Make college memories that last a lot longer than your student loan payments.
Education loan is offered by leading banks in India to help students achieve their academic dreams. Education loan Interest rates start from 8.05% 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.
Here is a general list of courses that are covered under an education loan:
| Nationality |
|
| Courses eligible |
|
| Institutes eligible |
|
| Collateral |
|
| Loan amount | Up to Rs.1 crore |
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).
| Bank | Interest Rate (p.a.) |
|---|---|
| SBI |
|
| Axis Bank | 13.70% to 15.20% |
| Bank of Baroda | 8.25% to 10%* |
| HDFC Bank | For preferential rates contact HDFC |
| Punjab National Bank (PNB) | 8.05% to 9.95% |
| Tata Capital | 10.99% onwards |
*0.50% concession for female students
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.
Here’s what the loan amount will cover:
Here are the top lenders offering student loans:
Key Highlights:
| Maximum Loan amount | Maximum Loan Tenure | Collateral | Margin |
|---|---|---|---|
| India: Rs.10 lakh Abroad: Rs.20 lakh | 15 years | Up to Rs.7.5 lakh: Nil Above Rs.7.5 lakh: Yes | Up to Rs.4 lakh: Nil Above Rs.4 lakh: 5% for India; 15% for abroad |
Key Highlights:
| Maximum Loan amount | Maximum Loan Tenure | Collateral | Margin |
|---|---|---|---|
| Rs.1 crore (overseas education) | 15 years | Yes (based on the case) | Up to Rs.4 lakh: Nil Above Rs.4 lakh: 5% for India; 15% for abroad; No margin up to Rs.20 lakh (special overseas cases) |
Key Highlights:
| Maximum Loan amount | Maximum Loan Tenure | Collateral | Margin |
|---|---|---|---|
| Rs.80 lakh | 10-15 years (based on scheme) | 100% tangible security | Up to Rs.4 lakh: Nil Above Rs.4 lakh: 5% - 10% |
Key Highlights:
| Maximum Loan amount | Maximum Loan Tenure | Collateral | Margin |
|---|---|---|---|
| India: Rs.20 lakh Abroad: Rs.35 lakh without collateral; no limit with collateral | 15 years | Up to Rs.7.5 lakh: Nil Above Rs.7.5 lakh (India): Yes Above Rs.35 lakh (Abroad) - Yes | Contact HDFC |
Key Highlights:
| Maximum Loan amount | Maximum Loan Tenure | Collateral | Margin |
|---|---|---|---|
| Need based | 15 years | Up to Rs.7.5 lakh: Nil Above Rs.7.5 lakh: Yes | Up to Rs.4 lakh: Nil Above Rs.4 lakh: 5% - 15% Some loans carry flat margin of 20% |
Key Highlights:
| Maximum Loan amount | Maximum Loan Tenure | Collateral | Margin |
|---|---|---|---|
| India: Rs.25 lakh Abroad: Rs.30 lakh | 6 years | Up to Rs.4 lakh: Nil Above Rs.4 lakh: Yes | Contact the lender |
Find below the most common fees that lenders charge on their education loans:
| Bank | Processing Fees | Penal Interest Rate | Pre-Payment Charge |
|---|---|---|---|
| SBI | Loan amount up to Rs.20 lakh: Nil Loan amount above Rs.20 lakh: Rs.10,000 + tax | 2% on loan amounts exceeding Rs.4 lakh | - |
| Axis Bank | Nil to Rs.15,000 + tax | 2% per month on overdue amount | Nil |
| Bank of Baroda | India: Nil Abroad: 1% of loan amount up to Rs.10,000 | 2% on loan amounts exceeding Rs.4 lakh | - |
| HDFC Bank | India: 1% of loan amount (min. Rs.1,000) Abroad: Up to 1.5% of loan amount + tax | 2% per month + tax | India: Up to 4% of prepaid amount if loan closed during moratorium period; otherwise Nil Abroad: Nil |
| Punjab National Bank (PNB) | India: Nil Abroad: % of loan amount (min. Rs.10,000) | Nil | |
| Tata Capital | Up to 2.75% of loan amount + tax | 3% of overdue amount + tax | 4.5% of outstanding principal +GST + part pre-payment amount |
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 BankBazaar 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.
Here is an indicative list of documents that most lenders ask:
| Academic |
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| KYC |
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| Income documents (Salaried) |
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| Income documents (Self-Employed) |
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| General Documents |
|
*Document charges may be levied by the lender.
There are several ways of applying for a student loan:
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.
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.
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.
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.
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:
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.
Generally, the age limit for getting an education loan is 30 years.
Lenders consider the following factors when approving a loan:
Some of the courses eligible for education loan are mentioned below:
The repayment period begins after you complete the course. The tenure may vary from one lender to another.
In case you choose to discontinue the course mid-way, you must start repaying the loan immediately after getting a job.
Yes, education loans are eligible for tax benefits. You can avail deductions under sections 80C and 80E of the Income Tax Act of 1961.
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.
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.
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.
Some of the additional expenses covered by education loans are:
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