A good education is a great asset to have. More often than not, it forms the stepping stone to a great career. Many individuals look to obtain a higher education abroad or at a premier institute in India. These degrees do not come cheap. And to add to it the living expenses during the education. The cost comes up to a tidy sum; hence the need for education loans. These loans also go on to teach a sense of responsibility to the youngsters, as the loan is in their name.  

Additional Reading: Your Primer to Educational Loans 

Important features of an education loan: 

  • Education loans can be applied by anyone wishing to pursue higher studies. It may be a student fresh out of school or someone who is looking to get back to studies after certain years of experience.  

  • The minimum loan amount is Rs 1,00,000 and the general upper limit is Rs 20,00,000. However, banks and financial institutions could consider amounts higher than these on a case-to-case basis 

  • Any graduate, post-graduate, vocational and other related courses are considered for education loans. The education could be pursued in India or abroad 

  • The borrower and co-borrower should be Indian citizens 

  • As it is often the borrower's first loan, the credit score of the co-borrower (generally a parent or sibling) matters 

  • Female borrowers get some rebate on the rate of interest 

  • For banks, the interest structure is based on the Marginal Cost of Funds based Lending Rate (MCLR). NBFCs have their own methods of determining the rate of interest 

  • There is a suspension period on education loan. Repayment of the loan starts one year after course completion or 6 months after the borrower gets a job, whichever is earlier. The repayment tenure after the commencement of repayment is 5-10 years, which again varies from bank to bank 

  • Interest paid on educational loans gets a rebate under Section 80E  

Some of the popular educational loan schemes in India are: 

SBI Student Loan Scheme  

This is a loan that any Indian can avail for studies in India or abroad 

  • Repayment period of up to 15 years after Course Period + 12 months of repayment holiday subject to conditions 

  • No processing/upfront charges are levied on education loans 

  • This loan can be applied for only after the admission has been secured 

  • Usually, loans for studies in India are capped at Rs 10 lakh and Rs 20 lakh for studies abroad. However, higher amounts are considered on a case-to-case basis 

  • For loans up to Rs 7.5 Lakhs, the parent/guardian can act as co-borrower, and for loans above this limit, a tangible security is required along with a co-borrower 

  • For loans up to Rs 7.5 Lakhs, the rate of interest charged is 10.5% and for loans above this limit, the rate of interest is 10.75%. There is a rebate of 0.5% for girl students or if any policy is assigned by the bank 

  • For the loan amount up to Rs 4 Lakhs, there is no margin/downpayment payable. For any amount higher than Rs 4 Lakhs, it is 5% of the loan amount for studies in India and 15% for studies abroad 

Avanse Educational Loan 

Avanse is a DHFL group company that provides loans for education, both within India and abroad.  

  • 100% of the cost of education is financed at Avanse, provided all other conditions are met 

  • The entire process of loan application and disbursal is provided as a door-step service 

  • There is no fixed upper limit on the number of loans, loans of Rs 50 lakhs and above are also disbursed on meeting all required conditions and provision of adequate collateral 

  • Their educational loans Cover all Pre-Admission & Education Expenses such as costs of Test Preps, Consultant Fees, Admission Applications and your Course Fees & Living Expenses 

  • A processing fee of 1-2% is charged 

  • Executive education loans are also provided 

  • The current rate of interest is Avanse Base rate of 12.65%+ a spread. This spread is decided based on the criteria of credit score, the collateral provided, etc. 

  • Avanse provides lots of variants of educational loans, which you can choose based on your requirement 

Axis Bank Education Loan 

  • The minimum value of the loan could be Rs 50,000 and the upper limit is pegged at Rs 75 lakhs. However, higher amounts are approved on a case-to-case basis 

  • The loan covers the tuition fee, cost of living, books, etc. 

  • The person applying for an education loan should have obtained at least 50% marks during HSC & Graduation. Proof of admission is also required for applying for a loan 

  • Up to Rs 4 Lakhs of the loan amount, there is no margin/downpayment payable. For any amount higher than Rs 4 Lakhs, it is 5% of the loan amount for studies in India and 15% for studies abroad 

  • There is no processing fee or prepayment charges on an educational loan 

  • The effective rate of interest for various amounts of the loan is 

Up to Rs 4 Lakhs - 15.2% 

From Rs 4-7.5 Lakhs - 14.7% 

Above 7.5 Lakhs - 13.7%  

Female applicants get a rebate of 0.25%  

HDFC Credila Education Loan      

HDFC Credila is a part of the HDFC group and was the first dedicated company in the country to provide educational loans. 

  • 100% of the cost is available as a loan without any margin requirement 

  • Loan amounts greater than Rs 20 Lakhs are easily available 

  • Collaterals of less than 100% are accepted 

  • Properties mortgaged with HDFC are also accepted as collaterals 

  • Loan sanction is provided before admissions too 

  • Customized solutions are available for students going to countries like Germany etc which need 60-70-% of the fee to be paid before the visa 

ICICI Bank Educational Loan 

  • Seamless remittance to international institutes 

  • Collateral free loan up to Rs 40 Lakhs for select institutes/ courses 

  • Quick and hassle-free process for timely disbursement of loans 

  • Loans up to Rs 1 crore are allowed 

  • Preferential forex rates are also allowed on foreign disbursements 

  • Loan tenures of up to 8 years + 6months are allowed for Post-Graduate courses and up to 5 years + 6 months are allowed for Under-Graduate course for loans without collaterals 

  • For loans with collaterals, longer tenure of 10 years is allowed on PG courses and 7 years on Under-Graduate courses 

  • The rate of interest starts at 11.5%