How to get an Education Loan in India?

Education has always been a tool for individuals to achieve the desired goals in their life. In India, various reforms are made by the Government to improve the quality of education. Every year a huge amount of packages are dedicated to the Education Department so that the education can be accessed by each and every individual.

The cost of education in India is somewhat less than compared to the other developed countries in the world. However, as you move to the premium institutes in India the education cost becomes higher. Despite achieving High scores students are usually not exempted from paying the fees. Thus paying such a high amount of fees becomes difficult for the parents and thus the student have to quit their studies or they move to another institute.

Student have various questions regarding How to get an education loan in India? Thus, through this article, we will be providing you the complete details which include the important steps to avail the education loan, eligibility, benefits and loan repayment etc.

Education Loan in India

To help the students to overcome the financial crisis for paying the Insitute fees various Government and Private banks provide Education loans to the students. The tenure of the loan is selected by the beneficiary and the interest rates & repayment period of the education loan varies from bank to bank. Usually, the repayment of the education loan starts after the completion of the course. Let’s have a basic understanding of some important terms below.

Education loan Vs Personal Loan-: Most of the Guardians think that availing a personal loan for education can be a better option. However, this is not true. The interest charged by the banks in Personal loans (either Government/ Private) is much higher than the interest on Education loans. The banks have now categorized loans into various sections and the process to avail the loan completely depends on its category i.e. Car loan, Home loan, Education loan, Personal loan, etc.

What is a Comprehensive Educational Loan Scheme?

The Reserve Bank of India in association with the Indian Bank Association has designed the framework for Education loans granted by various banks. The framework includes some of the important guidelines that have to be followed by the banks in order to process the loan application for education. The RBI instructs the banks to follows guidelines so that every section of the society either rich or poor who wants to avail of the loan can get it easily at low interest rates.

Education loans in India at a Glance

Article Education Loan in India
CategoryEducation Loan
BeneficiariesStudents
Loan Available forUG/ PG/ Abroad Studies
Loan Provided byGovernment/ Private Banks
Collateral Loans exceeding 4 lakhs
Education Loan Interest Rate7% to 9% (Varies from bank to bank)
Repayment Period6 month/1 year after completion of Course
Loan Margin PercentageNo margin % below loaning amount of Rs 4 lakhs,
5% margin percentage for loans above Rs 4 lakhs,
Margin Percentage of loan for Abroad studies15%

Benefits of Education Loans

Most of the parents prefer availing of the education loans for the higher studies of their children. The reason behind availing of the loans has several benefits. The list of benefits of Education loans is depicted below.

  • The Education is granted by various Public sector and private banks which is applicable for all type of Individuals residing in India. The education loans are given under various Government schemes which are directly funded by the Government and carries a low Interest rate.
  • The loans are available for almost every course which includes Undergraduate courses, Potgraduate courses, Vocational, Diploma etc. Loans are also provided for pursuing education in Foreign Institutes.
  • As per the strict guidelines of RBI, the education loans are the top priority loans and thus they are easily available in every bank.
  • The amount of loan depends upon the type of course which the student is opting.
  • Interest Rates are generally low as comapred to other types of loan.
  • The repayment of the loan can be done after the completion of course. Usually a time period of 6 month/1 year is granted after which the bank converts the loan amount in EMI’s.

Other Queries on Education Loan

Below we have provided answers to the queries by the users on Education loans.

  • What is the basis of providing education loan by the banks?
    The loans are provided as per the fees of the course you are pursuing. The course fees includes the study material, hostel, mess, and other activity listed by the institution. The loans are processed considering the totak income of the family.
  • I am a student. Can i apply for education loan?
    The education can be taken on the name of the students in the behalf of their parents/guardians.
  • Is their any collateral/guarentee needed to avail the education loan?
    The loan below 4 lakhs do not require any type of collateral. However, loans above 4 lakhs requires a guarantor/ collateral in whose behalf the loan can be given.

AICTE PG Scholarship Scheme 

List of Essential Documents required

In order to avail of the education loan, the applicant has to provide a list of important documents that include -:

  • Address Proof,
  • KYC Documents,
  • Fee structure issued by the Institute,
  • Bank details,
  • IT Return,
  • Letter for admission & fee structure (For abroad study)

Aikyashree Scholarship

Important tips before applying for education loan

  • Before opting for education loan do consider the monetary abilities and liabilities of your family and afterward choose training credit, determined to reimburse it on schedule so that you and your parent’s do not get their name for the defaulters list.
  • Training credit is more similar to a speculation. Low loan cost, even of it is 0.5% less, alongside a more drawn out reimbursement period is more useful. Along these lines, it is extremely fundamental that you ought to painstakingly consider and comprehend the conditions for applying in various banks prior to picking the most great bank.
  • At the point when the bank is at last picked, ensure you read every one of the agreements and agendas of the credit application structure in light of the fact that there may be some secret expenses too.
  • You ought to typically pick a bank which gives the office to expansion of the reimbursement residency if there should arise an occurrence of deferral under unanticipated conditions.
  • Understudies from the financially more fragile layers of society ought to decide on government-controlled banks as they offer a few advantages as revenue sponsorship for understudies.
  • Likewise, know in subtleties what does your schooling credit cover? The credit sum doesn’t come to you. It goes straightforwardly to the organization where you need to examine, toward the start of every semester. Henceforth, it should cover every one of the advantages and administrations offered so you don’t need to bring about any extra expenses.
What are the interest rates for education loans?

The interest can be between 7% to 9% which varies from bank to bank.

What is the maximum amount that can be availed as an education loan?

The amount of land depends upon the fees of the course you are pursuing. Applicants must note that the bank will provide a loan as per the fee structure provided by the Institute/University/ College.

Collateral is required for an education loan?

Loans below Rs 4 lakhs are granted on the basis of family income and no collateral is required for it. However, loans above Rs 4 lakhs require a guarantor and collateral.

What are the interest rates for personal loans?

The interest rates for personal loans can be between 10% to 13.5%.

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