Student loans are generally classified as educational loans by top financial lenders in the country. Education loans are offered by banks and financial institutions to those who wish to pursue higher studies, with the maximum loan amount being Rs.1.5 crore. The interest rates starts lowest at 6.85%, the maximum tenure of education loans is 15 years.
Student loans can be repaid after the borrower has completed his/her educational course and finds employment thereafter. Most of the major banks in India, public as well as private, provide education loans to students. The college to which you wish to apply and the course you wish to undertake will determine the size of the loan. Student loans or education loans can be availed to pursue higher education in India as well as abroad. The course you can apply for with a student loan include management, architecture, engineering, etc. The loan will cover expenses incurred on tuition fees, accommodation, examination fees, lab and library fees, the purchase of books, equipment required for the course, uniforms, etc.
The interest rates applicable to student loans are slightly higher in comparison to the interest rates applicable to home loans. The rates may vary from lender to lender depending on the size of the loan, the tenure and other factors. Usually, student loans can be availed for interest rates ranging from 6.85% to 15% p.a. Students who secure admission at major institutes such as the IIMs and IITs get a relaxation on rates. Interest rates are also reduced by public sector banks for female applicants.
|Student Loan Banks||Interest Rate||Amount||Processing Fees|
6.85% to 8.65%
|Up to Rs.1.5 crore||Rs.10,000 + tax|
6.90% to 9.55%
|Up to 15 Lakhs||1% of loan amount|
|Bank of Baroda||
6.75% to 9.85%
|Up to 4 Lakh and above||1% of loan amount up to Rs.10,000|
There is a specific set of documents required by banks for sanction of education loans. This list of documents is similar for all lending entities. Following are the papers that need to be furnished by an education loan applicant.
Student loans are a great boon for people who want to study but struggle to do so because of financial constraints. The concept of banks paying for your education while you study and then getting repaid when you start earning is a great boost for banks as well as for your own educational growth. Here are some of the most significant features and advantages of student loans in India.
Banks offer education loans not only to students who study in India but also to students who wish to study abroad. Generally, studying abroad is far more expensive than studying in India and hence students who wish to study abroad have to manage enough cash to get admitted to an educational institution.
For example, a post graduate course in the U.S. can cost up to Rs.30 lakhs per annum. This is a huge amount for any student and so education loans for overseas offer considerable loan amounts. Also, education loans have a set limit to the loan amount offered and as such students might be required to take up part time jobs to manage their expenses. Insurance is a compulsory cost associated with education loans for overseas study. The sum assured in this case will depend upon the course as well as the country where the applicant is going to study.
Public sector banks as well as private banks offer education loans to students who wish to study in India. These loans can be taken for any professional course like MBA, engineering, medical etc. Sometimes, rates on education loans are slashed in case the college an applicant has got admission too is a premier institute like an IIT, IIM or an NIT.
The stark professional shift in education, the increasing competition and globalization have led to more people aspiring for higher studies. Courses that were expensive for people have now become easily attainable due to the increased penetration of student loans.
Any student who wishes to study further is eligible for an student loan provided he/she is a resident of India.
Yes. Generally, the age of the applicant needs to be between 16 and 35 years of age. This is subject to the lending bank’s discretion.
The following expenses are covered as part of education loan.
Nil. 100% loan is available for select courses and is dependent upon bank’s policy.
Loan tenure can be a period up to 7 years. This includes the moratorium period.
Moratorium period is a payment holiday offered on repayment of education loan until the applicant finds a job and starts repaying the loan.
Yes. A co-applicant is almost always required by banks to sanction your education loan.
Loan amount depends upon the requirement of the applicant. Greater amounts are offered to applicants who wish to study abroad than those who apply for study in India.
Yes. Education loans can get tax exemption for interest paid on the loan. This is in line with section 80E of the Income Tax Act.
Yes. Pre-closure of student loan is possible, however some banks levy a prepayment fee on pre-closure of loan.
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