Education loan is the best way to fund education-related expenditures, without disturbing the finances of your family. This type of loan helps bridge the gap between the required amount and the shortfall, helping you pursue and achieve educational goals.
It helps reduce the financial burden on families as education loan comes with a special benefit, where the repayment process starts after completion of the course.
The main borrower of the education loan is the student, but he must have a parent or guardian as co-borrower. An education loan can be availed for full time, part time and vocational courses. An education loan not only helps fund education but also helps you save on taxes and build a good credit score.
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Both banks and NBFCs offer education loan to students. Education loan not only helps cover various expenses related to your education but also helps fulfill aspirations. The benefits provided by education loan are:
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You have the basic list of the requisite documents that an applicant must submit along with the loan application:
The above list is the basic documents required. Banks in their own capacity may request for more documentation and proof.
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Listed below are the top 6 lending institutes offering education loan at best interest rate:
Banks/NBFCs |
Min-max loans offered |
Rate of interest |
Punjab National Bank |
Different types of loans are offered like PNB Kaushal, PNB Honhaar etc |
8.55% to 10.45% |
Canara Bank |
loans offered are below 4 lakhs, up to 7.5 lakhs and above |
6.60% to 10.40% |
Axis Bank |
Loans offered are from 4 lakhs to 7.5 lakhs and above |
13.7% to 15% |
SBI education loan |
Loans offered are from 4 lakhs to 7.5 lakhs and above |
10.25% to 10.50% |
Avanse |
For all loan types and amounts |
10% to 16.5% |
Credila |
For all loan types and amounts |
11.85% onwards |
Education loan is also known as student loan. This is an unsecured loan where the main borrower is the student. No collateral is required for availing an education loan.
However, parents, siblings or guardian will have to execute the loan as co-borrower. The bank uses the Marginal Cost of Funds based Lending Rate (MCLR), plus an additional spread to decide interest rate.
The rate of interest varies across lenders and also depends on the amount of loan sanctioned. Generally, banks offer lower interest rate of 6.60% a year for loans below Rs 4 lakhs. For loans between Rs 4 to 7.5 lakhs, the rate of interest offered is 8.50% up to 14.5%. For loans above 7.5 lakhs, the rate of interest offered by the banks is in the range of 10.30% to 16% a year.
The rate of interest in education loan is floating in nature and the rate of interest is the prime factor in education loans. To calculate the monthly EMI, you have to use the Education Loan EMI Calculator Online. You have to select the loan amount, select the loan tenure and select the rate of interest offered by the bank. EMI will be displayed as soon as you give these inputs.
How does the bank track my educational progress through the course period?
Yes, the bank asks the borrower to submit academic progress report periodically. This can be in the form of mark sheets or a letter from the institute which serves the purpose.
Does taking an education loan entitle me to any tax benefits?
Yes, education loan helps you save taxes as well. The interest paid on the education loan can be claimed as a deduction as per Section 80E of the Income Tax Act, 1961. However, the income tax benefit can only be claimed on interest part of the loan, the principal part does not qualify for it.
Is there any age restriction for education loan?
The applicant must be above the age of 18 years to apply for education loan. There is no restriction on the upper age.
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