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Trusted by 1L+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below
Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below
Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Education Loan Interest Rates, Types, Process, Features, and Eligibility
Education Loan Interest Rates, Types, Process, Features, and Eligibility
Jul 31, 2024
Education Loan Interest Rates, Types, Process, Features, and Eligibility
Obtaining a quality education is a significant priority for individuals aspiring to achieve their professional goals. However, the escalating cost of education often necessitates financial assistance. Education loans have emerged as a critical solution for students aiming to meet their academic expenses. Banks and Non-Banking Financial Companies (NBFCs) in India offer education loans at competitive rates to support the education of future innovators and leaders.
Top Education Loan Interest Rates 2023
Below are the education loan interest rates offered by some of the leading banks in India as of March 2023:
Bank of Baroda: 9.15% onwards
Punjab National Bank: 9.25% onwards
Canara Bank: 9.25% onwards
Union Bank of India: 11.30% onwards
State Bank of India: 8.55% onwards
Central Bank of India: 8.55% onwards
IDBI Bank: 9.01% onwards
Indian Overseas Bank: 11.05% onwards
HDFC Bank: Offers preferential rates based on the college or university
Axis Bank: 13.70% onwards
Federal Bank: 12.55% onwards
ICICI Bank: 9.95% onwards
Kotak Mahindra Bank: Up to 16%
Karnataka Bank: 10.44% onwards
These interest rates are subject to change as per the bank's regulations.
Types of Education Loans
Education loans can be classified based on various criteria, including the location of the educational institution, the type of course, and the collateral required.
Based on Location
Domestic Education Loan: This loan type is for students who wish to pursue education within India. Approval is contingent upon the applicant being admitted to an Indian educational institution and meeting other lender criteria.
Overseas Education Loan: This loan facilitates students who dream of studying abroad. It covers airfare, accommodation, and tuition fees, provided the student meets the eligibility requirements.
Based on Course
Undergraduate Loans: These loans provide financial assistance to students pursuing undergraduate degrees, which typically span three to four years. An undergraduate degree enhances job prospects and earning potential.
Postgraduate Loans: These loans support students who wish to continue their education with a postgraduate course, usually lasting two years. An advanced degree offers deeper knowledge and better career opportunities.
Career Development Loans: These loans are for professionals who take a break from their careers to pursue professional courses and training. They aim to enhance skills and employment prospects, often in reputed business and technical schools.
Based on Collateral
Loan Against Property, Deposits, and Securities: These loans require pledging immovable assets (e.g., agricultural land, residential land, flat, house), fixed deposit certificates, recurring deposits, gold deposits, bonds, debentures, and equity shares.
Third-Party Guarantee: A guarantee letter from a bank employee or a home bank can help the student secure an education loan.
Features and Benefits
Loan amounts can reach up to Rs. 1 crore for international students and up to Rs. 50 lakh for domestic students.
100% financing is available under certain conditions.
The loan can cover additional expenses such as travel for student exchange programs and the purchase of a laptop.
Preferential forex rates might be available for international disbursements.
Parents are required to be joint borrowers.
Repayment tenures can extend up to 15 years.
There is a moratorium period of up to 6 months to 1 year post-course completion.
Tax benefits on loan interest payments are available for up to 8 years.
List of Expenses Covered under Education Loan
Education loans can cover a variety of expenses, including:
Fees payable to educational institutions.
Examination, library, and laboratory fees.
Travel expenses for studying abroad.
Insurance premiums for student borrowers (if applicable).
Caution deposits, building funds, and refundable deposits (not exceeding 10% of the total loan).
Purchase of books, equipment, instruments, and uniforms (not exceeding 20% of the total loan).
Purchase of a computer (if required) to complete the course (not exceeding 20% of the total loan).
Other expenses are necessary to complete the course, such as study tours, project work, and thesis (not exceeding 20% of the total loan).
While computing the required loan amount, scholarships, fee waivers, and other financial aids available to the student borrower should be considered.
List of Courses Covered under an Educational Loan
Educational loans can cover various courses, including:
Graduation and post-graduation courses (professional, technical, or diploma) conducted by approved universities or colleges under UGC, IMC, AICTE, government bodies, AICTE, AIBMS, or CMR.
Regular degree or diploma courses administered by autonomous institutions such as IIM, IIT, IISc, XLRI, NIFT, NID, ICWA, CA, CFA, etc.
Regular degree or diploma courses such as pilot training, aeronautical, shipping, and more, approved by the Director General of Civil Aviation, Shipping, or other regulatory authorities.
Job-oriented courses (professional or technical) for graduation, post-graduation, or diploma such as MBA, MCA, MS, and courses conducted by the Chartered Institute of Management Accountants (CIMA) in London or Certified Public Accountant (CPA) in the USA.
Loans for skill development programs.
