aeronautical, pilot training, shipping, etc.,
• Aircraft Maintenance Engg, Pre-Sea Training courses and the like.
• Nursing and Para Medical courses (includes admission via management quota).
• Courses offered by reputed institutes that assure employment and are Govt. certified.
• Courses offered in India by reputed and certified foreign universities.
• All courses listed here- www.ugc.ac.in , www.education.nic.in and www.aicte-india.org
2. What is the age restrictions for subscribing to an education loan?

   Generally, there are no restrictions. Most banks and financial institutions do not impose this rule. However, certain lenders do mark an age limit spanning from 16-35 years.

3. Aside from the fee payable to the school/college, what other expenses are covered by the loan?
• Towards the purchase of books, uniforms, equipment and instruments.
• Purchase of computers/laptops, if deemed necessary for the completion of the course.
• Fees paid for Exams, Library, Laboratories, Hostel, etc.
• Building fund, Caution deposit, Refundable deposit (must be supported by receipts/bills).
• Costs incurred in travel, for studies abroad.
• Additional costs that are required to successfully complete the course, including but not limited to, Study tours, Thesis work, Projects, etc.
4. Does taking an education loan entitle me to any tax benefits?

   Not immediately. However, after you start repaying, you are free to deduct the loan interest amount from your total income when calculating tax.

5. How does the bank track my educational progress through the course period?

   The applicant is expected (and mandated) to submit his/her progress reports periodically. The progress reports could be mark sheets or a suitably attested letter from the applicant’s school/college.