An education loan is designed to help students pay for tuition fees, books and living expenses. It may differ from other types of loans in that the interest rate may be lower and the repayment schedule may be deferred while the student is still in school.
Basically an education loan, is funding offered by various banks & NBFCs and New generation standalone education loan NBFCs to the deserving students so that they can pursue their basic or higher education, in India or abroad.
Features & Benefits
- Education loans are provided to pursue all types of academic courses, in India and abroad. The courses include graduation, post-graduation, vocational courses and other certificate courses.
- Loan amounts upto maximum of Rs.15 lakhs for education in India. For education abroad, banks & NBFCs can provide loans to the maximum of Rs.30 lakhs.
- The applicant’s annual family income and the course pursued are primary determinants for the applicable loan amount.
- Usually, female students are offered discounts and/or lower interest rates when it comes to education loans.
- Government sponsored subsidy schemes, such as ‘Central Scheme to provide Interest subsidy (CSIS)’ help students from the economically backward sections of society avail the benefits of a robust loan for education.
- The applicant need not repay the borrowed amount immediately. Post the completion of the course, the repayment tenure can stretch upto 5-7 years.
- Generally, loans below Rs.4 lakhs do not require a security or guarantor.
A term loan granted to Indian Nationals for pursuing higher education in India or abroad where admission has been secured. The following courses are eligible to be covered
For Studies in India:
- Graduation, Post-graduation including regular technical and professional Degree/Diploma courses conducted by colleges/universities approved by UGC/ AICTE/IMC/Govt. etc
- Regular Degree/ Diploma Courses conducted by autonomous institutions like IIT, IIM etc
- Teacher training/ Nursing courses approved by Central government or the State Government
- Regular Degree/Diploma Courses like Aeronautical, pilot training, shipping etc. approved by Director General of Civil Aviation/Shipping/ concerned regulatory authority
For Studies abroad:
- Job oriented professional/ technical Graduation Degree courses/ Post Graduation Degree and Diploma courses like MCA, MBA, MS, etc offered by reputed universities.
- Courses conducted by CIMA (Chartered Institute of Management Accountants) – London, CPA (Certified Public Accountant) in USA etc.
Interest Rates :
Education loans usually command an interest rate from anywhere “Between” 12.00 % to 16.00 %, depending on the bank’s base lending rate and other factors. The base lending rate for banks in India, as directed by India’s apex bank, the RBI, is around 9.00- 10.00%. Some private education loan lenders/ financial institutions offer interest rates that are based on their own base lending rates (often very dynamic) and calculation of interest rates are accomplished on a case-to-case basis.
- Letter of admission
- Completely filled in Loan Application Form
- 2 passport size photographs
- Statement of cost of study
- PAN Card of the student and Parent/ Guardian
- AADHAR Card of the student and Parent/ Guardian
- Proof of identity (Driving Licence/Passport/Aadhar/ any photo identity)
- Proof of residence (Driving Licence/Passport/Electricity bill/Telephone bill)
- Student/Co-borrower/ guarantor’s bank account statement for last 6 months
- IT return/ IT assessment order, of previous 2 years of Parent/ Guardian/ other co-borrower (if IT Payee)
- Brief statement of assets & liabilities of Parent/ Guardian/ other co-borrower
- Proof of income (i.e. salary slips/ Form 16) Parent/ Guardian/ other co-borrower
Types of Education Loans :
Education Loan For Studies in the USA
The product given under is for USA. Banks and NBFCs have specialized products for other countries too. Student may apply to banks and NBFCs even before finalizing his/her country of education. However, the final loan product shall be as per the Country finalized by the student for his/her higher education.
The loan will be disbursed in India in Indian Rupees wherever required by student.
Repayments of the loan to be made by the borrower in Indian Rupees only.
What Costs Are Covered?
All of the tuition fees as determined by the college/University.
Up to 100% of other expenses including living and hostel expenses, traveling expenses, examination fees, library/laboratory fees; purchase of books / equipment’s/instruments/uniforms; passage money for studies into India; purchase of computers / laptops considered necessary for completion of the course as decided by Bank and NBFCs. Travel fare restricted to one economy class return ticket between India and the USA (study location).
Loan Re‐payment Terms
- Loan interest re‐payment will start immediately after disbursement of the first installment of the loan.
- Tenure of an education loan consists of Duration of Study + Grace Period after the Study + Repayment Period.
- Bank and NBFCs generally offer maximum tenure of 12 years.
- The loan tenure is however, subject to the factors such as the repayment capacity of the customer/s, future prospects of the course, age of the co‐applicant, etc. and further subject to Bank and nbfcs credit and underwriting norms as applicable from time to time. However, Bank and NBFCs would endeavor to determine the repayment period to suit your convenience.
The following types of collateral are accepted
- Residential Flat
- Residential House
- Non‐Agricultural Land
- A Fixed Deposit, assigned in favor of Bank and NBFCs
Education Loan for Higher Studies in Abroad (Other than USA)
Post-graduate students from India are increasingly choosing to study abroad. India’s most popular destination to study abroad (apart from USA) is countries such as Germany, Canada, U.K. & Australia. France, Singapore, Dubai, NZ are also seeing significant increases from India.
While many institutes in India are internationally competitive by most measures, but the numbers of students who can be served by these schools is quite limited. Hence increasing number of bright Indian are choosing to study overseas for higher education.
The cost to study in these countries varies, depending on the University, course, duration and the cost of living of the country. Most Banks & NBFCs have cutomised loan solutions for each country to help brilliant minds pursue their higher education in the University of their choice keeping in mind the complexities of financing higher education.
Funding Solutions for Studies in India
Perusing higher education in India needs financial planning to be done at least a few months in advance. Rising costs and complex admission procedures need simple, quick, customized solutions. Hence, Bank and NBFCs offers the following finance solutions to help you fulfill your dream education in the University of your choice:
Bank and NBFCs has specialized products for various courses like full time & Executive MBA programs, MS, MBBS, MD, Clinical Research, Engineering etc. and has funder for various different types of courses. Longer courses like 4-6 year MBBS programs are also funded with principal amount repayment post course completion.
Funding Solutions for Studies in India MBA/PGDBM
MBA remains the most popular master’s degree among Indian aspirants with over 2,15,000+ aspirants appearing for CAT , approximately 30,000 undertake GMAT in India.
The decision to pursue an MBA needs significant amount of financial planning due to the rising costs of education
Education Bridge Loan
This loan covers all education expenses related to Exam Prep Classes, GRE/GMAT/SAT Entrance Exam fees, Cost of Applications for Admission to Universities abroad, Actual Course fees, Living Expenses abroad, costs of books, computer and other educated related expenses, etc.
This is an Education Loan Sanction that helps you secure a Confirmation of Admission to the Institute/University abroad. This loan is like a ‘proof of funds’ to cover your course fees and living expenses abroad.
Pre Visa Disbursement Loan
If you already have a Confirmed Admission or your I-20(USA), this loan will help you secure your Visa. The actual loan is disbursed into your bank account, so you can demonstrate ‘proof of funds’ to study abroad at the time of your Visa Interview.