Introduction  A loan taken to meet tuition fees, hostel fees, and other related expenses for pursuing a specified educational course in an institution is called Education Loan. Many banks offer student loans for pursuing pre-specified courses in India and abroad from certain institutions. Banks release a list of permitted courses and institutions for which it will give education loans. So, the course you want to pursue is within the bank’s list along with the institution you wish to join, then you can apply for an education loan.

Education loan is the best way to pursue higher education without getting your finances disturbed. You can take an education loan for courses in India or abroad. For unemployed students, their guardian or parents need to be guarantors.

Interest Rates Comparison for Education Loan  Banks Interest Rates Processing Fees Punjab National Bank 7.30% to 9.80% p.a. 1% of the loan amount Central Bank of India 7.60% to 9.60% p.a. Courses in India: Nil Canara Bank 7.85% to 9.85% p.a. Nil State Bank of India 7.95% to 10.05% p.a. Up to Rs.10,000 Bank of Baroda 8.00% to 10.25% p.a. 1% of the loan amount IDBI Bank 8.25% to 10.25% p.a. Contact the bank Syndicate Bank 8.25% to 11% p.a. Nil Bank of India 8.95% to 9.75% p.a. Up to Rs.5,000 Tamilnad Mercantile Bank 9.10% to 11.60% p.a. Nil Oriental Bank of Commerce 9.40% to 11.40% p.a. Contact the bank HDFC 9.55% to 13.25% p.a. Up to 1% of the loan amount UCO Bank 9.95% to 10.35% p.a. Nil Karnataka Bank 10.08% to 13.9% p.a. Contact the bank United Bank of India 10.25% to 10.35% p.a. Contact the bank Federal Bank 10.25% p.a. onwards Contact the bank Karur Vysya Bank 11.25% to 12.95% p.a. Nil Tata Capital 10.99% p.a. onwards Contact the bank Jammu and Kashmir Bank 11% to 13% p.a. 1% of the loan amount Andhra Bank 11.15% to 11.45% p.a. Contact the bank ICICI Bank 11.25% to 14.60% p.a. RAAC pricing + GST Dhanalakshmi Bank 11.45% to 13.60% p.a. Nil Axis Bank 13.70% to 15.20% p.a. Rs.15,000 + GST Kotak Mahindra Bank Up to 16% p.a. Nil

 

Education Loan Eligibility

    Age of the Applicant - Up to 35 years for non-employed personnel, up to 45 years in case of working employees/ executives.

    Who is eligible – 

      An Indian National having secured admission to professional/technical courses in recognized institutions

      Students seeking admission for higher studies

      Permanent employees who are employed for not less than three years with any organisation and who intend to acquire higher professional qualifications and have secured admissions in a reputed institute

    Maximum Loan Amount – 

      Up to Rs. 10 lakhs for studies in India; with minimum margin money (own contribution by student/ family) of 5% of the total cost

      Upto Rs. 20 lakhs for studies abroad, some banks offer up to Rs. 30 lakhs with minimum margin money (own contribution by student/ family) of 15% of the total cost

      Up to Rs. 30 lakhs for studies at IIT's, IIMs and ISB with minimum margin money (own contribution by student/ family) of 5% of the total cost

    Cost Heads/ Expenses Funded by Bank – 

      Admission fees including Monthly Fees and Examination Fees

      Books, Stationery and Equipment

      Airfare for joining the course abroad

      Purchase of PC, laptop as essential for the completion of the course. 

      Boarding & lodging expenses of authorized hostel or boarding house

      Caution or building deposit/ refundable deposit supported by the bill/receipts from the institution. Subject to the amount not exceeding 10% of the tuition fee.

      Insurance premium, if opted by the student. 

      Other required expenses like study tour, project work, thesis, etc.

    Co-borrower/ Guarantor/ Security – 

      Loans up to Rs 4 lakhs: Parents or guardian or husband/in-laws in case of married woman required need to be co-borrower

      Loans above Rs.  4 lakhs and up to Rs. 7.5 lakhs: Parents or guardian or husband/in-laws in case of married woman need to be co-borrower and a third- party guarantee needed as collateral

      Above Rs. 7.5 lakhs: Parents or guardian or husband/in-laws in case of married woman need to be co-borrower and tangible security equivalent to 100-133% of the loan amount as collateral

    Repayment Frequency – 

      Quarterly or monthly

      Repayment typically starts 1 year after completing the course or six months after getting a job, whichever is earlier

    Repayment Period – 

      Varies from bank to bank - can range from 7 to 15 years

      There is no prepayment penalty or charge on early prepayment or foreclosure

    Key Appraisal Criteria – 

      Good academic record with at least 50% marks in the qualifying examinations

      Admission letter from a bonafide educational institution

      Passport/visa/i-20 form for studies abroad

      Net-worth and credit history (CIBIL) of the guarantors

Process for Availing Education Loan  Here is the commonly followed process to avail an education loan:

    Attach your admission letter received from the college or institution along with your application.

    Keep the primary documents like PAN card, age proof, address proof, etc., ready.

    Compare various education loans based on the interest rate, tenure, loan amount, etc.

    The mark-sheet of 10th and 12th would come handy. Keep them ready for attesting.

Documents Required for Education Loan

    Filled in application form along with two passport size photographs of the applicant and co-applicant.

    Admission Letter from the Institute. It should have the name of the institute and address on the letterhead.

    A detailed fees breakup of the course from the Institute, which specifies the tuition fee, the term of the course, year-wise charges, and expenses.

    The academic record of the applicant/student, which should include 12th standard Marksheet, certificate of any subsequent education like graduation or post-graduation, mark sheet of the entrance exam (if any), and any scholarship document.

    An affidavit or a declaration that no loan has been availed from any other bank or financial institution.

    Any ID proof like PAN card, Aadhar card, Driving License, passport, etc.

    Address proof such as Ration Card, Driving License, Passport, Aadhaar Card, etc

    For age proof Birth Certificate or 10th Class certificate.

End Note Education and academic excellence are considered to be very important in India. An education loan helps facilitate young minds to pursue their academics further, either in India or aboard by providing them with a loan amount to fund their higher education. This is especially helpful when the child does not have adequate funds to pursue his/her higher education.