Make college memories that last a lot longer than your student loan payments.

Education Loan

Education loan is offered by leading banks in India to help students achieve their academic dreams. Education loan Interest rates start from 7.30% p.a. with loan tenures of up to 15 years. Education loans are offered for higher education in both India and abroad.

What courses are eligible for an education loan will be decided by the lender. You can get an education loan for studies starting from Nursery. For higher studies, you can get a loan for full-time as well as part-time courses, and loans for working professionals.

Compare Top Education Loan Offers 2020

Education Loan Schemes Interest Rate Loan Amount Processing Fees
PNB 7.30% onwards Up to 15 Lakhs 1% of loan amount
SBI 7.97% p.a. - 10.05% p.a Above Rs. 20 Lakh Rs.10,000 + tax
Axis 13.70% to 15.20% Up to 7.5 Lakh Nil to Rs.15,000 + tax
Bank of Baroda 8.25% to 10%* Up to 4 Lakh and above 1% of loan amount up to Rs.10,000
HDFC For preferential rates contact HDFC Max Apr Up to 1.5% of loan amount + tax
Tata Capital 10.99% onwards Up to 30 Lakh Up to 2.75% of loan amount + tax

Depending on the bank or financial institution, you could get a fixed interest rate package or a floating interest rate one. Floating rates are most likely based on the Repo Rate, and a spread may be added to it before offering you the final effective interest rate (EIR).

Types of Taxes
Education Loan
  1. Punjab National Bank Education Loan
    • Maximum Loan Amount: Need Based
    • Maximum Loan Tenure: 15 Years
    • Collateral: Nill Up to Rs.7.5 lakh
    • Margin: Nill Up to Rs.4 lakh
    • Offers loans to Indian residents and OCIs/PIOs/students born abroad to Indian parents and want to pursue studies in India.
    • Security will be 125% of loan amount.
    • Moratorium period of 6 months to 1 year after course completion.
  2. SBI Education Loan
    • Loan amount up to Rs.20 lakh with concessional rates for female students.
    • Max Loan Tenure: 15 Years
    • Collateral: Nil upto Rs. 7.5 lakh
    • Margin: Nill Up to Rs.4 lakh
    • Moratorium period of 12 months after course completion.
    • Second loan can be availed for completing higher studies.
  3. Axis Bank Education Loan
    • Maximum Loan Amount Rs. 1 Core
    • Maximum Loan Tenure: 15 years
    • Margin: Nill Up to Rs.4 lakh
    • Can secure loan before admission based on profile.
    • Loan disbursal within 15 business days from the date the bank receives your complete application.
    • Unsecured loans up to Rs.20 lakh for working professionals.
  4. Bank of Baroda Education Loan
    • Maximum Loan Amount: Rs. 80 Lakh
    • Maximum Loan Tenure: 10 –15 Years
    • Collateral: 100% Tangible Security
    • Margin: Nill Up to Rs.4 lakh
    • Education loan available for education from nursery onwards.
    • Get a free debit card on select education loan schemes.
    • Concessional interest rates for female students.
  5. HDFC Bank Education Loan
    • Maximum Loan Amount: India: Rs.20 lakh Abroad: Rs.35 lakh without collateral; no limit with collateral
    • Maximum Loan Tenure: 15 Years
    • Collateral: Nill Up to Rs.7.5 lakh
    • Preferential rates offered for admission to top ranking colleges and universities.
    • Education loan abroad covers more than 950 courses in 36 countries.
    • Co-borrower can be from a different city.
  6. Tata Capital Education Loan
    • Maximum loan amount of Rs.30 Lakh
    • Maximum Loan Tenure: 6 years
    • Collateral: Nill Up to Rs.4 lakh
    • Choose from 3 EMI plans as per your convenience.
    • Minimal documentation and quick approval of loans.

Education Loan Eligibility

Nationality:
  • Indian citizens
  • Non-Indian Residents (NRIs)
  • Overseas Citizens of India (OCI)
  • Persons of Indian Origin (PIOs)
  • Students born to Indian parents abroad and wish to study in India
Courses:
  • Undergraduate programs
  • Postgraduate programs
  • Doctoral courses and PhDs
  • Certificate courses with 6 months or longer duration
  • Job-oriented courses
  • Technical/diploma/professional courses
Institutes:
  • Recognized institutions and government colleges
  • Private institutes aided by government
  • Professional institutions
  • International colleges and universities
Collateral:
  • Collateral-free loans up to Rs.7.5 lakh from leading lenders
  • Collateral-free loans up to Rs.40 lakh for select courses/institutions from select lenders

Acceptable collateral: Residential or commercial property or plot, fixed deposits, insurance

Loan amount: Up to Rs.1 crore

Education Loan EMI Calculator

If you wish to know your monthly payments upon applying for an education loan or what the total cost of the loan will be, you can use the Education Loan EMI Calculator. By entering a few loan-related details such as the loan amount, tenure, interest rate, and processing fees, you will get an estimate of your equated monthly instalment (EMI). You will also get other crucial details such as the total interest payable and a detailed amortisation table breaking down your EMIs into principal and interest amounts on a monthly and yearly basis.

