Education and academic excellence are considered to be very important in India. An education loan is a loan that helps facilitate young minds to pursue their academics further, either in India or aboard by providing them with a loan amount to fund their higher education. This is very advantageous when the child does not have adequate funds to pursue his/her higher education. An education loan can be availed for an undergraduate degree, a postgraduate degree, or a Ph.D.

The loan repayment is done only when the student completes his/her course and finishes a grace period of 6 months or one year wherein he/she can join a job and start making money. 

• Good loan amount

Maximum loan amount of Rs. 50 Lakhs can be obtained as an education loan for domestic institutes and up to Rs.1 crore for international institutes. So, the loan amount can be availed based on the tuition fee for the institution. In some cases, living expenses are also covered by the bank along with other needed expenses for education such as the cost for books, a laptop, and more.

• Flexible tenures

Education loans have tenures that can extend up to 10 to 15 years. This reduces the EMI burden on the student, and he/she can repay the loan amount with ease in time after the moratorium period.

• Good education

A major benefit of taking an education loan is that the student gets to afford a good education that can help him/her in the long run by getting a good career and getting settled for life. It helps one achieve academic excellence that adds to a resume to enable one to get into a reputed company thereby giving one job security and job satisfaction for life.

• Tax benefits

The interest paid on the education loan can be claimed as a tax deduction as per section 80E of the Income Tax Act that was passed in the year 1961. However, the income tax benefit can only be claimed on the interest of the loan and not the principal amount as it does not qualify for it.

• Government subsidy

The Government of India has the scheme to help the weaker sections of society to enjoy education and not deprive them of the same due to insufficient monetary funds. According to this, the Government of India provides full interest subsidy during the moratorium period which is during the entire course period plus an additional six months of one year after getting a job, whichever is sooner.

• Moratorium period

The repayment on the education loan does not begin right after he/she finishes his/her course. The banks provide a holiday period of one year or six months after course completion which is called the moratorium period. So, one does not need to repay the loan during this one year, but the interest rate will be applicable for the year. This helps the student get a job to help repay the loan and this lessens the burden on the student by a great deal.

• Collateral free loans for premier institutions

A very big advantage in an education loan is that if the student gets admission into a premier institute such as IIT or IIM, then the entire loan amount can be taken collateral-free. If the institute is not a premier institute, then only up to 4 lakhs can be taken without collateral. Loan amounts that are higher than 4 lakhs require collateral in most cases.

• Maximum Loan Amount: Need-Based
• Maximum Loan Tenure: 15 Years
• Collateral: Nil Up to Rs.7.5 lakh
• Margin: Nil Up to Rs.4 lakh
• Offers loans to Indian residents and OCIs/PIOs/students born abroad to Indian parents and want to pursue studies in India
• Security will be 125% of the loan amount
• Moratorium period of 6 months to 1 year after course completion

• Loan amount up to Rs.20 lakh with concessional rates for female students
• Max Loan Tenure: 15 Years
• Collateral: Nil up to Rs. 7.5 lakh
• Margin: Nil Up to Rs.4 lakh
• Moratorium period of 12 months after course completion
• The second loan can be availed for completing higher studies

• Maximum Loan Amount Rs. 1 Core
• Maximum Loan Tenure: 15 years
• Margin: Nil Up to Rs.4 lakh
• Can secure a loan before admission based on profile
• Loan disbursal within 15 business days from the date the bank receives your complete application
• Unsecured loans up to Rs.20 lakh for working professionals

• Maximum Loan Amount: Rs. 80 Lakh
• Maximum Loan Tenure: 10 –15 Years
• Collateral: 100% Tangible Security
• Margin: Nil Up to Rs.4 lakh
• Education loan available for education from nursery onwards
• Get a free debit card on select education loan schemes
• Concessional interest rates for female students

• Maximum Loan Amount: India: Rs.20 lakh Abroad: Rs.35 lakh without collateral; no limit with collateral
• Maximum Loan Tenure: 15 Years
• Collateral: Nill Up to Rs.7.5 lakh
• Preferential rates offered for admission to top-ranking colleges and universities
• Education loan abroad covers more than 950 courses in 36 countries
• The co-borrower can be from a different city

• Maximum loan amount of Rs.30 Lakh
• Maximum Loan Tenure: 6 years
• Collateral: Nill Up to Rs.4 lakh
• Choose from 3 EMI plans as per your convenience
• Minimal documentation and quick approval of loans

Here’s what the loan amount will cover:

• 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 expense required to complete the course such as study tours/thesis/project work

The loan repayment period usually starts 6-12 months after completing your course or when you get a job, whichever occurs first. Different lenders provide different moratorium periods to applicants to repay the loan. You will have to repay your loan through EMIs.

