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Education loan helps facilitate young minds to pursue their academic dreams. Get a good loan amount and flexible tenure period with tax benefits. Collateral free loans for premier institution. Apply now through CreditMantri!
Education and academic excellence are considered to be very important in India. An education loan is a loan that 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 very advantageous when the child does not have adequate funds to pursue his/her higher education. An education loan can be availed for an undergraduate degree, a postgraduate degree or a PhD.
The loan repayment is done only when the student completes his/her course and finishes a grace period of 6 months or one year wherein he/she can join a job and start making money.
Maximum loan amount of Rs. 50 Lakhs can be obtained as an education loan for domestic institutes and up to Rs.1 crore for international institutes. So, the loan amount can be availed based on the tuition fee for the institution. In some cases, living expenses are also covered by the bank along with other needed expenses for the education such the cost for books, a laptop and more.
Education loans have tenures that can extend up to 10 to 15 years. This reduces the EMI burden on the student, and he/she can repay the loan amount with ease in time after the moratorium period.
A major benefit of taking an education loan is that the student gets to afford a good education that can help him/her in the long run by getting a good career and getting settled for life. It helps one achieve academic excellence that adds to a resume to enable one to get into a reputed company thereby giving one job security and job satisfaction for life.
The interest paid on the education loan can be claimed as a tax deduction as per section 80E of the Income Tax Act that was passed in the year 1961. However, the income tax benefit can only be claimed on the interest of the loan and not the principal amount as it does not qualify for it.
The Government of India has a scheme to help the weaker sections of society to enjoy education and not deprive them of the same due to insufficient monetary funds. According to this, the Government of India provides full interest subsidy during the moratorium period which is during the entire course period plus an additional six months of one year after getting a job, whichever is sooner.
The repayment on the education loan does not begin right after he/she finishes his/her course. The banks provide a holiday period of one year or six months after course completion which is called the moratorium period. So, one does not need to repay the loan during this one year, but the interest rate will be applicable for the year. This helps the student get a job to help repay the loan and this lessens the burden on the student by a great deal.
A very big advantage in an education loan is that if the student gets an admission into a premier institute such as IIT or IIM, then the entire loan amount can be taken collateral free. If the institute is not a premier institute, then only up to 4 lakhs can be taken without collateral. Loan amounts that are higher than 4 lakhs require collateral in most cases.
The interest rates for an education loan generally begin at just 9% and can go upwards. Most interest rates are fixed at the sole discretion of the lender and can vary based on certain factors.
If you are joining a reputed institution like IIT, IIM or similar universities abroad, then the interest rate that is charged for an educational loan is much lower. Also, collateral is not required for such universities. This is very beneficial for academically excellent students.
Girl students get a lower interest rate than boy students in most banks. This is to promote the girl child to study and help her achieve academic excellence with the same opportunities provided to the male students in the society.
Educational loans are provided to the student along with their parents who are considered as joint applicants. If the parents have a good credit score, then the interest rate that is offered is generally lower as they are considered as creditworthy customers and thus reduces the risk factor to the bank.
A shorter tenure than a longer tenure can make sure that the outflow of money towards the repayment of the interest is lower. The longer the tenure, the more the money spent on interest.
If the student himself/herself has a good credit score, it can be very useful to lower the interest rate on an educational loan. The better the credit score, the lower the interest rate charged. A credit score above 750 is always best to be considered a creditworthy customer.
If you have a good and healthy relationship with the lender you are borrowing from and are an existing customer with them, then the interest rates can be negotiated for and one can get a lower interest rate. This can help you lower the interest rates on your education loan. Most lenders aim to please their customers and so they can lower the interest rates if you have a positive and long relationship with them.
These eligibility criteria can vary from lender to lender and so it is best to check with the lender you are borrowing from as to what their eligibility criteria are.
For the student
Identity proof, age proof can be submitted with Aadhar card, passport, driver’s licence or voter’s ID. Address proof can be submitted with Aadhar card, ration card, passport, telephone bill, electricity bill or voter's ID card.
For the parent
Documents needed can vary from lender to lender and so it is best to check with the lender you are borrowing from as to what are the documents needed.
Apart from this there are some procedures like signing of the loan agreement by the applicant and the parents, repayment instructions to be followed and the copy of the payment receipt of given by the institute to be submitted.
1. What are the education loans used for?
An education loan can be availed for an undergraduate degree, a postgraduate degree or a PhD.
2. How much is the loan amount for an education loan?
Education loan amounts can go up to Rs.50 lakhs for domestic institutes and up to Rs.1 crore for international institutes.
3. What is the tenure for an education loan?
Education loans have tenures that can extend up to 10 to 15 years.
4. What is the minimum and maximum age for applying for an education loan?
In most cases, the applicant should be a minimum of 16 years old and a maximum of 35 years old.
5. Is collateral needed for an education loan?
Loan amounts that are higher than 4 lakhs require collateral in most cases.
Salient Highlights of New Education Policy 20206 Aug 2020
Dr Krishnaswamy Kasturirangan, former ISRO chief, Chairman of the Committee that recommended the New Education Policy 2020 has stated that the new policy aims to bring about a paradigm shift in education in India. The New Education Policy has been in...
Dr Krishnaswamy Kasturirangan, former ISRO chief, Chairman of the Committee that recommended the New Education Policy 2020 has stated that the new policy aims to bring about a paradigm shift in education in India. The New Education Policy has been introduced thirty-four years after the previous policy.
The major highlight of this policy is that from a 10 + 2 system, schooling will now move to 5+3+3+4 format. School education is now divided into four stages:
1) Foundation (Pre-school) Stage - It is for children of ages 2/3 to 8. It is a multilevel play-based learning model, with the focus being on language learning skills and an activity-based curriculum.
2) Preparatory Stage - It is for classes 3 to 5 and focuses on the cognitive development of language and number skills. Children will learn in their mother tongue, local language or home language - states are given deciding power for language selection.
3) Middle School - It is for classes for classes 5 to 8. The major focus in this level is to instill the spirit of critical learning.
4) Secondary Level - It is for classes 9 to 12. As per the new policy, there is no strict demarcation among the various streams offered to students. Students can choose any subjects to study from science, arts and humanities as per their interests. The focus at this level would be on critical thinking, coding and managing finances.
Soon Banks to Offer Education Loans for Online Courses16 Jul 2020
Before the Covid-19 pandemic, education loans were offered for only regular courses. Currently leading banks like ICICI Bank, Kotak Mahindra Bank, Bank Of Baroda, and others have tied up with online education platforms like “Great learn” and “Upgrad”...
Before the Covid-19 pandemic, education loans were offered for only regular courses. Currently leading banks like ICICI Bank, Kotak Mahindra Bank, Bank Of Baroda, and others have tied up with online education platforms like “Great learn” and “Upgrad” to discuss and possibly start issuing loans for online courses.
But issuing loans for online education for courses conducted by universities can be done only after these institutions have released their fee structures for online courses. With leading higher educational institutions planning to commence courses online, you can ensure that your child continues his/her learning amidst the pandemic with an education loan for online classes.
Missing 2 instalments may add 10 months to loan tenure6 Apr 2020
With people's finances being hit by the lockdown, many are looking to avail the repayment relief that RBI has announced. This repayment holiday will only be a grace period and they are likely to charge interest for unpaid amounts. Missing 2 EMI insta...
With people's finances being hit by the lockdown, many are looking to avail the repayment relief that RBI has announced. This repayment holiday will only be a grace period and they are likely to charge interest for unpaid amounts. Missing 2 EMI instalments could extend your tenure up to 6-10 months, or increase the EMI amount 1.5%. Borrowers may be given three options by their banks:
They may make a 1 time payment in June of the interest that accrues in April and May. You can add the interest to the outstanding loan and increase EMI for remaining months till you make the full repayment. Or you can keep your EMI amount unchanged and extend your tenure period
Haryana government to extend credit guarantee for education loans9 Mar 2020
The Haryana government has set an unprecedentedly high allocation of over 14 percent of the total outlay to education. And a new fund is to be set up to extend credit guarantee for education loans to be taken by students. With the cost of higher educ...
The Haryana government has set an unprecedentedly high allocation of over 14 percent of the total outlay to education. And a new fund is to be set up to extend credit guarantee for education loans to be taken by students. With the cost of higher education going through the roof, this guarantee comes as a support system for deserving students, who at present are denied loans by banks for lack of collateral. The Chief Minister of Haryana, who is also the state finance minister says that this scheme has the potential to address an emerging gap in the education loan scene that has impacted the underprivileged students.
Heading - Education sector to be enhanced with new policies19 Feb 2020
Union Finance Minister Nirmala Sitaraman said in a recent Lok Sabha meeting that Rs. 99,300 crore has been earmarked for the education sector for 2020-21; whereas, Skill Development will get Rs. 3000 crore. This shows that the government is inclined ...
Union Finance Minister Nirmala Sitaraman said in a recent Lok Sabha meeting that Rs. 99,300 crore has been earmarked for the education sector for 2020-21; whereas, Skill Development will get Rs. 3000 crore. This shows that the government is inclined towards skill development and creating more job opportunities. The Finance Minister also said that the new education policy would be announced soon, and if it were to be implemented well it will have a good effect on India’s workforce. Affordable, accessible and quality education can be delivered through online education. A degree-level full-fledged online education programme announced recently will be offered by premium institutes in the country. This program will make higher education more accessible and enhance career prospects for many. However, the budget did not mention anything on the GST relaxation and education loan bracket. All the services provided are currently under high tax brackets but there is still hope that the education sector will be revitalized.
Santosh Vishnu Bhadale
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