Education Loan Details

Quality education is an important aspect of today’s life. However, the cost of education is increasing on a daily basis. In fact, the expense of education is already high at reputed institutions. Despite all the fund and savings, one may still face a shortage of fund. Thus an education loan plays a vital role to bridge the gap.

There are several schemes introduced by the government with an intention to extend the helping hands towards the students and their family to achieve the dream of attaining the dream of higher education.

This article clears all the doubts about accessing education loan for Indian students which include detailed information such as important factors to consider, interest rate, eligibility criteria, documents required and so on.

Sr. No. Title
1 Important Factors to be Considered
2 Interest Rate for Education Loan In India
3 Documents Required For Education Loan
4 Eligibility Criteria For Education Loan

Important factors to consider before applying for an education loan

Education Loan Rate of Interest - There are two types of interest imposed on educational loan which are fixed rate of interest and floating rate of interest. Basically, a fixed rate of interest is higher but it is constant and not affected by the fluctuation in the market. In floating rate of interest, the EMI is usually lower but it is subjected to the risk of variation in the market. The borrower can choose the appropriate one according to financial convenience.

Waiver Period - It is another important factor to be considered before applying for an education loan. The loan repayment usually does not start immediately after the exams, there is a Waiver Period given for the students to seek the job or to establish any business. An important point to be noted is that bank imposes interest during the waiver period. So it is up to you to select the education loan which is appropriate to you.

Margin Money - It refers to the part of the amount need to be paid by the applicant. The percentage of margin money is mentioned in the terms section of the loan which has to be arranged by the student. However, education loan up to Rs 4 lakhs usually does not require any margin money. It is applicable to loan above 4 Lakhs. It requires a 5% margin for studies within India and 15% for studies overseas.

Preclosure of education loan - Some of the banks impose a penalty in case the borrower wants to settle the loan with full amount before the loan period ends. Thus it is important to check for the prepayment conditions in the terms and conditions before proceeding in order to avoid the future problems at the time of preclosure.

Collateral - Everyone knows that bank requires any asset particularly an immovable property or asset such as FD, shares, bond and so on to be pledged to the bank to secure the loan. If the borrower stops repaying the loan, the bank has all the right to seize the collateral to recover the loss incurred with the loan provided. You no need to worry if you don’t have any collateral to pledge, there are many banks that give education loan without collateral on the basis of the academic excellence of the student.

Expense covered - It is important to check for the expense covered by the bank especially by the students who opt to study overseas to make sure that the loan covers all the necessary aspects of the expense that can occur in the academic period. Most of the education loans cover even the expense incurred for the purchase of study materials which are essential for the academics. However, it is advisable to check for the terms and condition before proceeding with the education loan.


Interest Rate for Education Loan In India

The interest rate is an important factor to be considered before applying for an education loan. Here you get an overview of the interest rate imposed by various banks and it varies with the range of loan amount. However, there can be a revision by the bank in the values. As this information is intended to give a basic structure of the interest rate, you can visit the official website of the particular bank to check for an update.

Banks

Education Loan Amount

Rate of Interest

Canara Bank

For Vidhya Turant Loan Scheme

6.60%

Up to Rs. 4 Lakhs

10.40%

Rs. 4 Lakhs to Rs. 7.50 Lakhs

10.40%

Loans above Rs. 7.50 lakhs

10.40%

IBA´s Model Loan scheme for Vocational Education & Training

9.90%

Bank of Baroda

For all loan types and amounts

8.50% onwards

Axis Bank

Up to Rs. 4 Lakhs

15.20%

Loans greater than Rs. 4 Lakhs and up to Rs. 7.5 Lakhs

14.70%

Loans greater than Rs. 7.5 Lakhs

13.70%

HDFC Bank

Minimum APR

9.00%

Maximum APR

13.86%

Average APR

11.57%

Punjab National Bank

PNB Kaushal

8.55% onwards

PNB Saraswati/Udaan

10.30% onwards

PNB Pratibha (for admission to IITs, IIMs and XLRI Jamshedpur)

8.45% onwards

PNB Pratibha (for admission to other colleges)

8.55% onwards

PNB Honhaar

10.45%

State Bank of India

Up to Rs. 7.5 Lakhs

10.25%

Above Rs. 7.5 Lakhs

10.50%

Kotak Mahindra Bank

For all loan types and amounts

11.5% to 24%


Documents Required For Education Loan in India

  • Proof of identity - Passport, Voter ID card, Driving license, or PAN card. (Any one of the listed document)

  • Proof of residence - Bank account statement, Latest electricity bill, Latest mobile/telephone bill, or Existing house lease agreement (Any one of the listed document)

  • Age Proof - Class 10th certificate or Birth certificate

  • Latest salary slip or Form 16 along with recent salary certificate. ( Applicable only for the salaried candidate)

  • Bank Statement / Pass Book of last 6 months

  • Copy of admission letter of the Institute

  • Fees structure from the Institute

  • Application form

  • Two passport size photos (both Applicant and Co-Applicant)

  • Mark sheets or passing certificates of previous degree courses (Scholarship documents if any)

  • Affidavit or that confirms that no loan has been availed from another bank or financial institution

  • Visa approval and travel papers (only for studies overseas)

Documents Required For Co-applicant For Education Loan

  • Address proof

  • Identity proof

If salaried

  • Last 3 months salary slips or salary certificate on company letterhead

  • Last 2 years Income Tax returns or Form 16 from the employer

If Self-employed

  • Last 6 months bank statement

  • Last 2 years Income Tax Returns

  • Proof of office - lease deed, utility bill, or title deed (any of the following)


Eligibility Criteria For Education Loan in India

Some of the basic eligibility criteria are given below as it varies for each bank and schemes

  • The applicant must be an Indian Citizen.

  • The student should have already confirmed the admission to any recognized educational institutes in India or abroad.

  • The applicant should be between the age of 18 to 35 years.

  • There should be a co-applicant who can be either parent/guardian or spouse/parent-in-law in case of married applicants.

  • Students should display a good academic record.


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