Most lenders allow you to make part prepayments on your loan every year. If you wish to make such payments, you can enter the details in the calculator and the result will tell you how much you will save on interest payments and by how many years your tenure will reduce.

List of Courses that are Covered under an Education loan

  • Nursery to class 12.
  • Graduation and Post-Graduation courses (technical/professional/diploma) conducted by approved universities or colleges under UGC/IMC/AICTE/government.
  • Regular degree/diploma courses administered by autonomous institutions such as IIM/IIT, etc.
  • Regular degree or diploma courses such as pilot training, aeronautical, shipping, and more approved by the Director General of Civil Aviation/Shipping/other regulatory authority.
  • Job oriented courses (professional/technical) for Graduation/Post Graduation/Diploma such as MBA/MCA/MS offered by reputed educational institutions, courses conducted by the Chartered Institute of Management Accountants (CIMA) – London or Certified Public Accountant (CPA) – USA.
  • Loans for skill development.
Abroad
  • Job oriented courses (professional/technical) for Graduation/Post Graduation/Diploma such as MBA/MCA/MS, etc. offered by reputable institutions.
  • Courses conducted by CIMA and CPA.

List of Expenses Covered in Education Loan

Here’s what the loan amount will cover:

  • Tuition fees
  • Hostel fees
  • Travel expenses passage money for students studying abroad
  • Insurance premium
  • Cost of books/equipment/instruments/uniform
  • Examination/laboratory/library fees
  • Cost of a computer/laptop required for course completion
  • Caution deposit, building fund/refundable deposit supported by institution bills/receipts
  • Any other expense required to complete the course such as study tours/thesis/project work

Features & Benefits of Study Loan

  • Loan financing up to Rs.1 crore available.
  • Loan repayment tenure up to 15 years.
  • Get Education loans for studies in India and abroad.
  • Some lenders offer loan disbursal before applying for a Visa.
  • Door-step service to collect required documents.
  • Children of the bank’s employees enjoy preferential rates at several banks.
  • Certain banks offer concessional interest rates to female students.
  • Enjoy a moratorium period of up to 1 year after course completion. During this period, you do not have to make payments on the loan.
  • Enjoy tax benefits up to 8 years on the interest paid.

Tax Benefits on Education Loan

You will get tax deduction on the interest paid on your education loan under Section 80E of the Income Tax Act, 1961. This benefit is only offered to individual borrowers and for the purpose of higher education. The deduction covers all fields of study in India and overseas. It also includes vocational as well as regular courses.

Please note that the tax deduction is only applicable on the interest portion of the EMI and not the principal. However, there is no maximum limit to claim this benefit. You will require a certificate from your bank or financial institution segregating the principle and interest portions of your EMIs to claim this benefit.

You can claim this benefit for 8 years from the year you started repayment or until the interest portion of your loan has been repaid, whichever occurs first.

List of Documents Required for Education Loan

Here is an indicative list of documents that most lenders ask:

  • Admission letter from the educational institution
  • Marksheets (previous education – school/college)
  • Age proof
  • ID proof
  • Address proof
  • Signature proof
  • Salary slips
  • Recent bank account statements
  • ITR with income computation
  • Audited balance sheet
  • Recent bank statements
  • Proof of turnover (service tax return/sales receipt)
  • Completed application form with signature
  • Latest passport size photographs
  • Appropriate Visa for studies abroad

*Document charges may be levied by the lender.

How to Apply Education Loan

There are several ways of applying for a student loan:

Apply Online:
  • This is the easiest and the most convenient way of applying. There are two ways of applying online. The first is a straightforward application form that you will fill online, attach the necessary documents, and submit the form.
  • The second is where you apply through providing all the requested details and the lender will then get in touch with you to discuss the terms of the loan before proceeding with the application.
Offline
  • Visit a Branch: You can apply for a loan by visiting your nearest branch with the necessary documents, discuss the terms of the loan with a representative, fill the form, and apply in person.
  • Call the Lender: You can either call the lender or request a call back by expressing your interest. You can then discuss the loan terms and proceed to apply.
Virtual Assistant
  • Banks and other financial institutions are now adopting digital methods to better serve their customers. One such method is using a Virtual Assistant to clear your doubts and request assistance with the application procedure.

Study Loan Repayment System

The loan repayment period usually starts 6-12 months after completing your course or when you get a job, whichever occurs first. Different lenders provide different moratorium periods to applicants to repay the loan. You will have to repay your loan through EMIs.

Here are the different modes of repayments usually available:

  • Internet Banking - Pay online through the lender’s website or mobile app.
  • Cheque – Drop a cheque at any of the branches.
  • Direct debit – Set up recurring payments for your EMI to be directly debited from your bank account on the payment due date.
  • Demand Draft – Pay through a DD.

The preferred method of repayment varies between lenders. Therefore, it is advisable to check with your lender when taking the loan.

If money is the only obstacle in your way from achieving your professional goals, then consider taking an education or student loan to fulfil your goals. You can get collateral-free goals wherein you need not provide any security to the lender and your repayments will not start immediately after graduation.

