Education Loan for Canada: Interest Percentage, Eligibility Criteria, Required Documents & Covered Expenses

An education loan for Canada is required if students find it difficult to arrange for funds to pursue their high education. These loans are available for students pursuing degree and diploma programs at different colleges and universities in Canada. It covers the living expenses for Canada in addition to the tuition fees for the respective course.

Some of the top providers of an education loan for Canada are SBI, Punjab National Bank, Bank of Baroda, and Axis Bank. The loan covers almost 85% of the course fees and charges an interest rate of about 10% to 15%. Various aspects related to education loan for Canada including eligibility, the application process, documents required are discussed.

Table of Contents

• Top Banks Offering an Education Loan for Canada
• Types of Education Loans Available in India to Study in Canada
• Eligibility Criteria to Apply for an Education Loan for Canada
• Documents Required to Obtain a Study Loan for Canada
• Repayment
• Expenses Covered by an Education Loan for Canada
• Collateral Rules
• Tax Benefits
• How to get an Education Loan for Canada?
• Top Universities in Canada Eligible for Study Loans

Top Banks Offering an Education Loan for Canada

An education loan for study in Canada is offered by several nationalized banks in India. Students fulfilling all the eligibility criteria can apply for a student loan to be able to bear the tuition and living expenses in Canada. Find below the top education loan providers for students willing to pursue studies in Canada:

1. HDFC Bank
2. State Bank of India
3. Axis Bank
4. Punjab National Bank

HDFC Bank

HDFC Bank is one of the largest private banks offering education loans for studying abroad. The maximum loan amount offered to students is up to INR 20 lakhs. The HDFC Credila education loan for Canada has funded thousands of students to pursue higher education in various Canadian universities. It has customized education loan products for Indian students willing to pursue higher education in Canada. Some of the benefits of the HDFC Credila education loan for Canada are listed below:

• HDFC Credila issues a sanction letter of education loan before applying for admission to the Canadian colleges
• It is a specialized lender for education loans
• One can avail of income tax benefits under Section 80(E) of the Income Tax Act of India through an education loan from HDFC Credila

State Bank of India

SBI education loan for study in Canada is offered for an amount of up to 30 lakhs with a loan margin of 15%. The interest rate charged for students is 2% on the current base rate of SBI. The SBI education loan for Canada can be repaid in the duration of 1-15 years. Students pursuing Regular Graduate Degree/ Post-Graduate Degree/ Diploma/ Certificate/ Doctorate Courses in any discipline in Canada are eligible for the SBI Global Ed-Vantage education loan. Some of the advantages of applying for an SBI education loan for study in Canada are listed below:

• The SBI education loan is sanctioned before the i20/ visa approval
• The online application is processed faster and the loan is offered at attractive interest rates
• The higher range of the loan amount is 1.5 Crore and the minimum loan amount exceeds INR 7.5 lakhs
• The repayment of the loan can be done through EMI up to 15 years

Axis Bank

Axis Bank offers education loans for Canada at competitive rates. A margin of 15% has to be arranged by the applicant if the loan amount is more than 4 lakhs. Axis Bank offers a maximum loan amount of 20 lakhs that includes different costs like tuition fees, books, and accommodation. The details about the Axis Bank Education Loan is shown below:

• Axis Bank offers education loan for Canada starting from INR 50,000 at attractive interest rates
• The pre-admission sanction is one of the key benefits of applying for an education loan through Axis Bank
• Other benefits include simple documentation and quick loan disbursal
• Students can avail of tax benefits and the loan repayment has a long tenure

Punjab National Bank

PNB Udaan is the education loan scheme offered by the Punjab National Bank to students pursuing studies abroad. Students traveling abroad to pursue graduate, post-graduate, job-oriented professional, and technical courses are offered education loans. The applicant is required to show a loan margin of 15% for the loan amount exceeding INR 4 lakhs. Other details related to the PNB Udaan loan scheme offered by Punjab National Bank is given below:

• PNB offers an education loan to students pursuing graduation, post-graduation, and degree/ diploma courses in Canada
• Students pursuing studies in premier foreign universities and educational institutes are eligible to apply for a student loan
• Repayment of the loan can be done for a maximum of 15 years

Types of Education Loans Available in India to Study in Canada

In general, education loan options in India for studying in Canada fall into two broad categories:

• Education Loans with Collateral: Applicants must provide collateral to secure these loans. This collateral is offered to the lender as security in exchange for the loan amount. This collateral can take the form of the following types:
  • Tangible assets like land (non-agricultural), shops, flats, etc.
  • Intangible assets like life insurance, government bonds, fixed deposits, etc.
•  Education Loans without Collateral: Applicants of these education loans are not required to give any security to the lender to obtain the education loan. However, there needs to be a co-applicant, and the income of the co-applicant becomes an important factor in determining the chances of loan sanctioning. Moreover, only a few international players, as well as private lenders in India, offer unsecured education loans above INR 7.5 lakhs to study in Canada.

