Education Loan,Features, Benefits, Rate of Interest, Repayment and Other Information 23 Sep 2020

Updated: Aug 30,2019 17:01 IST

Education Loan are provided by the banks and other financial institutions. Education Loan attracts a certain rate of interest but assists the students who aspire to do their higher studies. Education loans are funded to students for studying in India as well as abroad. Detailed information on Education Loan, its features and benefits, repayment and related details are provided in this article.

What is an Education Loan?

Education loans help the students to grow more and be highly qualified irrespective of their financial situation. Banks and other financial institutions provide education loans at a certain rate of interest and provide flexibility in the repayment of the loan amount after their education. Education loan provides major part of the financial support to the students to shine in their lives through education. With the education loan, every person is eligible to acquire quality education and helps to have bright future. The education loans are provided by many banks upon verification and also charging for the processing of the education loan. Demand for the education loan is constantly stable over the years. Education loans are expensive loans, but provides financial support at the very important phase of life which is educating oneself or their son or daughter. Library fees, laboratory fees and other charges related to the course are all covered under the education loan. Education loans help to survive the student’s dream education whether in India or abroad.


What are the Interest Rates Charged towards Education Loan ?

Interest rates for the education loan vary from banks to banks. Mostly according to the RBI regulations, it is to be charged as 9%-10%. But most private banks and other financial institutions charge 12%-16% interest on the education loan depending upon the banks’ base lending rate and other factors. Interest rates of some of the banks along with the base rate, maximum loan amount provided and the repayment tenure are given below in the table.
 

Banks or financial institutions

Base rate

Loan amount with Interest rates including base rate

Maximum loan amount

Repayment tenure

SBI

9.70%

Upto 4 lakhs - 13.35%pa

 

Upto 7.5 lakhs

-13.60%pa

 

Above 7.5 lakhs

-11.60pa

Study in India- 10 lakhs



 

Study abroad- 30 lakhs

5-7years

Axis Bank

9.95%

Upto 4 lakhs - 16.95%pa

 

Upto 7.5 lakhs

-17.95%pa

 

Above 7.5 lakhs

-15.95%pa

Study in India- 10 lakhs



 

Study abroad- 20 lakhs

7 years

Punjab National Bank

10%

Upto 4 lakhs - 12%pa

 

Upto 7.5 lakhs

-13%pa

 

Above 7.5 lakhs

-12.50%pa

Study in India- 10 lakhs




 

10-15years

Avanse Education Loan

11.50%

Calculated based on course

Minimum -rs 50000

Maximum-no limit

120 months


What are the Features of Education Loan ?

Education loan are available universally and can be applied easily. With good credit history, a person can get his or her education loan sanctioned in very less time. For all academic courses listed under the education loan of different banks, one can apply for the loan. Also the courses include graduation, post graduation as well as the vocational courses. Some of the features of the education loan are as follows.
  • One can avail the education loan for studying in India as well as in foreign countries.
  • Education loan can be obtained for minimum 10 lakhs to maximum 15 lakhs in case of higher studies in India, whereas for studying abroad the maximum limit is 20 lakhs.
  • The type of course pursued and the family income of the applicant is considered while providing the educational loan.
  • Female students who are applying avail discounts and lower interest rates.
  • Education loan less than 4 lakhs does not require a guarantor.
  • Government subsidy schemes of educational loans are provided for the students from economically backward people.
  • Students need not repay the loan immediately. They can repay after completing their course and within the repayment tenure from the course completion date.


What are the Benefits of Education Loan ?

Education loan is very helpful to the students who wish to pursue higher studies. Students who wish to take up courses abroad are benefited by the bank education loans. With proper submission of the required documents and the repayment ability, the education loan for students are easily sanctioned. Some of the benefits of the education loan are as follows.
  • Students get a financial support to achieve their dreams.
  • It is not necessary to repay the loan immediately. The tenure can be extended upto 5 or 7 years after completing the course.
  • Student can choose any course and apply for the educational loan.
  • For small amount of loans, the collateral security is not required.
  • All educational expenses like the library fees, building fund, accessories for education, etc can be utilized through the loan amount which is received on their savings account.


Who are Eligible for obtaining an Education Loan ?

The eligibility to obtain an education loan can be easily check online. Education loan eligibility calculators are available at the bank’s official website. It gives an idea of the possibility of obtaining an education loan. One who satisfies all the eligibility criteria will be sanctioned for the education loan amount. The eligibility criteria for applying for an education loan are as follows.
  • Student must be an Indian. In case of NRI, he or she must have an Indian passport.
  • Students must be under the age prescribed by the lending institutions.
  • Student must hold the admission letter from the school or college.
  • Education loan can be applied with the co-applicant who has regular income.
  • Good academic records must be maintained.
  • The credit history of the co-applicant must be good for easy sanction of loan.


