What is an Education Loan?
An education loan is monetary fund availed by individuals to fund their educational expenses. The borrower generally repays the amount after completion of course in installments. The students can secure the amount in joint liability with their parent or guardian. The loan amount does not only cover direct expenses related to education like tuition fees, registration charges and examination fess, but also allied expenses like equipment/ tools cost, travelling expenses, uniform cost, etc.
||Rs. 10 thousand to Rs. 1 lakh
||0.1% to 0.15% per day
||61 days to 120 days
|Student Loan Purpose
||Small educational expenses
Education loan for abroad studies on loanbaba:
||Rs 4 lakhs to Rs. 1 crore
||Up to 12 years
|Education Loan Purpose
||For MBA and MS. Engg
Courses Covered under Education Loan
Specific courses can be opted from well reputed educational institutes in order to avail education loan from reputed banks and NBFCs. The course can be PG-Post Graduation, technical, graduation, management, diploma or other professional course, in case of student studying within India. In case the student intends to study abroad, the course can be PG, graduation, CIMA- London’s or CPA-USA’s certification degree course, etc.
Below mentioned courses offered in recognized universities are eligible for education loans:
- Full time and part time management courses.
- Courses offered by IITs, XLRI, NID, IIMs, IISC, NIFTs, etc.
- Agriculture studies, architecture, designing, fine arts, etc.
- MCM, M.Com, B.Com, MCA, BA, MA, etc.
- Hotel and hospitality.
- Professional courses including medical science and engineering.
- CA, CFA, ICWA, etc.
- Online certifications and distance learning programs.
- Courses like ERP, air hostess training course, SAP, GNIIT, etc.
- Diploma and degree courses like pilot training, aeronautical, shipping, etc.
- Nursing and Para medical courses which also includes management seats.
- Courses offered in India by reputed certified foreign universities.
- Pre-sea training courses, aircraft maintenance engineering, etc.
- Government certified courses offered by reputed institutes assuring employment.
Why Choose an Education Loan/What is the Purpose of Student Loans?
A person chooses student loan to fund expenses related to studies either in India or abroad. At loanbaba, we offer study loan for both these purpose. We have small education loan that can be received the same day of loan application approval. The amount is up to a lakh of rupees. The individual can even apply for higher studies loan abroad for which, he/she can avail flexible amount of funds.
Apart from charges/ fees payable to the educational institution, expenses covered by such loans are listed below:
- Purchase of equipments, tools, books, instruments and uniforms.
- Purchase of laptop or computer if it is mandated by the institute or is necessary for completion of the course.
- Library, hostel, examination and laboratory fees.
- Travel expenses incurred by the student, especially when studies are pursued abroad.
- Additional costs pertaining to course completion, including and not limited to thesis work, study tours and projects.
- Caution deposit, building fund and refundable deposit, supporting receipt/ bills of the same should be furnished along.
Things to Consider before You apply for an Education Loan
Below mentioned are points to keep in mind when you apply for a education loan at loanbaba.com.
- Depending upon the individual capacity of the borrowers to repay the loan amount and bank’s own specific criteria like margin money, the maximum amount of loan that can be financed is Rs. 10 lakh for study in India and Rs. 20 lakhs for study abroad. The loan amount covers cost of books, hostel charges, tuition fees, travelling expenses and such other charges mentioned in the letter of admission.
- One can also apply education loan online via various websites, some of which are of specific banks. Loanbaba education loan is one of the best education loans online because our website provides top providers of students’ loans not only for India but also abroad. It is highly recommended that if you need education loan urgent, you should go for applying education loan online.
- Generally in majority loans, the repayment of loan starts after the disbursement. But in case of education loans, the repayment starts after a specific period from date of completion of course. One can either start EMI once job has been acquired or at most after 6-12 months from date of completion of course. Hence the bank gives a long moratorium period in this case which can extend from 6 months to 6 years. Some banks also give concession in interest rates of education loans if your serve the interest portion right from the date of disbursement of loan.
- What if you do not get any job after completing the course? In case you do not get a job after completion of course, the bank may or may not agree for extension of repayment period taking into consideration the factors like genuineness of case and financial condition of the family. In any case the repayment period cannot be extended more than 10 years.
Benefits, Features, and Types of Education Loans
You can apply for an education loan if you plan for a safe and efficient way of financing your child’s educational requirements. The features and benefits of educational loans are detailed below:
- The parent or guardian need to be co-borrower in this case as the loan cannot be given to the student only.
- The loan amount depends upon the course to be pursued by the student and annual family income.
- Any Indian individual can apply for collateral free education loans if he/ she intend to study in India or abroad. One can pursue any professional, graduate, doctoral or post-graduate course or degree.
- In case you want education loan for your girl child, you will special discount/ concession in interest rate.
- Banks also finance unsecured education loans if the loan amount is less than Rs. 4 lakhs. Also, there is no need of guarantee in this case.
- The maximum amount of loan that can be availed by an individual is Rs. 10-15 lakhs in case of inland studies and Rs. 20 lakhs in case of study abroad.
- Education loan is availed before starting the studies but repayment needs not to be started immediately. One can start the installments once the course is complete and job is secured by him/ her successfully. In case the candidate is unable to secure a job, a period of 6 to 12 months after the completion of course is given to start the installments.
- There is no need of collateral up to a specific limit (generally 7.5 lakhs) of loan in the form of FD, property, etc.
- Normally, the repayment period is 5 to 7 years. Relaxation can be given in special cases which can extend the repayment to 10 to 15 years.
- One can claim income tax benefits of education loan under section 80E of Income Tax Act. Similarly, a scheme of providing education subsidy is also there by central government.