Here are the different modes of repayments usually available:

• Internet Banking – Pay online through the lender’s website or mobile app.
• Cheque – Drop a cheque at any of the branches.
• Direct debit – Set up recurring payments for your EMI to be directly debited from your bank account on the payment due date.
• Demand Draft – Pay through a DD.

The preferred method of repayment varies between lenders. Therefore, it is advisable to check with your lender when taking the loan.

If money is the only obstacle in your way from achieving your professional goals, then consider taking an education or student loan to fulfill your goals. You can get collateral-free goals wherein you need not provide any security to the lender and your repayments will not start immediately after graduation.

You will get a tax deduction on the interest paid on your education loan under Section 80E of the Income Tax Act, 1961. This benefit is only offered to individual borrowers and for the purpose of higher education. The deduction covers all fields of study in India and overseas. It also includes vocational as well as regular courses.

Please note that the tax deduction is only applicable on the interest portion of the EMI and not the principal. However, there is no maximum limit to claim this benefit. You will require a certificate from your bank or financial institution segregating the principle and interest portions of your EMIs to claim this benefit.

You can claim this benefit for 8 years from the year you started repayment or until the interest portion of your loan has been repaid, whichever occurs first.

There are several ways of applying for a student loan:

Apply Online:

• This is the easiest and most convenient way of applying. There are two ways of applying online. The first is a straightforward application form that you will fill online, attach the necessary documents, and submit the form.
• The second is where you apply through providing all the requested details and the lender will then get in touch with you to discuss the terms of the loan before proceeding with the application.

Offline

• Visit a Branch: You can apply for a loan by visiting your nearest branch with the necessary documents, discuss the terms of the loan with a representative, fill the form, and apply in person.
• Call the Lender: You can either call the lender or request a call back by expressing your interest. You can then discuss the loan terms and proceed to apply.

Virtual Assistant

• Banks and other financial institutions are now adopting digital methods to better serve their customers. One such method is using a Virtual Assistant to clear your doubts and request assistance with the application procedure.

Nationality:

• Indian citizens

• Non-Indian Residents (NRIs)

• Overseas Citizens of India (OCI)

• Persons of Indian Origin (PIOs)

• Students born to Indian parents abroad and wish to study in India

Courses:

• Undergraduate programs

• Postgraduate programs

• Doctoral courses and PhDs

• Certificate courses with 6 months or longer duration

• Job-oriented courses

• Technical/diploma/professional courses

Institutes:

• Recognized institutions and government colleges

• Private institute

• Must be an Indian Resident
• Applicant should have secured admission with the educational institution

• Must be an Indian Resident.
• The applicant should have secured admission to the educational institution.
• Should be between 16 to 35 years of age.

• Indian National. The applicant should be an Indian citizen or must hold an Indian passport
• 10+2.One must have qualified 10+2 from a recognized institute
• Co-Borrower.A co-borrower or a co-signer is a must. A co-borrower must be a member of the immediate family
• Recognized Institute. The person should be applying for the course in a reputed institute recognized by the government

• The applicant is required to be a citizen of India.

• The applicant must have attained the age of 18 else his/her parents will have to take the loan on his/her behalf.

• Job oriented professional/ technical Graduation Degree courses/ Post Graduation Degree and Diploma courses like MCA, MBA, MS, etc offered by reputed universities are included in the scheme.

• Courses conducted by CIMA (Chartered Institute of Management Accountants) – London, CPA  (Certified Public Accountant) in the USA are also included in the SBI Education Loan scheme .

• Duly filled the application form along with two passport size photographs of the applicant and co-applicant.
• Admission Letter from the Institute. It should have the institute name and address on the letterhead.
• The detailed cost breakup of the course from the Institute, which specifies the tuition fee, the term of the course, year-wise charges, and expenses.
• The academic record of the applicant/student, which should include 12th Marksheet, certificate of any subsequent education like graduation or post-graduation, mark sheet of the entrance exam (if any), and any scholarship document.
• An affidavit or a declaration that no loan has been availed from any other bank or financial institution.
• Any ID proof like PAN card, Aadhar card, Driving License, passport, etc.
• Any address proof like Ration Card, Driving License, Passport, Aadhaar Card, etc
• For age proof Birth Certificate or 10th Class certificate.

