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How to get an Education Loan in India?


Education LoanAre you the son of proud parents looking for continuing your higher education in one of the IITs in India or want to go abroad and attend the famous Harvard Business School? Perhaps you have the entire necessary documents and admission letter from your dream institute where you intend to pursue your higher studies. Now, cash is the main obstacle that you are facing, and the question is how to get an education loan. This loan in India covers the cost of tuition fee including almost all the expenditure enabling you to successfully pursue your academics.

Getting the right education loan in India

right education loan You can set yourself on the path to academia for which you require a guarantor and highly placed credentials. Getting loans has become a usual thing today whether you wish to purchase a house, a car or you need it for continuing higher studies. You may see that the fees for the college are increasing every year. With this, you have no other option but to get an education loan. The fees payable for undergraduate engineering courses could vary from Rs 5 to 10 lakhs, while you have to shell down up to a maximum of fifty lakhs for completing a five year medical course at a private college. For studying post graduate courses like management education, you have to pay fees which will be more than Rs 10 lakhs. On the other hand, private colleges charge you higher fees in comparison to government colleges.

Requirements for a getting an education loan from a bank

Requirements for a getting an education loan from a bankTo apply for education loan you must have a co-applicant. In this case, your co-applicant can be your parents, siblings or your spouse. You require a third party guarantor to get a loan ranging between Rs 4 to 7.5 lakhs. However, for loan amount exceeding 7.5 lakhs, you have to provide collateral security. After completion of the course, the repayment of the loan commences, which should be within a period of six months to one year. Delay in payment of loan amount will adversely affect your credit history and your co-applicant. If you are proceeding abroad, then your education loan amount will be recovered by your banker from your co-applicant like your parents. However, the education loan that you avail for your studies abroad may not be sufficient for you. In such cases, you need to look for part-time jobs or obtain sponsorship that will help you to continue your studies further. You have to gain insurance coverage for studying abroad.

Education loan from banks

education loan from a bankBased on the norms of Indian Bankers Association, banks can offer you education loan up to Rs 10 lakhs for pursuing higher studies in Indian colleges like IIT’s. But, banks can offer you loans up to 20 lakhs for studying in premier management institutes in India like IIMs. However, in general, the size of an education loan dependents on the course that you wish to take up. Getting these loans will help you to pay your fees for tuition, examination, hostel, laboratory, and library. You can purchase books, equipment, uniform and instruments out of this loan money. Education loan will also help you to pay for your expenses on project work and study tour.

Sanctioning conditions of education loan

Sanctioning conditions of education loanThe banker or the lender while sanctioning your loan will verify whether you have actually secured admission to a course. This verification also includes other factors like the quality of the course and the college where you intend to study. The lender will also check whether the college in which you propose to study is recognized by the University Grants Commission authorities or by the All India Council of Technical Education. Other factors that are verified by the lender or the banker are the credit history of your co-applicant or guarantor. It also checks about your ability to secure an appropriate employment after the successful completion of the course. Lenders before offering you the education loan also verify and consider the value of the property that you have provided as collateral security. This is required only for high value loans. After fulfilling these conditions, the loans will be sanctioned. The lender or the banker will pay directly to the college where you have enrolled, for the tuition fees, for library and examination.

Rates of interest   

Rates of interestWhen once your loan is sanctioned, it will carry interest rates, which you need to pay as well. The interest rates for education loans may vary from 11.75 percent to 14.75 percent. This rate is dependent upon the amount of education loan and the concerned college where you have got admission. Discounts of 25 basis points on lending rates are offered to female students by public sector banks as a special concession.

Terms of repayment

Terms of repaymentWhen once you complete the course, the education loan that you have got will have to be repaid under repayment period ranging from six months to one year. If you are an engineering student, then you start repaying your loan amount and complete it within twelve months after completion of the course. The duration of the course is four years. Even if you do not manage to secure a job, you need to start your repayment of the loan money immediately after you complete the course. However, when you start repaying the education loan amount, it is possible for you to avail the advantage of tax benefits under section 80-E of income tax act.

Education loan procedure

Education loan procedureEducation loans also known as student loans, are nothing but financial aid offered by government organizations, banks and private financial institutions. These loans will help the needy students as well as eligible students to achieve their higher degrees by studying in professional institutes like IITs and IIMs. The loans are formulated to help you with the required financial assistance and you can pay your college tuition, books and other living expenses. For getting an education loan, there is no need for you to run from pillar to post today. You can find the facility of getting bank loan to continue your education. With the government’s liberal policies, you will be able get these education loans in an easy way. For getting a loan you need to first assess as to how much loan amount you require consideration all the expenses including tuition fees. Now, you can decide upon the type of loan that is most suitable for you. For this purpose, you can approach banks like SBI and private banks like ICICI or HDFC. Study the various schemes offered by them and compare the merits and demerits. Websites like has become popular. Study the offers made by various banks through online. You can get the right type of loan after studying the lowest offer. Get the loan processed by submitting all the documents to the concerned bank. Fulfil all their requirements. Your loan will be sanctioned easily. Go ahead with your studies as planned.


ConclusionThe education loan that you may get from the bank or any institution may not be adequate to meet the entire expenses during your studies. Still you can feel that it would be of great help to you to continue your studies and complete your professional degree of your choice. Many parents these days decide and allow their children to avail education loan. This will help them to learn financial discipline. Besides this, it will help parents to save their savings to cover unforeseen expenses or emergencies that may occur later on in their old age.

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