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  • Higher Education Loan

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  • What is Higher Education Loan?

    A higher education loan is the amount you borrow from a bank to finance you or your children’s educational expenses. Banks normally charge affordable rates of interest for higher education loans. Also, these loans do not require any collateral up to a particular amount. Higher education loan is normally provided to aspiring and deserving students and professionals who need funds to finance their education. Any deserving students or professionals can apply for higher education loan to pursue professional and technical education in India and across the world. Before applying for a higher education loan, an individual needs to first enroll himself/herself in career oriented courses like medicine, management and engineering at graduate or postgraduate level.

    In the USA, a higher education law was formed on November 8, 1965 in the USA to strengthen the educational resources in the colleges and universities of the USA and provide financial support to post-secondary students. As per the law, low interest loans are provided to deserving applicants to fund their education. Similarly, the government of India has also launched a scheme to offer complete interest subsidy educational loans for students during the period of a course and more 1 year or 6 months after getting a job. Such higher education loans can be availed by economically weaker sections of our society for pursuing any approved courses in technical and professional domains from recognized institutions in India. In India, you can apply for higher education loans under the educational loan schemes offered by the Indian Banks’ Association (IBA) which is a representative body of the Indian banking system. The IBA primarily works for development, coordination and strengthening of the Indian banking system by assisting the Indian banks in multiple ways.

    Given that higher education has become a very costly affair, you need do prior financial planning to fund your education. Rising education fee and expensive hostel accommodation demand a lot of cash on your part. So, in order to get a customized solution to all your educational expenses, it is advisable that you opt for a higher education loan and complete your studies without facing any financial difficulty. Certain banking institutions provide education loans for non – AICTE approved courses as well. With a higher education loan, you can cover 100% of your course fee as well as other education related expenses. You can take higher education loans from any financial institutions or government approved charitable institutions.

    Higher Education Loan Eligibility:

    You need to fulfill the below mentioned eligibility conditions to be qualified for a higher education loan in India:

    • First of all, you need to be an Indian resident.
    • Your age needs to be between 16 to 35 years. However, the maximum age limit may differ from bank to bank. For example, ICICI Bank offers higher education loan to the age of 40 years.
    • If you are taking a higher amount of loan, bank may ask for collaterals.
    • A co-applicant is mandatory for all full time programs. You can include your parent and guardian as co-applicant. A married person can include spouse and parent-in-law as co applicant.

    Documents required for Higher Education Loan

    Bank usually asks for the following documents from a student while accepting his/her higher education loan application:

    • A copy of the letter of admission in a college/university.
    • A complete loan application form with all required details included.
    • A few recent passport size photographs.
    • A statement containing the cost of study.
    • Copies of PAN card (applicable for both - student and parent / legal guardian).
    • Copies of AADHAR card – (applicable for both - student and parent / legal guardian).
    • Proof of identity. You can submit any of the following documents - driving license/ passport/ /aadhar or any photo identity as proof of identity.
    • You also need to submit your proof of residence. Documents like driving license/passport/electricity bill/telephone bill are accepted as proof of residence.
    • Last 6 months’ bank statement of the student/ co-borrower/ guarantor are required.

    A salaried employee needs to submit the following additional documents:

    • Latest 2 months’ salary slips containing your date of joining.
    • Last 6 months’ bank statement of salary account.

    A self-employed individual needs to submit the following documents:

    • Last 2 years income tax return certificates with computation of income.
    • Latest 2 years audited balance sheet.
    • Bank statement of the last 6 months.
    • Proof of latest turnover.

    A self-employed professional needs to submit the following documents:

    • Income tax return certificate with computation of income of the previous two years.
    • Audited balance sheet or profit and loss sheet of the preceding two years.
    • Last 6 months’ bank statement.
    • A proof of qualification.

