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

    If you are searching for an education loan, the interest rates for such loans range from 8.45% to 15.2% pa. and come with flexible tenures up to 15 years. The amount that you can borrow can be Rs. 1.5 crore or more depending on the banks policies. Education loans can also be used to gain tax benefits under Section 80 (E).

    Eligibility Criteria for Education Loans in India

    Mentioned below is the general eligibility criteria for education loans in India:

    Age
    • Undergraduate study loans: 18 years to 27 years
    • Post-graduate study loans: 21 years to 35 years
    • Doctoral course loans: 27 years to 55 years
    • Post-doctoral course loans: 27 years to 65 years
    Courses eligible
    • Undergraduate programs
    • Postgraduate programs
    • Doctoral courses and PhDs
    • Certificate courses with 6 months or longer duration
    • Job-oriented courses
    • Technical courses
    Institutes eligible
    • Recognized institutions and government colleges
    • Private institutes aided by government
    • International colleges and universities
    • Professional institutions

    Types of Education loans in India

    An education loan is designed to financially aid the applicant in affording the cost of education. Since, the it caters to customers going for higher studies, the loans can be classified based on two parameters:

    • Location of the institute (India or abroad): There are numerous banks in the country which offer loans specifically for students who aim study in India and for those who aim to study abroad. This distinction in the loan has been made keeping in mind the different financial needs that arises from studying in India or studying abroad.
      • Study abroad loans: Such loans are aimed at applicants who plan to study abroad. Generally, lenders have a list of institutions or specifications they support. The loan is approved if the applicant secured a seat in one of those institutes.
      • Domestic loans: Domestic loans are meant for applicants who wish to pursue higher education in India. Lenders have eligibility criteria for the Indian institutes as well. Similar to study abroad loans, domestic education loans are approved if the applicant secured admission in an institute that meets the requirement.
    • Course based loan: Many banks and NBFCs offer loans that are based on the type of course the applicant is going for. There are loans which are also made for studying in premier institution like IITs and IIMs. Similarly, customers may also find loans that specifically offers financial solutions for the course their planning to pursue. Some types of course based loans are:
      • Undergraduate loans: These loans offer financial support for pursuing undergraduate degree programs.
      • Graduate or professional loans: These loans are designed for applicants who want to pursue post-graduate studies or other professional courses.
      • Career loans: Such loans help applicants pursue career-oriented programs and certification courses.

    Importance of Education Loan

    Education costs are on a steady rise. In such a scenario, getting an education loan helps the applicant gain access to quality education at premier institutions whether in India or abroad. Apart from the tuition fees, education loans also help the applicant with the living costs and any other study related expenses.

    Mentioned below are a few important reasons why you should opt for an education loan:

    • Easily available: Most banks in India provide education loans as a priority product. Availing education loans is comparatively less complicated as you only have to establish your repayment capacity to get approval.
    • Specialised help: Education loans take care of the additional expenses that are associated with most courses like hostel fees, library fees, etc.
    • Prevents exhaustion of resources: By opting for an education loan, the applicant or his/her parents can keep their savings intact. Such loans prevent the exhaustion of one’s savings and helps them meet their financial needs comfortably.

    Features and Benefits of Education Loans

    • Easy access available to everyone
    • Helps finance course in India and Abroad
    • Customizable loan amounts
    • 100% finance options available
    • Applicant’s annual family income and course opted for determine the loan amount
    • Government sponsored subsidies available for minority students
    • Repayment period begins after the completion of the course

    Who Can Apply for Education Loans

    Mentioned below is the general eligibility criteria for education loans in India:

    • Must be a resident of India
    • Must have a secured admission into a recognized course in India or abroad
    • NRI applicants must have a valid Indian Passport
    • Applicant must provide collateral enforceable in India

    Securities Required to Apply for an Education Loan

    An education loan can be both secured and unsecured based on the bank or NBFC offering it. Usually lenders do not require collateral for smaller loan amounts. However, if the loan amount exceeds the limit specified by lenders, the applicant may have to provide security.

    Securities may vary based on the kind of loan, for instance some loans can be taken with collaterals like agricultural property, house, etc. Some loans can also be taken against funds, debentures, fixed deposits, etc

    Loan repayment- Cheques, pay online options

    The loan repayment period usually starts a year after completing the specified course. Different lenders provide different modes for the applicants to repay the loan, mentioned below are few repayment options:

    • Cheque: You can write a cheque addresses to the bank with the EMI amount before the monthly due date. Usually this method used for foreclosure of loans.
    • Online payments: Many banks have the online loan repayment facility on their mobile banking apps and net banking portals. You can log in to the online facility of the specific bank and make the payment.
    • Direct debit system: Under this method, you can set up a system of standing instructions with the bank. With this method, the bank can auto deduct the EMI amount from your account on a monthly basis till the loan is fully repaid.
    • Deduction against salary: With this method, the EMI amount can be directly deducted from the salary.
    • Demand draft: You can also choose to repay the loan amount using a demand draft.

