Education Loan for Indian Students

Educational loans help the students to achieve their dream of attaining higher education. It is a great financial support provided by the banks in the context of education prices being escalated by each year. In India, the education loans are open to any Indian citizen between the age of 16 to 35 years and enthusiastic to pursue higher education. It is usually approved for the candidates who have taken the admission in any designated college or any educational institute recognized by the bank.

Sr. No.

Title

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Factors to consider before applying for Education Loan

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Education Loan Without Collateral

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Banks that offer Education Loan without Collateral

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Basic Eligibility Criteria


Factors to consider before applying for an educational loan

Rate of Interest - It is available under both fixed rate of interest and floating rate of interest which can be chosen by the borrower’s convenience. The fixed rate of interest can be higher than that of the floating rate of interest but the risk of change in interest rate according to market fluctuation doesn't come into the picture.

Waiver Period - The loan repayment does not start immediately after the student passes out. There is a waiver period given in order to search for a job or to establish a business. Usually, the waiver period is 6 months but still varies according to the terms of each bank. It is also essential to note that the interest is charged during the waiver period.

Margin Money - Margin money refers to the amount you need to pay from your own fund. There will be a percentage given by the bank which has to be arranged by the applicant and the bank pays the remaining amount. Anyway, education loan up to Rs. 4 Lakhs does not require any margin money. For loans above 4 Lakhs require a 5% margin for studies within India and 15% for studies abroad.

Prepayment of Education Loan - Most of the banks do not charge any fees/penalty in case a borrower wants to close the loan by paying the entire loan amount in one shot. Some banks may charge a nominal fee as per the terms and condition. Therefore it is important to check for the prepayment conditions to avoid problems later at the stage of prepayment.

Education Loan for female students - As an intention to empower women students almost all the public sector and private banks offer lower interest rate for female students. In most of the cases, the concession will be about 0.50%


Education Loan Without Collateral

Collateral is an immovable property or any other asset such as FD, shares, bond and so on which is offered to the financier by the borrower to secure the loan. If the borrower stops repaying the loan, the bank can seize the collateral to recover the loss incurred by the bank in context with the loan provided.

You no need to worry if you don’t have any collateral to pledge. There are many banks that provide education loan without collateral.

According to the guidelines of the RBI, all banks have the credential to provide education loan without collateral up to Rs 7.5 lakhs even though there are few criteria which have to be met by the applicant. Private and Non-Banking Finance Corporations provide loans up to INR 50 lakhs without security.

Some of the Banks which offer Educational Loan without collateral

Bank

Loan Amount

HDFC Bank

Up to Rs.15 lakhs for domestic education and Up to Rs.20 lakhs for Foreign Education. For loans up to Rs.7.5 lakhs no collateral is required

HSBC

Loan up to Rs.5 lakhs

State Bank of India (SBI)

Up to Rs.15 lakhs for Domestic Education and Up to Rs.20 lakhs for Foreign Education. No collateral is not required For loans up to Rs.4 lakhs.

Punjab and Sind Bank

Up to Rs.15 lakhs for Domestic Education and Up to Rs.20 lakhs for Foreign Education. No collateral is not required For loans up to Rs.4 lakhs.

IDBI Bank

Up to Rs.15 lakhs for Domestic Education and Up to Rs.20 lakhs for Foreign Education. No collateral is not required For loans up to Rs.4 lakhs.


Eligibility Criteria For Education Loan

  • The eligibility criteria may vary according to each bank and some of the basic eligibility criteria are given below.

  • The candidate must be an Indian Citizen.

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

  • The age of the candidate must fall between 18 to 35 years.

  • The applicant seeking full-time courses should have 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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