    Interest rates on Higher Education Loan:

    Normally, banks charge lower rates of interest on higher education loans. Higher education loans are designed in such way that students, salaried employees and self-employed individuals can afford these loans and fulfill their desire for higher studies. Low interest rates and less associated service charges make these loans highly affordable. Also, banks like the State Bank of India (SBI) offer 0.50% concession on interest rates for girl students. Likewise, Axis Bank charges base rate plus 6.50% for girl child for an amount of Rs. 4 lakh. For the same amount of loan, the bank charges base rate plus 7% from a male applicant. The interest rate charged by ICICI Bank on higher education loan is currently 11%. However, these interest rates are subject to change from time to time without giving any prior notification to customers.

    Higher Education Loan process

    It is very easy to apply for a higher education loan in India. Once, you decide your course and know the amount you required for pursuing that particular course, you can proceed to apply for your higher education loan. Either you can apply it online or you can visit your nearest branch to do the same. While applying online, you have to keep the following information - your personal details, contact information, co-borrower detail and course details ready with you. Else, you can contact your concerned branch after which the bank representative will follow up with you and help you get your loan.

    Features and Benefits of Higher Education Loan:

    • Higher education loans can be availed to pursue higher studies both in India and abroad.
    • Banks offer different amounts for studying abroad and India. For example, the State Bank of India offers Rs. 30 lakhs to pursue higher studies abroad and Rs.10 lakhs to study in India.
    • Enjoy long term repayment tenures for higher education loans.
    • Banks may ask for collaterals if you borrow a higher amount of money. For example, HDFC Bank asks for collaterals if you are borrowing more than Rs.7.5 lakhs.
    • A co-applicant is mandatory for a full time course.
    • Easy and hassle free documentation process.
    • You can enjoy a wide range of collateral options including residential property, fixed deposits, national savings certificate, LIC policy etc. However, collaterals may differ from bank to bank.
    • You can enjoy tax benefits by taking a higher education loan under section 80E of the Indian Income Tax Act 1981.
    • Banks like HDFC also offer doorstep services.
    • The loan gets directly disbursed to your educational institutions. It may be disbursed in full or parts as per the requirement of your course.
    • Some banks offer savings account free with higher education loans.
    • Get insurance protection.
    • You can use the amount received as higher education loan for paying off your college fee, hostel expenses and travel expenses, and purchasing books and computers etc.
    • No margin is applicable up to a particular amount.

    FAQs

    Can I take a higher education loan to pursue study abroad?

    Yes, you can apply for a higher education loan to pursue higher studies abroad.

    What is the maximum amount offered for studying abroad?

    The maximum amount offered as higher education loan differs from bank to bank. For example, the State Bank of India offers Rs.30 lakhs as maximum amount while HDFC Bank offers Rs.20 lakhs as the highest amount for higher education abroad.

    Do I need a co-applicant for my higher education loan? If yes, whom can I include as co-applicants?

    Yes, you need a co-applicant for a higher education loan taken for a full time course. You can include your parent or legal guardian as primary co-applicant, and spouse and parent-in-laws as secondary co-applicant, if you are married.

    Will I be eligible for any discount if I am a girl?

    Yes, definitely. Many banks in India including Axis Bank and SBI offer discounted rates of interest for girls.

    Can I get a moratorium or repayment holiday while paying off my higher education loan?

    Yes, many bank offers repayment holidays for select course.

    Am I eligible to get a higher education loan, if I am a self-employed?

    Yes, a self-employed person can also apply for a higher education loan.

    What are the modes of payment I can use to pay off my higher education loan?

    You can repay your higher education loan through equated monthly installments. Also, you can pay it off via standing instruction, post-dated cheques and ECS.

    What are the courses for which banks normally offer higher education loan?

    Banks normally offer higher education loans for the following courses – full time Management Courses, Graduation Courses, Post-graduation Courses, Medicine, Architecture, Engineering Courses ( both government and private ), Medicine, MCA ( Masters in Computer Application), Hotel and Hospitality Management , Agriculture and Pure Sciences.

    Is it compulsory to be an Indian resident to apply for a higher education loan in India?

    Yes, it is mandatory to be an Indian resident to apply for a higher education loan in India.

    Do I need to submit ITR, if I am a self –employed and apply for a higher education loan?

    Yes, you need to submit your income tax return (ITR) certificate if you are a self-employed.

        

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    Higher Education Loan Reviews

    • HDFC Bank Personal Loan
      "Need to decrease the rate of interest"
      0.5 5.0/5 "Blown Away!"
      I have taken a personal loan from HDFC. I selected the tenure of 3 years, and i am paying Rs.7566. The rate of intetrest was very high 22% need to decrease. Documentation was simple i uploaded and also executive collected . Customer sevice was good and i went to bank directly within 1 day i received loan and documentation charges Rs. 8900 deducted.
      Was this review helpful? 0
      , hosur
      Reviewed on Jan 20, 2020
    • HDFC Bank
      HDFC Bank Personal Loan
      "Easy loan approval"
      0.5 5.0/5 "Blown Away!"
      I have taken a personal loan from HDFC through online. The rate of interest was very low 10.99% and i have taken loan for Rs. 3.65L with the tenure of 60 months. I am paying EMI 8,200rupees and the customer service was okay. Documentation process was good and also it took 20 days to receive this card, which was very lengthy process. They deducted Rs. 10K for processing fee and i am not sure about the fore closure charges.
      Was this review helpful? 0
      , kanpur
      Reviewed on Jan 20, 2020
    • PaySense Personal Loan
      "Need to decrease interest charge"
      0.5 4.0/5 "Great!"
      I got a personal loan offer from Paysense through online. On time I got a call from their end for verification process. Within 7-10 days I got a call from them. Just because of the loan amount I chosen them. The tenure period of 2 years. An interest rate of 19% which is high and they have negotiated. There is option of pre closure and locking period of 6 months. I use to pay EMI of 9K.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2020
    • PaySense Personal Loan
      "Need to improve their customer service"
      0.5 4.0/5 "Great!"
      I have taken a personal loan from PAYSENSE and the loan amount was Rs. 91K after deducting processing fee i got Rs. 87K. The rate of interest was very high 13% with the tenure of 2 years. They have enabled ECS option but EMI's are not deducted from my account and am paying manually. Customer service is not responding properly and there is no patience also they need to work on interest rates.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jan 20, 2020
    • Shubh Loans Personal Loan
      "Excellent Loan Service"
      0.5 5.0/5 "Blown Away!"
      I took the personal loan from Shubh loan due to some medical issues. My friend has referred me, by saying the service is good and interest rate also less. I have uploaded all the documents and by the next day, an executive came to my place for collection and verification. I have got the loan in 5 days. I am not satisfied with the interest rate provided to me because its 10.5% if they are reducing the same, it may be fine for me.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2020
    • HDFC Bank Personal Loan
      "Good Loan Service"
      0.5 5.0/5 "Blown Away!"
      Its because of the lower rate of interest rate, i have chosen the personal loan from HDFC. Took the loan amount of Rs. 2.85 lakhs and the processing fee was Rs. 3000. I have paying the EMI amount of Rs. 7754 and duration is 48 months. Within 4 days, they have sanctioned the loan. They have sent welcome kit to my residential address regarding my personal loan.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2020
    • PaySense Personal Loan
      "Need to provide more amount "
      0.5 5.0/5 "Blown Away!"
      I have applied a personal loan of 1L with Paysense but they have sanctioned the loan of 50K only. The tenure period of 1 year and 3 months. Rate of interest is nominal. I use to get remainder message on time for EMI amount to pay of 4700 rupees . There is no option for pre closure.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2020
    • HDFC Bank Personal Loan
      "Need to decrease interest charge"
      0.5 5.0/5 "Blown Away!"
      I have applied a personal loan with HDFC bank through online process. The process was smooth but they have sanctioned the loan after one month. The amount was okay with tenure period of 3 years. Interest rate of 22% is high and locking period of one year. I use to pay EMI of 7600 rupees and get remainder message on time.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 20, 2020
    • Aditya Birla Finance Personal Loan
      "Need to decrease the rate of interest"
      0.5 4.0/5 "Great!"
      I have applied personal loan from Aditya Birla through online and the loan amount was 1.10L The rate of interest was very high 24% at that time i had a requirement so i have selected this bank for 3 years tenure and EMI is Rs.3800. I received DSA call and i applied this loan, service was good and also i am getting alert call and message. Within 3 days, the loan was disbursed.
      Was this review helpful? 0
      , new delhi
      Reviewed on Jan 20, 2020
