Education Loan

Education Loan provides financial support to meritorious students who want to pursue higher education in India and abroad. It helps students to pay their tuition fees, books, living expenses while studying, etc.

Some of the key factors students should keep in mind before applying for Education Loans are:

Education Loan Courses covered:

Education Loan covers most graduate, post graduate, diploma and professional courses recognized by University Grant Commission, All India Council for Technical Education, AICTE, AIBMS, and the Indian Council for Medical Research, Government of India, job oriented professional / technical courses of reputed institutes abroad, etc. Educational Loan is also available for government recognized or approved vocational or skill development courses.

Education Loan Eligibility:

  • Student should be an Indian national
  • Student’s parents / guardian should have a regular source of income so that they are able to repay the loan if the need arises (not required for loans up to Rs. 4 lakhs).
  • Student should have a secured admission to the College / Institution.

Education Loan Amount and Margin:

Most bank offers up to Rs. 10 Lakhs for studying in India and up to Rs. 20 lakhs for studying abroad.

Students have to bring in their own contribution for loan amount above Rs. 4 lakhs i.e. 5% for studies in India and 15% for studies abroad.

No collateral security is required for loans up to Rs. 4 lakhs, however Co-obligation of Parents or Guardians is required. However, for availing education loan of more than Rs. 4 lakhs student will have to furnished collateral security (such as a house, etc.) of at least reasonable value as compared to the loan and or a guarantor with sufficient income in relation to the loan.

Education Loan Expenses covered:

Some of the expenses that are covered under education loan are:-

  • Fees payable to the college, school or hostel, including tuition fees.
  • Examination, library and laboratory fees.
  • Purchase of books, equipment, instruments and uniforms.
  • Caution deposit or refundable deposit.
  • Travel expenses for studies abroad.
  • Buying computers for completion of the course.

Any other expenses needed to complete the course like study tours, project work and theses. State Bank of India also cover the cost of two-wheelers up to Rs 50,000/-

Education Loan Repayment:

Repayment for education loan commences after 1 year after course or 6 months after getting the job, whichever is earlier.

The maximum loan tenure is 10 years for loan amount up to Rs. 7.5 lakhs and 15 years for loan amount above Rs. 7.5 lakhs.

Education Loan Documents Required:

Different banks have different document requirements for granting education loans. However, most banks require the following documents;

  • Mark sheets of the last qualifying examination.
  • Proof of admission / scholarship.
  • Schedule of expenses for the specified course.
  • Statement of the borrower’s bank account of the last six months, which is usually the parent or guardian, and proof of income, if any..
  • An income tax assessment order for the previous two years.
  • If tangible collaterals required – relevant documents of Property / Shares / Units / Life Insurance polices with high surrender value, etc.
  • If you are not an existing bank customer, you will also need to give proof of identity and residence to comply with the basic KYC (Know your customers) norms.