FAQ’s

  1. What is the age limit for education loan?

    Generally, the age limit for getting an education loan is 30 years.

  2. What do the lenders consider to approve the loan?

    Lenders consider the following factors when approving a loan:

    • The course and institute you choose
    • The amount you need
    • Your academic performance
    • Repayment capacity of your family
    • Family assets
    • Annual income
  3. What are the courses eligible for education loan?

    Some of the courses eligible for education loan are mentioned below:

    • School education
    • Graduation courses
    • Post-graduation courses
    • Professional courses
    • Diploma/degree courses conducted by recognised institutions
  4. When does the loan repayment period begin?

    The repayment period begins after you complete the course. The tenure may vary from one lender to another.

  5. What happens if I discontinue the course and get an employment within the grace period?

    In case you choose to discontinue the course mid-way, you must start repaying the loan immediately after getting a job.

  6. Can I avail tax benefit on education loan?

    Yes, education loans are eligible for tax benefits. You can avail deductions under sections 80C and 80E of the Income Tax Act of 1961.

  7. Can I port my education loan to another bank with lower interest rates?

    Yes, you can move your education loan from one bank to another. However, your current bank might charge a refinance fees. Therefore, it is important to consider all factors of the existing bank and the new bank before moving the loan.

  8. What should I do if my loan application is rejected?

    While rejecting a loan application, banks usually provide a reason why it has been rejected. You can rectify the error and re-apply. However, if the bank did not provide any valid reason for the rejection, you can file RTI petition.

  9. Do all education loans cover 100% of the education expenses?

    Yes, education loans cover 100% of the education expenses. However, full coverage may only be provided for expenses under a certain limit. Lenders have a margin if the expenses go above the limit.

  10. What are the other expenses covered by education loans?

    Some of the additional expenses covered by education loans are:

    • Hostel fees
    • Exam fees, laboratory and library fees
    • Cost of books, uniforms, projects, etc.
    • Travel expenses for overseas education
    • Deposits required by the educational institute

NEWS

  • Various banks may offer education loans for studying from home

    Many state-owned banks are working on offering new loan products which aim to fund students for their education online. Various banks have begun preliminary discussions where they could tweak their existing education loans for the online classes which are held by colleges and universities. Apart from this, it could also cater to those courses done through various educational platforms from home.

    According to various reports, the internal discussions have begun and discussions with the stakeholders will follow. However, there will be much more clarity after the education institutions chalk out their fee structure for the courses which will be available online. There are already a few banks which have partnered with online education portals.

    Deputy General Manager of Indian Bank, M Aruna, stated that the institutions will be thinking about the process of application for students if they apply for online courses. With the shift to digital platforms, education loans will have to be framed in such a way. The fee for online courses will be must lesser than the fee which would have been charged for education on-campus.

    16 July 2020

  • Chandigarh University launches its Financial Aid Scheme for Students

    The Chandigarh University is now offering the Financial Aid Scheme to its students and this is worth Rs.48 crore. It has been launched to help the deserving and meritorious students from any part of the country so that they will be able to fulfill their dreams and reach their goals. This scheme had been launched by the University Chancellor, Satnam Singh Sandhu. While they had launched this scheme, Satnam Singh Sandhu had said that getting access to good quality education is a right for every student in the country and their financial constraints should not be allowed to stop them from getting education.

    This is the first of its kind in India and the Financial Aid Scheme launched by Chandigarh University is set to be offered on merit and also first-come-first-serve basis and this will be applicable to the 109 Under-Graduate and Post-Graduate programs.

    29 June 2020

  • Renewal of Educational Loans awaited by minority community students in Karnataka

    Minority community students in Karnataka who have taken admissions for professional courses are awaiting a decision on the renewal of education loans from the Karnataka Minorities Development Corporation.

    Two instalments of the margin amount have been paid for the education loan under the Arivu Scheme. Updates are also being awaited regarding the release of fees from the second year onwards. Around 300 students from the Udupi districts and 2,000 students from Dakshina Karnataka are waiting for the fees for the academic year 2019-2020. As per the scheme, students who belong to religious minority groups can avail loans ranging between Rs.10,000 and Rs.75,000 to pursue B.Ed, nursing, master’s degree, and professional courses. The student must pay margin money, which is a 2% service charge and 10% of the loan amount, in order to avail the loan. The margin money must be paid in instalments over the duration of the course. In the case of an engineering course, the margin money comes up to Rs.6,000.

    26 June 2020

  • Haryana Government set to bear three months interest on Education Loans

    The Haryana government will now bear three months interest on education loans which had been taken by many students in this. Chief Minister M L Khattar had said that the government would pay the interest of three months of students who will complete their education by this year and those who have finished their education during the previous year, but they have not been able to begin their business and jobs because of the Coronavirus. Around 36,000 students will benefit from this.

    The burden on the ex-chequer will be around Rs.40 crore. The government will be bearing 2% of the interest on loans of up to Rs.50,000 under the ‘Shishu Yojana’ of the Centre’s Mudra Loan Scheme.

    10 June 2020

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