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

    Tips to Make the Loan Application Process Easy

    Follow these steps mentioned below to make the loan application process a seamless process:

    • Confirm course/university you want to apply to
    • Compare the educational loans available in the market based on the loan amount, tenure, and interest rates.
    • Keep all the basic documents ready like address proof, age proof, nationality proof, etc.
    • Keep attested marks cards starting from 10th standard handy
    • Provide the Admission letter issued by the college/institute
    • Make sure to get entry permit, admission letter, Passport and Visa, if you are studying abroad

    Best Student loan offers 2019

    Mentioned below are some of the well-known education loan providers and what they are best for:

    Banks Best For
    State Bank of India Low interest rates
    Axis Bank Quick loan disbursal
    Punjab National Bank Low interest rates
    Avanse Education Loan No limit on loan amount
    1. State Bank of India Education Loan Offers
    2. SBI offers different education loans to meet the requirements of the applicants. The bank offers loans that helps students study in Indian institutes, to pursue education abroad, and even go for vocational courses.

      Key Highlights:

      • Attractive interest rates
      • No processing fee
      • 100% financing
      • Quick loan sanction
      Interest Rate Loan tenure Maximum loan amount
      8.45% to 10.70% p.a. 15 years Up to 1.5 crore
    3. Axis Bank Education Loan
    4. Axis Bank’s education loan helps applicants afford education in India as well as abroad. The bank offers a wholesome coverage for tuition as well as living expenses.

      Key Highlights:

      • Simple documentation process
      • Minimum loan Rs. 50,000
      • Quick loan disbursal
      • No margin on loans up to Rs.4 lakh
      Interest Rate Maximum loan amount Pre-payment charges
      13.7% to 15.2% p.a. Up to Rs.75 lakhs Nil
    5. Punjab National Bank Education Loan Offers
    6. Punjab National Bank offers numerous education loans designed for higher studies in India and abroad. The bank also offers loans for vocational training and concessional loans for people with disabilities.

      Key Highlights:

      • Concessional loans available
      • Low interest rates
      • No margin on loans up to Rs.4 lakhs
      Interest Rate Loan tenure Maximum loan amount
      8.95% to 12.45% Up to 15 years Based on course and repayment capacity
    7. Avanse Education Loan Offers

    Avanse Education Loans provide 100% coverage on all education related expenses. The lender does not enforce a margin on the loan amount and offers various plans to meet the requirements of the applicants.

    Key Highlights:

    • High loan amounts
    • No margin on loans
    • No prepayment charges
    Interest Rate Loan tenure Maximum loan amount
    10% to 16.65% Up to 10 years No limit

    Documents Required to Apply for an Education Loan

    The following documents and information must be provided when applying for a student loan:

    Documents For Study abroad loans For Domestic loans
    Proof of Identity and age
    • Voter ID
    • Aadhar card
    • Any government issued identity card
    Proof of Address
    • Voter ID
    • Aadhaar card
    • Utility bills etc.
    Income proof
    • IT returns of parents of guarantor
    • 6 months bank statement
    Education proof
    • Marks card starting from 10th standard
    Other documents
    • Completed loan application form
    • Passport size photo of applicant
    • Passport, Visa copy (for studies aborad)
    • Completed loan application form
    • Passport size photo of applicant

    FAQs

    1. What is the age limit for education loan?
    2. Generally, the age limit for getting an education loan is 30 years.

    3. What do the lenders consider to approve the loan?
    4. 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
    5. What are the courses eligible for education loan?
    6. 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
    7. When does the loan repayment period begin?
    8. The repayment period begins after you complete the course. The tenure may vary from one lender to another.

    9. What happens if I discontinue the course and get an employment within the grace period?
    10. In case you choose to discontinue the course mid-way, you must start repaying the loan immediately after getting a job.

    11. Can I avail tax benefit on education loan?
    12. Yes, education loans are eligible for tax benefits. You can avail deductions under sections 80C and 80E of the Income Tax Act of 1961.

    13. Can I port my education loan to another bank with lower interest rates?
    14. 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.

    15. What should I do if my loan application is rejected?
    16. 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.

    17. Do all education loans cover 100% of the education expenses?
    18. 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.

    19. What are the other expenses covered by education loans?
    20. 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

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