Depending on the loan, the documents that must be submitted will vary. The main documents that must be submitted when you apply for an education loan are mentioned below:

• Application form
• Passport-size photographs
• Identity Proof: Any of the below-mentioned documents can be submitted as

Proof of Identity:

• PAN Card
• Aadhaar Card
• Passport
• Voter’s ID
• Driving License

Address Proof: Any of the below-mentioned documents may be provided as proof of address:

• Voter’s ID
• Driving License
• Aadhaar Card
• Passport

Academic Documents: The below-mentioned academic documents must be submitted:

• 10th and 12th exam marks cards
• Marks cards of any further education
• Entrance Exam mark sheet
• Mark sheets of GRE/IELTS/TOFEL/GMAT
• Any scholarship documents if applicable
• Proof of admission
• Income proof of the co-borrower or guarantor
• Collateral documents
• Bank statements

• Identity proof (either voter’s ID card, passport, PAN card, or driver’s license)
• Proof of address or residence (either a utility bill or a copy of the Aadhaar card/driver’s license/passport)
• Passport
• Academic records (10th, 12th, Graduation (if applicable), entrance exam result through which admission is obtained
• Proof of admission: Admission letter or an offer letter from the educational institution
• Loan account statement of the previous 1 year, if the loan has been taken from another lender
• Passport size photographs

2. For co-applicant:

• Identity proof (either voter’s ID card, passport, PAN card, or driver’s license)
• Proof of address or residence (either a utility bill or a copy of the Aadhaar card/driver’s license/passport)
• Loan account statement of the previous 1 year, if the loan has been taken from another lender
• Passport size photographs

The following documents will be required to be furnished to complete the loan application process.

Salaried Applicants:

• Proof of Identity: Passport, Voter’s ID, driving license, or PAN card.
• Proof of Income: Latest salary slip showing all deductions, Form 16, and recent salary certificate.
• Proof of Residence: Bank account statement, electricity bill, telephone bill, or house lease agreement.
• Last 6 months’ bank statement or passbook where salary or income is credited
• A guarantor form might be asked for.
• Education Documents: Copy of admission letter along with the fees schedule, mark sheets, certificates of S.S.C and H.S.C and degree courses.

Other Applicants:

Other classes of applicants must submit all the above documents. Instead of the latest salary slip, they can submit the Income Tax Returns statements for the last two years and computation of income by a certified CA for the last two years.

The documents which need to be submitted while looking to avail an education loan from HDFC bank are listed below:
1. Education loan for Indian Education for Pre-sanction loans

• Duly filled application form
• Latest photograph (Signed Across)
• Admission letter from the institute with the fee break – up
• Academic mark sheets (SSC, HSC, and Graduation)
• Age proof
• Identity proof
• Residence proof
• Signature proof
• Salary slips of the last two months carrying the date of joining details (Salaried)
• Bank statement of the salary account for the last 6 months (Salaried)
• ITR of last two years with computation of income (Self-employed)
• Audited Balance Sheet or Profit and loss statement for the last 2 years (Self- employed)
• Bank statement for the last 6 months (Self-employed)
• Latest Sales or service tax return as proof of turnover (Self-employed)
• Proof of qualification (Self-employed)

2. Education loan for Indian Education for Post-sanction loans:
Even for post-sanction loans, you will be required to submit the above-mentioned documents. Along with them, you will also be required to submit the
following:

• Completed loan agreement signed by the applicant and co-applicant
• PDCs, ACH or SI Mandate
• In the case of ACH and SI mode of repayment, three security PDCs need to be submitted

3. Central Government Interest Subsidy Scheme

• Original income certificate issued by an authorized officer of the State government under the scheme
• Original Bonafide student letter issued by the institute
• Interest subsidy agreement stamped as per the State Stamp Act
• Aadhaar number of the student

4. Education loan for Foreign Education

• Duly filled application form
• 2 passport-sized photograph of the applicant and co-applicant
• Photo ID (Anyone)
  • Voter ID
  • Aadhaar card
  • Driving License
  • Passport
  • PAN
• Residence Proof (Anyone)
  • Voter ID
  • Aadhaar card
  • Driving License
  • Passport
• Academic documents
  • Marksheet/certificate of 12th Exam
  • Marksheet/certificate of subsequent years of education
  • Scholarship documents (if applicable)
  • Marksheets of any entrance exam (if applicable)
• Bank statements of the co-applicant for the last 8 months
• Salary slips for the last 3 months or salary certificate on employers’ letter (Salaried co-applicant)
• Income tax returns for the last two years (Salaried and Self-employed co-applicant)
• Lease deed, Utility bill, a title deed, etc. to serve as proof of office (Self-employed co-applicant)
• Certified financial statements or provisional financial statements duly certified by a CA for the last 2 years (Self-employed co-applicant)
• Any other income proof not reflected in the above documents may also be asked by the bank officials.
• In case, the immovable property is provided as collateral you will be required to submit:
  • 7/12 extracts in case of land
  • Registered sale agreement along with society share certificate
  • Property title deed
  • Original registration receipt for the above agreement
  • Approved building plan
  • Encumbrance certificates
  • Latest property tax bill along with receipts
  • Latest maintenance bill along with receipts issued by builder/society
  • Allotment letter by a municipal corporation or authorized Government Authority like MHADA, CIDCO, etc