What are the Documents Required to Apply for Education Loan ?

Proper documents with accurate information affords you chances to get your education loan sanctioned. Provide the proof documents with current and updated information. Take up necessary courses and scores in the TOEFL or IELTS or other test which are required for studying abroad. Good scores help you get an admission in the universities you wish to study and in turn help to avail education loan easily if good scores in academics are maintained. Provide admission letters or emails with recent date, so that it eliminates confusion when applying for the education loans. The following are the necessarily proof to be submitted along with the application form.
  • Identity Proof
  • Address Proof
  • Age Proof
  • Proof for Nationality
  • Attested Mark sheets for 10th
  • Admission letter from schools or universities
  • Family Income Proof
  • Passport size photographs
  • For Studying Abroad, visa and passport are required


Who provides Education Loan?

Many banks and other financial institutions provide financial assistance to the students for their higher education through the education loan. There are many other banking sectors other than the list given below which provides education loan for the upliftment of the students.  Some top banking institutions that provide education loans are as follows.
  • SBI Education Loan
  • Axis Bank Education Loan
  • HDFC Education Loan
  • Avanse Education Loan
  • PNB Education Loan


How to Apply for Education Loan ?

One should search for the banks which provide them education loan on convincing rates. The loan application form from the bank must be obtained and duly filled with accurate information clearly. The documents required for the education loan must be attached along with the application form. The bank executives will scrutinize the forms and if it satisfies all eligibility criteria, then the loan is sanctioned. Some of the checklist for education loan application are given below.
  • Decide with the University, location and expenses which comes along with the course.
  • Compare all the banks’ education loan scheme through online.
  • Keep the identity proof, income documents, age proof and other required documents ready.
  • Get all the certificates attested copies for 10th, 12th and degree certificate if available.
  • Keep the admission letter from the university ready.
  • Take a printout of the break fees of the course and course details.
  • Submit the Income proof of student or the parent/guardian.
  • Keep the passport size photographs of the student as well as the borrower if the borrower is someone other than the student.
  • If the student is flying abroad for education, keep the passport and visa handy.
  • Keep the security or collateral documents ready.


What are the Courses Covered under Education Loan ?

Most of the educational courses from recognized universities or educational institutions are covered under the list for educational loan. In case the students apply for loan for studying in India, all management courses, technical courses, professional courses,etc can be covered with the help of educational loans. For courses in abroad, the courses like CIMA, CPA, graduation and post graduation from very recognized universities are covered under the education loan. To encourage students’ education and encourage them to repay the education loan amount on time, some banks eliminates processing and pre-closure charges. Some of the courses listed under the education loans in most of the banks are given below.
  • Professional courses like Medicine, engineering, ICWA, ICAI, CFA, etc.
  • Full time as well as part time of management courses
  • IIM, IIT, NID courses,etc
  • B.Com., M.Com., B.A.,M.A.,M.C.A,etc
  • Architecture
  • Agriculture
  • Fine arts courses
  • Hotel management
  • Hospitality courses
  • Distance learning courses
  • Online certificate courses


How to Repay the Education Loan ?

Usually all types of loans will be repaid immediately after the disbursing of the loan amount and the repayment is done through EMI. But it is quite different for educational loans. In case of education loans, students can repay the loan once they complete the course or when they join in a job, whichever is earlier. This helps the student to concentrate completely on the studies instead of being worried about the financial repayment during their education. From the date of course completion, the student can repay the education loan amount for upto 7 years or up to the loan tenure as committed. The repayment amount is completed as EMI every month. It is advised to repay the loan amount on time without any defaults. In case of defaults of EMI amounts, the notifications are sent through sms or call or email or post. Regular defaults in EMI payments reduces the credibility of the borrower. When the loan amount is not repaid, strict actions might be taken by the banks or other financial institutions who had provided the education loan.


How to Calculate EMI for Education Loan ?

One can easily calculate EMI on the education loan amounts with the help of the EMI calculators available on the internet. The loan amount, number of years, rate of interest details are to be known to calculate the EMI amount. The calculation of EMI saves a lot of time and is free of cost. Calculating EMI before applying for education loans helps to avoid unnecessary financial crisis at the time of repayment of the education loan. Follow the below steps to calculate the EMI for education loan using EMI Calculator.
  • Search for the bank’s official website in which you are planning to approach for education loan.
  • Choose the EMI Calculator from menu.
  • Enter the loan amount, loan tenure and interest rate.
  • Choose “Calculate EMI” to know the approximate figure of the EMI amount.
  • The EMI amount is displayed within few seconds.

 

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