Eligibility Criteria to Apply for an Education Loan for Canada

An education loan for Canada is generally offered to students pursuing job-oriented courses in Canada. Nationalized banks generally do not offer student loans for vocational, short-term, or diploma courses. Listed below are other eligibility requirements to apply for an education loan for study in Canada:

• The applicant should be an Indian citizen
• He/ she should maintain a good academic record
• The student should be 18 years of age. If not, his/ her parents will have to take the education loan 
• The applicant should have secured admission to a recognized foreign university/ institution
• As preference is given to job oriented courses, the student should have applied to a technical or professional course in Canada

Documents Required to Obtain a Study Loan for Canada

Prior to applying for an education loan for study in Canada, the student should be completely aware of the documents required for the process. To sanction an education loan, the bank needs certain documents to verify the details provided by the applicants. Listed below are the important documents needed for applying for an education loan for Canada:

• Completed application form
• Passport-size photographs of the applicant and co-applicant
• Photo identification proof of the applicant and co-applicant like PAN card, Voter ID, etc
• Proof of residence of the applicant and co-applicant
• Official academic documents
• Mark sheets and certificates of the applicant
• GRE/ GMAT scores
• TOEFL, IELTS scores
• Proof of admission to a Canadian university/ institution- Admission letter 
• Bank statements of the last six months of the co-applicant
• Income proof of the co-applicant
• Property title deed, Building approved plan, NOC for a mortgage from builder or society- in the case of collateral (immovable) property.

Repayment

After completion of the course, once the candidate gets hired, repayment begins after one year or six months, whichever comes earlier. As soon as the repayment process begins, the loan amount must be repaid within 5 to 10 years. 

Nevertheless, the repayment period may vary depending on the loan scheme and the bank's rules. For instance, In the case of SBI Ed-vantage, the repayment period is 15 years.

Expenses Covered by an Education Loan for Canada

An education loan for study in Canada covers the cost of studies in addition to the living expenses in Canada. The expense coverage varies for the different student loan schemes offered by various banks. The general expenses covered under the educational loans for Canada are as follows:

1. Travel Expenses
2. Tuition Fees
3. Cost of Books and Other Supplies
4. Hostel Fee
5. Laboratory Fee
6. Laptop Cost (if required)
7. Expenses incurred for project work or study tours

Collateral Rules

In the event that the loan amount exceeds INR 7.5 lakh, collateral security is required in the form of tangible assets. In addition, parents must be the co-borrowers for all the study loans.

The amount of collateral required for a study loan for Canada is very subjective. This amount varies from bank to bank. Additionally, a student's academic record and their potential for employment are also taken into consideration. Collateral security is generally required by banks to reduce their risk.

Tax Benefits

According to section 80E, you can claim tax benefits on the interest paid on the complete loan amount. Moreover, the tax benefits can be claimed for a maximum of seven consecutive years following the beginning of repayment. Please note you can only claim tax benefits on the interest amount, not the principal amount.

How to get an Education Loan for Canada?

The process of applying for a loan to approval and disbursal is a time-consuming process. It is thus advised to apply for an education loan a bit early for smooth processing. The steps for applying for an education loan for Canada is shown below:

• The student should first check if the selected course is recognized by the banks or not
• He/ she should figure out how much loan amount is required and how much amount can be arranged on their own
• The applicant should then compare the education loans offered by various banks and select the one that best caters to their needs
• Once the bank and the loan amount is finalized, the student should fill out the loan application form and visit the bank
• On successful approval of the student loan, the bank issues a loan document to the student that includes various elements of the loan
• The applicant is required to sign the loan document after which the bank will disburse the loan amount in installments or as asked by the Canadian university/ institution

Top Universities in Canada Eligible for Study Loans

The table below shows top Canadian universities that are eligible for education loans, along with fees and loan details: