An education loan is a loan that students apply to meet the financial requirements to complete their academic or professional/technical education course. Many banks and NBFCs in India offer education loans at competitive rates.
Leading Indian banks offer education loans to help students achieve their academic objectives. The Education loan comes with a payback duration of up to 20 years starts at 7.00% per year in interest. Both domestic and foreign higher education students can benefit from these education loans.
Which types of education loan are available ?
- Domestic or Overseas Education Loan
- Undergraduate or Postgraduate Courses Loan
- Collateral or Property based Education Loan
- Third Party Guarantee Loan
Features and Benefits of Education Loan
- Loan upto Rs. 50 Lakhs for Domestic Students
- Loan Upto Rs. 1 Crore for International Students
- 100% financing available for certain courses
- The financing covers other expenses, such as student exchange travel expenses and laptop
- Loan repayment tenure can go up to 15 years
- Loan moratorium period of up to 6-months to 1 year from completing the course
- Tax benefits up to 8 years on the loan interest payment
Expenses Covered under Education Loan
- Tuition Fees payable to educational institutes
- Travel expenses/passage money for abroad
- Examination/library/laboratory fee
- Purchase of books/equipment/instruments/uniforms
- Purchase of Desktop computer, Laptop Tablet Pc at a reasonable cost
- Expense required to complete the course, such as study tours, project work, thesis
- Caution deposit, building fund/refundable deposit supported by institution bills/receipts
- Insurance premium for student borrowers
List of Courses Covered under an Educational Loan
- Graduation and post-graduation courses (professional/technical/diploma) conducted by approved universities or colleges under UGC, IMC, AICTE, government, AICTE, AIBMS or CMR
- Regular degree or diploma courses administered by autonomous institutions such as IIM, IIT, IISc, XLRI, NIFT, NID, ICWA, CA, CFA, etc.
- Regular degree or diploma courses such as pilot training, aeronautical, shipping, and more approved by the Director General of Civil Aviation, Shipping, other regulatory authority.
- Job oriented courses (professional/technical) for graduation, post-graduation or diploma such as MBA/MCA/MS, courses conducted by the Chartered Institute of Management Accountants (CIMA) – London or Certified Public Accountant (CPA) – USA.
- Loans for skill development.
Documents Required to Apply Education Loan
- Admission letter
- Fee Payment Details
- KYC documents- Adhar, Pan, Voter Id, Student and Parent details
- Mark sheets of 10th, 12th, graduation and entrance exams
- Co-applicant KYC and income proof in third party gurantee
- College/Institution Prospectorus
- Course Details
Education Loan Repayment System
Many bankers offer a 6-month to 1 year grace period after completing the course to land a suitable job and start the repayment process. This grace period may vary with the lender. Once you land a job within this period, you may start the repayment process in the form of EMIs.
You can get in touch with the bank officials, and based on your monthly income, the bank officials will suggest a certain EMI. If you agree with this suggestion, you can start making the monthly repayments. Otherwise, you may negotiate with the amount. In any case, the maximum repayment tenure allowed is eight years in general.