    • HDFC Bank Personal Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      HDFC bank service is excellent. They will give all documentation to the customer whenever needed even i get PDF. Each and every transaction I get an update from their end. If I have query no need to call them , rather I could check in PDF itself. They sanctioned the loan amount of 3L with tenure period of 2 years. Interest is nominal. Preclosure was avail. Once I had closed the loan on spot I got NOC letter. I am happy with their service.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jan 20, 2020
    • Kotak Personal Loan
      "Better Loan Service"
      0.5 5.0/5 "Blown Away!"
      For the house renewal purpose, i have taken the personal loan from Kotak Mahindra bank its because of the low interest rate. The offered interest rate was 11%. I bought the loan amount of Rs. 1 lakh and i have chosen the duration of 24 months. I have been paying the EMI amount of Rs. 4744. They have sanctioned my loan in 1 month. Documentation process was done through agent.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jan 20, 2020
    • PaySense Personal Loan
      "Best app"
      0.5 5.0/5 "Blown Away!"
      PAYSENSE has offered a personal loan with low amount when compared to my needs. I have applied through online with tenure period of 3 years. They have sanctioned the loan within 10-15 days. Rate of interest is around 13% and processing fee of 5K. I have requested for pre closure but they have told to contact customer care and they were helpless at that time. I use to pay EMI of around 4K.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jan 20, 2020
    • HDFC Bank Personal Loan
      "Without customer concern they changed the tenure"
      0.5 4.0/5 "Great!"
      I applied a personal loan with HDFC through online. The loan got disbursed within 10 to 15 working days. The interest rate was high at 16% for Rs.2.50L loan amount and i have selected for 3 years but they given as 5 years tenure without my concern . Fore closure options is available but i am not sure and the EMI 5500. Customer service was okay.
      Was this review helpful? 0
      , new delhi
      Reviewed on Jan 20, 2020
    • review Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      I received the call from BAJAJ executive with offer of pre approved personal loan. I have taken a loan amount of Rs.60K with the interest rate 14% the processing fee is normal. Bank executive came and collected the documents, loan credit on the same days.
      Was this review helpful? 1
      , kolkata
      Reviewed on Jan 19, 2020
    • PaySense Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      I have taken a personal loan amount of 25K from PAY SENSE for my home renovation. It took around 15 to 20 days for the loan disbursement. They don't have any customer support number and need to contact only through email. I need to pay Rs.3,500 for 12 EMIs.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jan 19, 2020
    • Kotak Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      I applied for Kotak personal loan through online, the process was easy and loan got disbursed quickly. I have opted for 1.5L of loan amount with 12.9% interest rate which is low compared with other bank. Foreclosure can be done only after the year but part payment can be done any time.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 19, 2020
    • Kotak Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      I applied for Kotak bank personal loan through online and it took long time to process the application more than 2 weeks. One day came for verification on other day for documents collection, everything came be done on the same day. The rate of interest is normal compared with other bank.Customer support response is very good.
      Was this review helpful? 0
      , chennai
      Reviewed on Jan 19, 2020
    • Kotak Personal Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I applied for Home credit personal loan through online. The amount got disbursed with in the day. I have opted for 90K loan amount but the interest rate is high around 28%, which need to be reduced. Customer service and the response from bank executive was good.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jan 19, 2020
    • HDFC Bank Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I applied a personal loan with HDFC BANK through online for traveling purpose. The loan got disbursed within 3 to 4 working days. The interest rate was normal at 12%for 60K loan amount. Fore closure options is available only after 12 EMI with no cost.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jan 19, 2020
    • HDFC Bank Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      I had an offer only with HDFC Bank for personal loan, so I had applied through online and the loan got disbursed with in a week. I have taken a loan amount of Rs. 1L with tenure period of 3 years. I am paying the monthly EMI of Rs.3500 and I am not aware of exact interest rate.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jan 19, 2020
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