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Education Loan

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What is an education loan?

You borrow money to finance your higher education or college fees. Payments are often deferred while you are in college, and for a six-month grace period after graduation called moratorium period.

Many banks have special education loan schemes for meritorious and needy students. The fee for the course is normally disbursed to the college/institute directly by the bank.

While you apply for an education loan, the bank will verify the tenure of the course and determine its total cost. Every year, you are required to submit a form to the bank which gives the details of the money required, after which the bank directly disburses the loan to the college/ institute.

Why avail Education Loan?

Reduces Financial Burden

You can preserve your savings and still provide for the costly education of your children. You don't have to break your Fixed Deposits.

      

Low Interest

Banks offer education loans at lucrative interest rates. No collateral for education loans up to INR 7.5 Lakhs.

     

Easy Repayment

You don't have to repay the loan until you finish your studies. Repayment is after completion of the course, or getting a job.

 

Tax Benefits

You can claim a tax deduction on the interest portion of your educational loan. Tax deduction for a period of 8 years, after you start paying back the educational loan.

Eligibility criteria to avail an Education Loan

You should be an Indian citizen.
You should fall in the age bracket defined by the respective bank.
You need to apply to a recognized college/institution.
You need to apply for the loan with a co-applicant who has a regular source of income.
You need a minimum CIBIL score of 700 for the final sanction of your education loan.

Key factors to consider for Education Loan

What are the documents required to avail an education loan?

  • You need a loan application form and passport sized photographs.

  • Letter of admission received from the college/institution needs to be presented to the bank.

  • You need mark sheets starting from class 10th to the last qualifying exam you have cleared.

  • You need a declaration/affidavit to confirm no other loan has been availed.

  • You need an identity and an address proof.

  • The co borrower (Your Parents or the third party Guarantor) has to show proof of income (salary slips) as well as the income tax statements of the past 2 years.

 

Concepts & FAQ's Education Loan

What are Education Loans?

Many banks have special education loan schemes for meritorious and needy students. The fee for the course is normally disbursed to the college/institute directly by the bank. While applying for a loan, the bank will verify the tenure of the course and determine its total cost as applicable at that point of time. Every year, you are required to submit a form to the bank which gives the details of the money required, after which the bank directly disburses the loan to the college/ institute.

Although the bank may be in India, you can get your education loan amount in dollars for studies overseas; the amount is paid directly to the institution abroad. Banks charge a fee for the remittance.

Tax benefits : One can get tax benefits for education loans.

Thinking of buying a Education Loan ?

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Frequently Asked Questions

For what type of courses can educational loans be taken?

Educational loans can be taken to pursue a wide variety of courses, for example: School/graduation courses, like High School, B.Sc., B.Com, B.A., etc. Post-graduate/specialized courses, like M.Sc., M.A., M.Com, etc. Professional courses, like M.B.A., M.C.A., B.E., M.E., B.Tech, M.B.B.S., etc. Other courses, like computer courses, fashion designing, commercial pilot training, etc. Keep in mind, however, that, usually, the courses financed should be for durations of more than a year, i.e., 12 months.

What are the costs covered under educational loans?

Educational loans usually cover the costs of tuition fees, hostel fees, mess fee and examination fees. Some banks may also finance the cost of books, equipments and other instruments required by the student for that course. For studies abroad, banks may provide one-way air fare. But this needs to be checked with your individual bank.

What security does one needs to provide for the loan?

The security depends on the loan amount. It is quite possible that banks may not require security for a loan of up to Rs 4, 00,000, but would require it for amounts greater than that. These limits are usually in slabs that vary with banks. The usual securities that the banks generally take are National Savings Certificates (NSCs), bonds, gold, vehicle, house or property, etc. In addition to these, some banks might also require the applicant to have a life insurance policy equivalent to, or greater than, the loan amount.

What are the documents required for an educational loan?

The general documentation required by the banks for disbursing education loans is usually very simple. The most important among them is proof from the college/institute that the student has a confirmed admission there, an agreement with the students or the parents/guardians, and proof of residence. Proof of age is also important, considering that quite a few banks have a clause that they would not finance a student above a certain age limit. Also some documents are required to prove that the parents/guardians have a regular source of income, namely, salary statements, IT returns, etc. and lastly a resume of the student, clearly showing his past academic performances.

How is the disbursement made?

Disbursement of the educational loan is made directly to the institute/college to which the student has applied for admission. In the case of mess and hostel charges, the relevant amounts are given to the concerned authorities. In the case of air fare, which is also available for studies overseas, the amount is given directly to the airlines. Some banks do give the students themselves a certain amount on a monthly or quarterly basis for purchasing books, equipments and other related material associated with the course. This, again, depends on the discretion of the bank.