Education Loan Eligibility
Eligibility criteria for education loans include:
Loans are granted for approved undergraduate, postgraduate, PhD programs, diploma courses of six months or longer, job-oriented courses, and technical or professional courses.
Applicants must be studying or have secured admission in recognized institutions, government institutions, professional institutions, or international colleges and universities.
Applicants must have completed 10+2 (12th standard) for undergraduate courses and hold a degree for postgraduate courses.
Documents Required
To apply for an education loan, the following documents are typically required:
KYC documents (proof of identity and address).
Mark sheets of 10th, 12th, graduation, and entrance exams.
Admission letter from the educational institution.
Fee structure of the course.
Co-applicant's KYC and income proof (in some cases).
Additional documents may be requested by the lender.
Tax Benefits on Education Loans
Under Section 80E of the Income Tax Act, the interest paid on education loans is eligible for tax deductions. However, this deduction is not applicable to the principal repayments. There is no cap on the amount that can be claimed for interest repayment. The tax benefit is available for eight years from the start of the loan repayment or until the interest is fully repaid, whichever comes first.
Education Loan EMI Calculator
An education loan EMI calculator is a useful tool that helps borrowers determine their monthly EMI (Equated Monthly Installment) payments. By entering the principal amount, loan tenure, and interest rate, the calculator provides an estimate of the EMI, aiding in financial planning.
How to Apply for an Education Loan
Education loans can be applied for either online or offline:
Online Application Process
Visit the bank's official website and select the desired education loan scheme.
Download the application form or click on the ‘Apply Now’ button.
Fill in the application form, attach the necessary documents, and submit it.
The bank will verify the documents, evaluate the course of study, and assess the collateral.
Once approved, the bank will disburse the loan amount.
Offline Application Process
Visit the branch of the bank where you wish to apply for the loan.
Fill out the application form and submit it along with the necessary documents.
The bank will verify your application and process the loan.
Study Loan Repayment System
Lenders typically offer a grace period of 6 months to 1 year after course completion for students to secure employment and start repaying the loan. This grace period varies with the lender. Once employed, repayment begins in the form of EMIs. Borrowers can negotiate the EMI amount based on their monthly income, but the maximum repayment tenure is generally eight years.
Final Thoughts
Securing an education loan is a significant step toward achieving your academic and professional goals. With various types of loans available, it's essential to choose the one that best suits your needs. Understanding the interest rates, loan types, eligibility criteria, and repayment options will help you make an informed decision and manage your finances effectively. By planning ahead and utilizing the benefits offered by education loans, you can focus on your studies and build a bright future.
Education Loan Interest Rates, Types, Process, Features, and Eligibility
Obtaining a quality education is a significant priority for individuals aspiring to achieve their professional goals. However, the escalating cost of education often necessitates financial assistance. Education loans have emerged as a critical solution for students aiming to meet their academic expenses. Banks and Non-Banking Financial Companies (NBFCs) in India offer education loans at competitive rates to support the education of future innovators and leaders.
Top Education Loan Interest Rates 2023
Below are the education loan interest rates offered by some of the leading banks in India as of March 2023:
Bank of Baroda: 9.15% onwards
Punjab National Bank: 9.25% onwards
Canara Bank: 9.25% onwards
Union Bank of India: 11.30% onwards
State Bank of India: 8.55% onwards
Central Bank of India: 8.55% onwards
IDBI Bank: 9.01% onwards
Indian Overseas Bank: 11.05% onwards
HDFC Bank: Offers preferential rates based on the college or university
Axis Bank: 13.70% onwards
Federal Bank: 12.55% onwards
ICICI Bank: 9.95% onwards
Kotak Mahindra Bank: Up to 16%
Karnataka Bank: 10.44% onwards
These interest rates are subject to change as per the bank's regulations.
Types of Education Loans
Education loans can be classified based on various criteria, including the location of the educational institution, the type of course, and the collateral required.
Based on Location
Domestic Education Loan: This loan type is for students who wish to pursue education within India. Approval is contingent upon the applicant being admitted to an Indian educational institution and meeting other lender criteria.
Overseas Education Loan: This loan facilitates students who dream of studying abroad. It covers airfare, accommodation, and tuition fees, provided the student meets the eligibility requirements.
Based on Course
Undergraduate Loans: These loans provide financial assistance to students pursuing undergraduate degrees, which typically span three to four years. An undergraduate degree enhances job prospects and earning potential.
Postgraduate Loans: These loans support students who wish to continue their education with a postgraduate course, usually lasting two years. An advanced degree offers deeper knowledge and better career opportunities.
Career Development Loans: These loans are for professionals who take a break from their careers to pursue professional courses and training. They aim to enhance skills and employment prospects, often in reputed business and technical schools.
Based on Collateral
Loan Against Property, Deposits, and Securities: These loans require pledging immovable assets (e.g., agricultural land, residential land, flat, house), fixed deposit certificates, recurring deposits, gold deposits, bonds, debentures, and equity shares.
