Leading Indian banks play a pivotal role in supporting students' academic aspirations through comprehensive education loans. These loans, tailored for both domestic and international higher education, offer a generous repayment period of up to 20 years, starting at an attractive 7.00% per annum interest rate. The inclusivity of these loans stands out, covering courses from Nursery to full-time, part-time, and higher education, accommodating the diverse needs of working professionals.
What is an Education Loan?
Education loan is the financial aid offered by the bank or the loan providers to the candidates who are willing to pursue technical, educational, or other courses abroad. The loan provider allows students to repay the loan after completion of the course and a period of six months is also provided as a grace period until the candidate gets a job.
Types of Education Loan
- Undergraduate education loan for higher education after secondary education
- Postgraduate education loan for pursuing courses after completion of undergraduate courses
- Career growth education loans for courses, training, or certification
- Parents availing education loan for their children
Education Loans Overview
Education loans act as a financial lifeline, covering a wide range of expenses including tuition fees, hostel charges, travel costs, insurance premiums, and more. With loan amounts extending up to Rs.1 crore and a flexible repayment tenure of 15 years, students receive substantial support throughout their academic journeys.
Additionally, tax benefits under Section 80E of the Income Tax Act provide relief through deductions on the interest paid.
These loans extend beyond traditional academic paths, including undergraduate, postgraduate, vocational training, and skill development courses. Eligibility criteria encompass enrollment in recognized institutions, completion of 10+2 or a degree, among other factors.
The application process, available through online and offline channels, requires essential documentation such as admission letters and academic records.
An Education Loan EMI Calculator aids borrowers in estimating monthly repayments, providing insights into the holistic loan cost. The repayment journey, often commencing 12 months after course completion, offers flexibility through various modes like internet banking, cheques, direct debit, and demand drafts.
Lenders, acknowledging the significance of education, adopt a holistic approach in approving loans, considering factors such as the chosen course, institute, loan amount, academic performance, family's repayment capacity, assets, and annual income.
In essence, these education loans create a supportive framework, alleviating financial constraints on students' educational endeavors.
Top Education Loan Offers 2024
| Name of Bank | Interest Rate (p.a.) | Processing Fees |
|---|---|---|
| SBI | 8.15% p.a. to 11.75% p.a. |
|
| Central Bank of India | 8.10% p.a. to 10.60% p.a. |
|
| PNB | 9.20% p.a. onwards |
|
| Canara Bank | 9.25% p.a. onwards |
|
| IDFC FIRST Bank | 10% p.a. to 15% p.a. | Up to 1.5% of the loan amount |
| IDBI Bank | 11.10% p.a. |
|
| Bank of Baroda | 8.55% p.a. onwards |
|
| Bank of India | 10.95% p.a. to 11.75% p.a. | No processing fee for studies in India |
| ICICI Bank | 9.40% p.a. onwards | Up to 2% + GST |
| Bank of Maharashtra | 9.45% p.a. to 11.45% p.a. | Contact the bank |
| Axis Bank | 13.70% p.a. to 15.20% p.a. | 2.00% of the loan plus GST |
| HDFC Bank | 9.50% p.a. |
|
| Kotak Mahindra Bank | Up to 16% p.a. | Nil |
| Federal Bank | 12.55% onwards | Contact the bank |
| Tamilnad Mercantile bank | 12.60% p.a. to 12.85% p.a. | 1% of the sanctioned loan amount above Rs. 7.50 lakh for studies abroad |
Note: These interest rates are effective as of January 2024 and are subject to change as per the bank's rules and regulations. Depending on the bank or financial institution, you can have a fixed interest rate package or a fluctuating interest rate package. Most floating rates are based on the Repo Rate, with a spread applied before the final effective interest rate is presented to you (EIR).
List of Expenses Covered in Education Loan
- Tuition fees
- Hostel fees
- Travel expenses (passage money for students studying abroad)
- Insurance premium
- Cost of books/equipment/instruments/uniform
- Examination/laboratory/library fees
- Cost of a computer/laptop required for course completion
- Caution deposit, building fund/refundable deposit supported by institution bills/receipts
- Any other expenses required to complete the course such as study tours/thesis/project work
Features & Benefits of Study Loan
- Loan financing up to Rs.1 crore is available.
- Loan repayment tenure is up to 15 years.
- Get Education loans for studies in India and abroad.
- Some lenders offer loan disbursals before applying for a Visa.
- Door-step service to collect required documents.
- Children of the bank's employees enjoy preferential rates at several banks.
- Certain banks offer concessional interest rates to female students.
- Enjoy a moratorium period of up to 1 year after course completion. During this period, you do not have to make payments on the loan.
- Enjoy tax benefits for up to eight years on the interest paid.
Tax Benefits on Education Loan
The interest you pay on your student loan can be deducted under Section 80E of the Income Tax Act of 1961. This advantage is only available to individual borrowers and is only offered for the purpose of higher education. The deduction is available to all fields of study, both domestically and internationally. It includes both vocational and academic courses.
It's important to remember that the tax deduction only applies to the interest portion of the EMI, not the principle. There is, however, no limit to how many times you can claim this benefit. You'll need a certificate from your bank or financial institution that separates the principal and interest components of your EMIs to qualify for this benefit.
This benefit is accessible for eight years from the day you start repaying your loan or until the interest component is paid off, whichever comes first.
Courses Covered Under an Educational Loan
- Undergraduate degrees
- Postgraduate degrees
- Undergraduate diplomas
- Postgraduate diplomas
- Vocational training courses
- Skill development courses
- Doctoral programmes
Eligibility Criteria for Education Loans
- Loans are provided for sanctioned undergraduate programs, postgraduate programs, PhDs, diploma courses with a duration of six months or more, job-oriented courses, and technical/professional courses.
- Applicants must be enrolled or secure admissions in recognised institutions, government institutions, professional institutions, and international colleges and universities.
- For undergraduate courses, applicants should have completed 10+2 (12th standard), and for postgraduate courses, a degree is required.
List of Documents Required for Education Loan
- Admission letter from the educational institution
- Marksheets (previous education - school/college)
- Age proof
- ID proof
- Address proof
- Signature proof
- Salary slips
- Recent bank account statements
- ITR with the income computation
- Audited balance sheet
- Recent bank statements
- Proof of turnover (service tax return/sales receipt)
- Completed application form with signature
- Latest passport-size photographs
- Appropriate Visa for studies abroad