Can a minor avail an educational loan?

No, a minor cannot avail of an educational loan. But his parents/guardians who satisfy the eligibility criteria can do so. Banks assess the individual's repaying capacity at the time of disbursing the loan, and, hence, minors are ineligible for educational loans. To know whether you can qualify for an education Loan, call us on 080 67974000 and ask our experts!

How does one repay the education loan?

Is a prepayment of education loan possible? What are the charges?

Is there any Grace Period in repayment of education loans?

How can one get Tax benefits on education loans?

When are education loans NOT eligible for tax deduction?

 

Education Loan Articles

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A Student's Guide for Paying off Education Loan in India

09 May 2019, Thursday    

An Education loan is the money borrowed from banks and financial institutions to manage education-related expenses. This type of loan helps bridge the gap between the required amount and the shortfall, thus helping you pursue and achieve your educational goals. An education loan can be availed by st ....

How to Get a Student Loan?

30 April 2019, Tuesday    

What is Student Loan? A Student loan is offered to applicants who want to enjoy a quality education.  Student loans are an ideal option for meritorious students, who want to study, but struggle with financial constraints. The concept of banks paying for your education while you study and th ....

How Education Loan EMI can save Taxes for you?

05 April 2019, Friday    

It’s each parent’s dream to educate children. They sacrifice a lot to fund children’s education. They are ready to use lifetime savings to pay tuition fees. Higher education these days costs a lot. An MBA from a popular institution would cost no less than Rs 8 Lakhs in India. Not a ....

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Education Loan News

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Billionaire Promises to Pay Off Debt for Morehouse Graduates

Monday, May 20, 2019, 4:25 PM

While delivering the commencement address at Morehouse College in Atlanta, US billionaire Robert F Smith said he would pay off Rs.278-crore loan of nearly 400 graduating students. "On behalf of the eight generations of my family who have been in this country, we are gonna put a little fuel in your bus," Smith said.

CBSE Class 12 Results Declared, 2 Girls Are Joint Toppers

Thursday, May 2, 2019, 3:10 PM

Central Board of Secondary Education(CBSE)has declared the Class 12th results today for all regions. Overall pass-percentage this year is 83.4%. Hansika Shukla and Karishma Arora of UPhave scored 499 out of 500 and emerged as CBSEtopper. Atotal of 31,14,831 candidates were registered for both 10th and 12th out of which 12, 87, 359 had appeared for CBSEclass 12th exam.

61.73% Pass Karnataka 2nd PUC Exam; Online Result Available

Monday, April 15, 2019, 12:08 PM

Karnataka 2nd PUC result has been announced and will be available on websites shortly. Students can find the 2nd PUC result on PUE-website pue.kar.nic.in and karresults.nic.in. The overall pass percentage has increased by 2.15%. The pass percentage among girl students is 68.2%. The pass percentage among science students is 66.58% and it is 66.39% in Commerce. 80-colleges have recorded a total of 100% pass.

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Education Loan Videos

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How to get a collateral free loan? | Money Doctor Show English EP 211

How to get a collateral free loan? | Money Doctor Show English EP 211

10 Days Ago

How to get a collateral free loan? | Money Doctor Show English EP 211  
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ಮಕ್ಕಳ ಸ್ಕೂಲ್ ಫೀಸ್ ಗೆ ಸಾಲ ಮಾಡೋದು ಎಷ್ಟು ಸರಿ? | Money Doctor Show Kannada | EP 302

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Education Loan Education

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Home Education
 

What is education loan?

Thursday, February 8, 2018, 12:23 PM

Quality education is a must for a complete and successful-life. For many, it is equivalent to graduating from a top institution. An education loan, therefore, plays a vital role in such a scenario by helping to bridge the gap between the shortfall and the required amount. It covers the basic course fee and other related-expenses such as (college) accommodation, exam and other miscellaneous charges.

Interest paid on education loan is tax deductible under Section 80E

Saturday, December 2, 2017, 5:52 PM

If you have taken an education loan for yourself, spouse or children, then the interest-paid on the loan qualify for tax benefit under Section 80E. The best thing here is that there is no upper limit on the amount of deduction. But the criteria is that the loan must have been taken from a financial-institution or approved charitable institution and for full-time higher education.

Retirement Rules: #6 Borrow for education, save for retirement

Saturday, May 13, 2017, 12:35 PM

In an effort to fulfil the needs of the child, parents sometimes dip into their retirement funds to pay for the child's education. This is risky because your retirement is going to be very different from that of the previous generations. You can borrow money for your children education, but it's very difficult to borrow money for retirement.

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