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Education loans are the most cost-effective approach to pursuing higher education without compromising on finances. You can get a loan for schooling in India or overseas. Unemployed students must have a guardian or parents as guarantors.

Education loans are available from leading Indian banks to help students attain their academic goals. The interest rate on a student loan with a payback period of up to 15 years starts at 6.60 percent each year. Education loans can be used for both in-country and out-of-country higher education.

Which courses are eligible for an education loan will be determined by the lender. For courses beginning in Nursery, an education loan might be secured. You can get a loan for higher education for full-time or part-time courses, as well as loans for working professionals.

You may check the EMI amount you'll have to pay each month using an Education Loan EMI Calculator. You can go through this process as many times as you want to compare the interest rates given by several banks to see which one best fits your budget. As a result, an EMI calculator can help you choose the proper loan.

Top Banks That Provide Education Loan

                      Banks

                Rate of Interest

HDFC Bank

    10.50%-11.50% (reducing)

Eduwanse 

    9%-11%

Finance Peer

    10.5% - 11.25% (fixed) 

IDFC Bank

    9%-13% (reducing)

You can choose between a fixed interest rate package and a variable interest rate package, depending on the bank or financial institution. The Repo Rate is the basis for most variable rates, with a spread implemented before the final effective interest rate is offered to you (EIR).

Education Loan Eligibility

Nationality:

  • Indian citizens
  • Non-Indian Residents (NRIs)
  • Students born to Indian parents abroad and wish to study in India
  • Overseas Citizens of India (OCI)
  • Persons of Indian Origin (PIOs)

Courses:

  • Certificate courses with 6 months or longer duration
  • Job-oriented courses
  • Technical/diploma/professional courses
  • Undergraduate programs
  • Postgraduate programs
  • Doctoral courses and PhDs

Institutes:

  • Recognized institutions and government colleges
  • Private institutes aided by government
  • Professional institutions
  • International colleges and universities

Collateral:

  • Collateral-free loans up to Rs.7.5 lakh from leading lenders
  • Collateral-free loans up to Rs.40 lakh for select courses/institutions from select lenders

Acceptable collateral: Residential or commercial property or plot, fixed deposits, insurance

Loan amount: Up to Rs.1 crore

About Education Loan EMI Calculator

You can use the Education Loan EMI Calculator to figure out how much your monthly payments will be and how much the overall cost of the loan will be if you apply for an education loan. To get an estimate of your equivalent monthly payment, enter a few loan-related variables such as the loan amount, duration, interest rate, and processing charges to get an estimate of your equivalent monthly installment (EMI). The total interest payable, as well as a detailed amortization table that breaks down your EMIs into principal and interest amounts on a monthly and annual basis, are important pieces of data. 

List of Courses that are Covered under an Education loan:

  • Nursery to class 12.
  • Graduation and Post-Graduation courses (technical/professional/diploma) are conducted by approved universities or colleges under UGC/IMC/AICTE/government.
  • Regular degree/diploma courses administered by autonomous institutions such as IIM/IIT, etc.
  • Job-oriented courses (professional/technical) for Graduation/Post Graduation/Diploma such as MBA/MCA/MS offered by reputed educational institutions, courses conducted by the Chartered Institute of Management Accountants (CIMA) – London or Certified Public Accountant (CPA) – USA.
  • Regular degree or diploma courses such as pilot training, aeronautical, shipping, and more are approved by the Director-General of Civil Aviation/Shipping/other regulatory authority.
  • Loans for skill development.

Abroad

  • Job-oriented courses (professional/technical) for Graduation/Post Graduation/Diploma such as MBA/MCA/MS, etc. offered by reputable institutions.
  • Courses conducted by CIMA and CPA.

List of Expenses Covered in Education Loan

Here’s what the loan amount will cover:

  • Tuition fees
  • Hostel fees
  • Travel expenses passage money for students studying abroad
  • Insurance premium
  • Cost of books/equipment/instruments/uniform
  • Examination/laboratory/library fees
  • Cost of a computer/laptop required for course completion
  • Caution deposit, building fund/refundable deposit supported by institution bills/receipts
  • Any other expense required to complete the course such as study tours/thesis/project work

Features & Benefits of Education Loan

  • Loans of up to Rs.1 crore are available.
  • Up to 15 years to repay the loan.
  • Get education loans for both Indian and international studies.
  • Before applying for a Visa, certain lenders offer loan disbursement.
  • Collection of essential documents at your doorstep.
  • Several banks offer favorable rates to children of bank employees.
  • Certain banks offer concessional interest rates to female students.
  • Enjoy a moratorium period of up to 1 year after course completion. During this period, you do not have to make payments on the loan.
  • Enjoy tax benefits for up to 8 years on the interest paid.

Tax Benefits on Education Loan

The interest you pay on your education loan can be deducted under Section 80E of the Income Tax Act of 1961.   This benefit is only offered to individual borrowers and is only available for higher education purposes. All areas of study, both nationally and internationally, are eligible for the deduction. There are both vocational and academic courses available.

The tax deduction only applies to the interest portion of the EMI, not the principle. You can, however, claim this advantage an unlimited number of times. To be eligible for this benefit, you'll need a certificate from your bank or financial institution that separates the principle and interest components of your EMIs.

This benefit is available for 8 years, or until the interest component of your loan is paid off, whichever comes first.

How to apply for Education Loan?

Following are the ways of applying for an Education Loan:

Online mode:

Step 1: This is the simplest and most practical method of applying. There are two methods for submitting an online application. The first is a simple application form that you will complete online, attach any required documents, and submit.

Step 2: Next, you apply by submitting all of the needed information, and the lender will contact you to negotiate the loan conditions before moving forward with the application.

Offline mode:

Step 1: Go to a Branch: You can apply for a loan by going to your nearest branch with the required documents, discussing the loan terms with a representative, filling out the application, and submitting it in person.

Step 2: Call the Lender: You have the option of calling the lender directly or requesting a callback by expressing your interest. After that, you can talk about the loan terms and apply.

Virtual Assistant

Banks and other financial institutions are moving to digital methods to better serve their customers. One method is to use a Virtual Assistant to clarify your doubts and request assistance with the application procedure.

FAQ

No, typically the education loan amount will not be the same in India and overseas even if the courses are of the same level. Higher sums are available for education loans for courses taken outside of India, as fees and other expenditures may be higher overseas than in India (which also depends on the educational institution).

Education loans for courses overseas are normally paid straight to the educational institution in the country's local currency.

Lenders consider the following factors when approving a loan: The course and institute you choose Repayment capacity of your family Family assets Annual income The amount you need Your academic performance

The length of the moratorium period on education loans varies by lender. However, it is normal until the borrower finds work or until the course is completed, whichever comes first. If you decide to take a sabbatical and request an extension of your moratorium, the bank will decide whether or not to give it, so it's advisable to talk to your lender about it.

If you decide to leave the course in the middle, you must begin repaying the loan as soon as you find work.

You can transfer your student loan from one bank to another. Your present bank, on the other hand, may charge you a refinance fee. As a result, before changing the loan, it's critical to analyze all of the existing and new bank terms & policies.

Yes, educational loans cover the entire cost of education. However, this full-coverage, maybe limited to expenses up to a specified amount. Banks have a margin if the expenses go above the limit.

Education Loan by Banks

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