• Duly filled application form
• Passport-size photograph
• Identity proof like Voter ID, Aadhaar card, driving license, passport, PAN, etc
• Address proof like Aadhaar card, Driving license, Voter ID, etc
• Date of birth proof
• Academic mark sheets and certificates (10th, 12th, subsequent exams if applicable)
• Admission letter or call letter from the institute

• Address proof – Voter ID, Ration Card, Passport, etc
• Identity proof – Voter ID, Passport, PAN Card, etc
• Income details – PAN Card, Form 16, Form 60, Income Tax Returns, Salary Slips, etc
• Education Documents – SSC and HSC mark sheets, degree certificates
• Duly filled application form

Depending on the loan, the documents that must be submitted will vary. The main documents that must be submitted when you apply for an education loan
are mentioned below:

• Application form
• Passport-size photographs
• Proof of admission
• Income proof of the co-borrower or guarantor
• Collateral documents
• Bank statements
• Academic Documents: The below-mentioned academic documents must be submitted:
  • 10th and 12th exam marks cards
  • Marks cards of any further education
  • Entrance Exam mark sheet
  • Mark sheets of GRE/IELTS/TOFEL/GMAT
  • Any scholarship documents if applicable
• Address Proof: Any of the below-mentioned documents may be provided as proof of address:
  • Voter’s ID
  • Driving License
  • Aadhaar Card
  • Passport
• Identity Proof: Any of the below-mentioned documents can be submitted as proof of identity:
  • PAN Card
  • Aadhaar Card
  • Passport
  • Voter’s ID
  • Driving License

Ans. Lenders consider the following factors when approving a loan:

• The course and institute you choose
• The amount you need
• Your academic performance
• Repayment capacity of your family
• Family assets
• Annual income

Ans. The repayment period begins after you complete the course. The tenure may vary from one lender to another.

Ans. In case you choose to discontinue the course mid-way, you must start repaying the loan immediately after getting a job.

Ans. Yes, education loans are eligible for tax benefits. You can avail of deductions under sections 80C and 80E of the Income Tax Act of 1961.

Ans. Yes, you can move your education loan from one bank to another. However, your current bank might charge a refinance fees. Therefore, it is important to consider all factors of the existing bank and the new bank before moving the loan.

Ans. Yes, education loans cover 100% of the education expenses. However, full coverage may only be provided for expenses under a certain limit. Lenders have a margin if the expenses go above the limit.

Ans. Some of the additional expenses covered by education loans are:

• Hostel fees
• Exam fees, laboratory and library fees
• Cost of books, uniforms, projects, etc
• Travel expenses for overseas education
• Deposits required by the educational institute

Ans. Some examples of the courses eligible for education loan are:

• Graduation and Post-graduation courses
• Professional courses
• Diploma/degree courses by recognized institutions

Ans. Yes, you can avail tax benefits under section 80C and 80E of the Income-tax Act, 1961 for education loan’s interest and payment.

Ans. For availing student loan/education loans, usually, the age of 30 is the limit. However, in some cases, it may be higher.

Ans. Usually, banks provide a reason when they reject an education loan application. In case you were not informed by the bank about the reason, you can file an RTI petition.

Ans. Yes, you can transfer your education loan to another bank. But in such a case, your current bank will charge a certain fee, and also the new bank will charge a processing fee. Thus, consider all the factors and expenses before making a decision.

Ans. Some of the factors that lenders consider while assessing an education loan application are:

1. The Institute and the course
2. The Loan amount
3. Repayment capacity of the family
4. Academic Performance
5. Estimated income after completion of the course and securing the job

Ans. In case you want to finance your education, but the course or the institution you wish to join is not in the bank’s list, then you can consider the option of availing a personal loan.Also, if you or your parents own a property, then loan against property is also an excellent option to finance your education.

Ans. An education loan can be availed for an undergraduate degree, a postgraduate degree, or a Ph.D.

Ans. Education loan amounts can go up to Rs.50 lakes for domestic institutes and up to Rs.1 crore for international institutes.