Education Loan Eligibility Requirements
The eligibility criteria for student loan may vary from lender to lender, but the basic criteria are detailed as under:
- Borrower should be Indian citizen.
- In case of NRIs- Non Resident Indians, holding a valid Indian passport is must.
- Age criteria needs to be fulfilled by you as per the bank’s clause.
- The applicant should be admitted in a recognized institution for any permissible course. The name of the institution should be in bank’s list.
- A co-applicant (with regular source of income) is must in most of the cases who shares liability of the loan.
- The student should have a good academic record and all the applicants should have a great credit history to qualify for the loan.
Documents Needed for Education Loan
Below mentioned are documents required for education loan India:
- Duly filled application form along with passport size photograph affixed on it.
- Letter of admission received from the concerned educational institution.
- Fee breakdown which shows the amount of tuition fees along with other charges levied by the institution.
- Mark-sheets Photostat copies from 10th standard to last examination cleared by the applicant.
- A declaration/ affidavit from the applicant that he/ she don’t hold any other education loan for this course or any other course.
- KYC certificate which comprise of both, identity proof as well as address proof.
- Identity card- PAN card, DL, passport, Aadhar card, Voter card, identity card issued by employer, etc.
- Address proof- , passport, Aadhar card, Voter card, ration card, utility bills, credit card bill, etc.
- Income proof of the co-borrower needs to be furnished.
- In case if co-borrower being salaried, latest salary slip needs to be furnished along with form 16 and last 6 months bank account statements.
- In case of self employed, businessmen or professional co-borrowers, latest ITRs along with computational sheet, business continuity proof need to be rendered.
- A proof of qualification of highest professional degree needs to be furnished by the applicant.
Education Loan Interest Rates
Education loan interest rates vary from bank to bank. The rate of interest of an education loan depends upon factors like amount of loan, tenure of loan and competitive market rates. Many banks give a concession of 0.50% in interest rate of education loan for girl students. The rate of interest in education loan is floating in nature and is always quoted as MCLR + X%, where X is the spread. The rate of interest is the prime factor on which we compare education loans. The rate of interest ranges from 12% to 16% in India and repayment period varies from 5 years to 10 years.
Education Loans Interest Rates of Top Banks
Below mentioned are best interest rates for education loan by top banks and NBFCs.
Complete Checklist to Apply for Education Loan
Here is a complete checklist to apply for student loan in India:
- Compare available options of education loans on loanbaba.com.
- KYC documents.
- Attested copies of mark sheets of class ten to previous course.
- Letter of admission in the recognized institution.
- All essential documents pertaining to admission in new institution.
- In case of non-availability of hostel, the proof of same (letter from institution).
- Salary slips of last 3 months, bank statements of last 6 months, ITR (income tax return) of parents.
- Two passport size photographs of applicant, co-borrower and guarantor.
- Employment contract in case of study abroad.
- Studying Abroad- Admission letter along with form I-20 from Foreign Institution.
- Studying Abroad- Entry Permit (having noted validity, issuing authority etc,).
- Studying Abroad- Passport and Visa.
- Property documents.
- Affidavit regarding no other education loan availed from any other bank.
- In case the applicant is employed, sanction letter for study, registration letter or resignation letter acceptance.
Top Providers of Education Loan in India
Below mentioned are top providers of education loan in India.
Why Choose Loanbaba.com to Help You Find an Education Loan?
Below are the reasons why you must choose us for your student loan requirement:
- Loanbaba helps you see all the required information about the education loans, interest rates and other factors at one place, which helps you in saving time.
- Here, for your education online loans can be searched and then compared at various points.
- If you are searching for online education loan apply now at loanbaba.com. You can shortlist the education loans from our website and then further compare them to aid your decision of choosing the best out of them.
- Our quick customer support team is always there to respond your queries via email, phone call or chat.
Frequently Asked Questions on Education Loans
Below mentioned are some of the important questions for education loan in India.
The bank normally provides a demand draft to the applicant in the name of the concerned education institute while disbursement of the loan. The amount of disbursement depends upon the fee structure furnished by you.
Yes, you can avail tax benefits for education loan availed by you for your child, under section 80 E of Income Tax Act.
The bank asks the applicant to furnish his/ her academic progress periodically with the bank. This can be given in the form of mark-sheet. In absence of mark-sheet, a letter from the applicant’s educational institution can serve the purpose.
Government of India provides a full interest subsidy to students belonging to economically weaker section of society in their interest during the moratorium period. Economic weaker section means borrowers having an annual income of less than Rs. 4.5 lakhs. The interest will be paid to bank by the government of India.
Nationalized banks generally don’t have any kind of foreclosure charges and hence you are not charged for paying your education loan in advance. But in case of private and foreign banks, a penalty ranging from 0.25% to 2% of the outstanding amount is levied on the applicant.
Education loans are generally sanctioned when a co-applicant/ co-borrower is there with the student, which can be applicant’s spouse, in-laws, parent, guardian or sibling. In case of loans up to Rs. 4 lakhs, there is no need of any guarantor and security. In some cases the bank may insist upon some king of security like shares, LIC policies, gold, FDs (fixed deposits), real estate, etc. Moreover, the bank can also insist upon a third party guarantee from a person who is not in blood relation with the applicant.
Collateral and guarantee needs are described as under:
- For loan cases up to Rs. 4 lakhs: Parent as co-borrower is must.
- For loan cases from Rs. 4 lakh to Rs. 7.5 lakhs: Co-borrower along with a suitable third party guarantee is required.
- For loan cases above Rs. 7.5 lakhs: Co-borrower along with a suitable third party guarantee and tangible collateral are required.