Third-Party Guarantee: A guarantee letter from a bank employee or a home bank can help the student secure an education loan.
Features and Benefits
Loan amounts can reach up to Rs. 1 crore for international students and up to Rs. 50 lakh for domestic students.
100% financing is available under certain conditions.
The loan can cover additional expenses such as travel for student exchange programs and the purchase of a laptop.
Preferential forex rates might be available for international disbursements.
Parents are required to be joint borrowers.
Repayment tenures can extend up to 15 years.
There is a moratorium period of up to 6 months to 1 year post-course completion.
Tax benefits on loan interest payments are available for up to 8 years.
List of Expenses Covered under Education Loan
Education loans can cover a variety of expenses, including:
Fees payable to educational institutions.
Examination, library, and laboratory fees.
Travel expenses for studying abroad.
Insurance premiums for student borrowers (if applicable).
Caution deposits, building funds, and refundable deposits (not exceeding 10% of the total loan).
Purchase of books, equipment, instruments, and uniforms (not exceeding 20% of the total loan).
Purchase of a computer (if required) to complete the course (not exceeding 20% of the total loan).
Other expenses are necessary to complete the course, such as study tours, project work, and thesis (not exceeding 20% of the total loan).
While computing the required loan amount, scholarships, fee waivers, and other financial aids available to the student borrower should be considered.
List of Courses Covered under an Educational Loan
Educational loans can cover various courses, including:
Graduation and post-graduation courses (professional, technical, or diploma) conducted by approved universities or colleges under UGC, IMC, AICTE, government bodies, AICTE, AIBMS, or CMR.
Regular degree or diploma courses administered by autonomous institutions such as IIM, IIT, IISc, XLRI, NIFT, NID, ICWA, CA, CFA, etc.
Regular degree or diploma courses such as pilot training, aeronautical, shipping, and more, approved by the Director General of Civil Aviation, Shipping, or other regulatory authorities.
Job-oriented courses (professional or technical) for graduation, post-graduation, or diploma such as MBA, MCA, MS, and courses conducted by the Chartered Institute of Management Accountants (CIMA) in London or Certified Public Accountant (CPA) in the USA.
Loans for skill development programs.
Education Loan Eligibility
Eligibility criteria for education loans include:
Loans are granted for approved undergraduate, postgraduate, PhD programs, diploma courses of six months or longer, job-oriented courses, and technical or professional courses.
Applicants must be studying or have secured admission in recognized institutions, government institutions, professional institutions, or international colleges and universities.
Applicants must have completed 10+2 (12th standard) for undergraduate courses and hold a degree for postgraduate courses.
Documents Required
To apply for an education loan, the following documents are typically required:
KYC documents (proof of identity and address).
Mark sheets of 10th, 12th, graduation, and entrance exams.
Admission letter from the educational institution.
Fee structure of the course.
Co-applicant's KYC and income proof (in some cases).
Additional documents may be requested by the lender.
Tax Benefits on Education Loans
Under Section 80E of the Income Tax Act, the interest paid on education loans is eligible for tax deductions. However, this deduction is not applicable to the principal repayments. There is no cap on the amount that can be claimed for interest repayment. The tax benefit is available for eight years from the start of the loan repayment or until the interest is fully repaid, whichever comes first.
Education Loan EMI Calculator
An education loan EMI calculator is a useful tool that helps borrowers determine their monthly EMI (Equated Monthly Installment) payments. By entering the principal amount, loan tenure, and interest rate, the calculator provides an estimate of the EMI, aiding in financial planning.
How to Apply for an Education Loan
Education loans can be applied for either online or offline:
Online Application Process
Visit the bank's official website and select the desired education loan scheme.
Download the application form or click on the ‘Apply Now’ button.
Fill in the application form, attach the necessary documents, and submit it.
The bank will verify the documents, evaluate the course of study, and assess the collateral.
Once approved, the bank will disburse the loan amount.
Offline Application Process
Visit the branch of the bank where you wish to apply for the loan.
Fill out the application form and submit it along with the necessary documents.
The bank will verify your application and process the loan.
Study Loan Repayment System
Lenders typically offer a grace period of 6 months to 1 year after course completion for students to secure employment and start repaying the loan. This grace period varies with the lender. Once employed, repayment begins in the form of EMIs. Borrowers can negotiate the EMI amount based on their monthly income, but the maximum repayment tenure is generally eight years.
Final Thoughts
Securing an education loan is a significant step toward achieving your academic and professional goals. With various types of loans available, it's essential to choose the one that best suits your needs. Understanding the interest rates, loan types, eligibility criteria, and repayment options will help you make an informed decision and manage your finances effectively. By planning ahead and utilizing the benefits offered by education loans, you can focus on your studies and build a bright future.
Author
Pluto Team
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