In India, education loans are offered by various banks and financial institutions to help students pursuing in higher education in India and abroad. The loans cover expenses such as tuition fees, hostel fees, books, and other expenses. Here we will provide key points to consider education loans in India:
Eligibility
Indian Citizens: Only Indian nationals can apply for education loans.
Age Limit: The students between 18 and 35 years are eligible for the education loans.
Admission: You should have secured admission to recognized college or university, either in India or abroad.
Courses: The education loans are available for undergraduate, postgraduate, and professional courses such as engineering, medicine, management, etc.
Loan Amount
The loan amount generally ranges between 50,000 to 20 lakh for studies within India, and 20 lakh to 1 crore for studying abroad depends on the institution and program.
Repayment Period
Repayment Tenure
The loan repayment period is typically 5 to 15 years, starting after the course completion or after the student secures employment.
Moratorium Period
It is generally a moratorium period during the course duration, and up to 6 months after completion.
Interest Rates
The interest rate of education loan ranges in between 8% to 15% per annum on the bank, the loan amount, and if the borrower opts for a fixed or floating rate. Some banks provide concessional rates to female students.
Margin Money
Some banks may require a margin of 5-15% of the loan amount, for loans above 7.5 lakhs.
Processing Fees
Most of the banks charge a processing fee, which can be 0.5% to 1% of the loan amount, subject to maximum limit.
Collateral Requirements
The loans above 7.5 lakh require collateral, such as property, fixed deposits, or a third party guarantee.
The loans less than 7.5 lakh are typically unsecured, meaning no collateral is required.
Documents Required
The student should have proof of identity, address, academic records, admission letter, and a passport-sized photo. The co-applicant should have parents or guardian’s proof of income salary slips, ITR, bank statements, and identity/address proof.
Tax Benefits
Under the section 80E of the Income Tax Act, you can claim a deduction on the interest paid on education loans for a maximum of 8 years.
Major Banks and Institutions Offering Education Loans
Public Sector Banks: State Bank of India, Bank of Baroda, Punjab National Bank, etc.
Private Sector Banks: HDFC Bank, ICICI Bank, Axis Bank, etc.
NBFCs: IDFC First Bank, Avanse Financial Services, etc.
Loan Process
Step 1: In this step you apply online or at the bank’s branch.
Step 2: In this step submit your documents and get approval from the bank.
Step 3: In this step you sign the loan agreement after sanction.
Step 4: In this step you sign the Loan disbursement to the institution, typically in installments.