You’ve done well in your exams, you’ve got admission into the college/university of your choice for an undergrad or post graduate programme but… do not have the funds to finance your education dream? If you need an education loan, worry not. Finding money to support your studies is no longer an insurmountable problem – whether you decide to study in India or overseas - so long as you qualify for the terms and conditions of the loan.

Features of Education Loans in India

Who is eligible? Most banks in India offer education loans to students for study either within the country or abroad and you can borrow money for undergraduate, post graduate, certificate or vocational courses. Any student, typically between ages 16-35, can apply for an education loan.

The loan amount can vary depending on the cost of the education. Some lenders will even fund 100% of your education, whether in India or overseas.

Interest rate: The interest rate for an education loan also varies between banks and can typically range between 9-15% p.a. There is usually a grace period before you need to start paying off your loan – this period is usually between 6 months after you get a job to one year after completion of the course, whichever is earlier. The EMI is calculated once this moratorium period is over and the repayment starts. Some banks offer a discount to female applicants for an education loan.

Guarantor: A co-applicant on your loan is mandatory if you are planning to study abroad, and it has to be an immediate family member like a parent, sibling, uncle, aunt or grandparent. They will need to show salary proof as part of the loan application. You will also need to provide collateral.

If you are planning to study in India, many banks offer unsecured loans (that do not require security) for up to Rs 7.5 lakhs. In some cases, you might need to offer additional security like an LIC policy or a fixed deposit with the bank for availing of the full loan amount.

Tax benefit: You can get a tax benefit under Section 80E of the Income Tax Act of India.

Documents required

The documentation varies with each bank but most applications will require attested mark sheets, proof of admission, ID and residence proof, bank statements of the past six months, photographs, and any scholarship documents.

Central Scheme for Interest Subsidy

The Central Government has a scheme to pay the interest during the moratorium period for students from economically weaker Sections (gross annual family income of up to Rs 4.5 lakhs) availing of loans for technical or professional courses. Applicants must have an income certificate from the certifying authority to be eligible for this scheme.