Education is one thing that people are willing to spend on. Getting a good education is seen as the main requirement among millions of people in India. An educated person will get a good career and is able to live a good happy life. This is the general feeling of Indians. Hence they are willing to pay lakhs of rupees on it. However getting a quality education in India and overseas is a costly affair and an education loan is one way of managing the expense.
This is one of the expenses which is inevitable. So it is better to start planning for this expense well in advance. In the recent past, education and medical cost are skyrocketing. Unlike a decade ago, the scenario is not that simple where you would need a few thousand to meet the education expenses. So for those who cannot raise the adequate funds for their children’s education, they opt for the education loan.
There are various banks and financial institutions who are offering education loan at very attractive rates. The repayment conditions are also very lucrative that you would certainly jump in to take the education loan. Usually, education loan is needed for career-oriented courses like medicine, engineering, MBA etc. at the private institution in India or abroad.
In general, education loan covers expenses like tuition fees, examination fees, library fees, cost of books and tools, hostel charges etc.
Eligibility Criteria for Education Loan
- Indian citizen and NRI both can apply for the education loan
- The loan can be applied directly in the name of the student, but the parents will become a co-applicant and a primary debtor
- Minimum age should be 18 years
- The student must have secure certain marks in SSC, HSC, and graduation
- The parents must have a regular source of income
- A confirmed admission from the college/institution is must to apply for an education loan
Documents required for education loan:
- Income statements (Salary slip, Form 16, Income-Tax Returns of the last 2 years, and Computation of income of last 2 years certified by a Chartered Accountant)
- Bank Statement/Pass Book of last 6 months of the parents
- Copy of the admission letter of the Institute along with the ‘fee schedule’
- Mark sheets and/or pass certificates of SSC, HSC, Degree Courses, National level entrance test
- Age proof (birth certificate, passport, Aadhaar, PAN card, driving license)
- Address proof (Aadhaar, passport, latest electricity bill, latest telephone bill, ration card, existing house lease agreement, bank account statement)
- Photo identification proofs (Aadhaar, voter id, PAN card, passport, driving license)
- Passport size photos of the applicant and co-applicants
- Guarantor form (optional)
Best Education Loan in India
Almost all the banks are providing education loan, so which one is best suitable for you? Let’s check and compare them to find out the best one.
SBI Education Loan Apply Online
SBI is India’s biggest bank is offering education loan for higher studies in India and abroad. The loan covers graduation, post-graduation, professional and technical courses conducted by colleges/universities that are approved by UGC/AICTE/IMC/Govt.
Features of SBI Education Loan
- Covers various courses approved by Govt. bodies across many colleges and universities.
- Degree/Diploma courses conducted by IIT and IIM are covered
- It covers the expenses of course fees, hostel fees, library fees
- It also covers the cost of two-wheeler up to Rs. 50000
- Traveling expenses if studying abroad
- For studies in India maximum Rs. 1000000 of loan
- For abroad maximum Rs. 2000000 of loan
- For loan up to Rs. 7.5 lakhs, no guarantee or collateral security is required
- Up to Rs. 4 lakhs, no margin is required
- Repayment will start after one year of loan disbursement
- The loan can be repaid in 15 years
- The interest rate is 10.50% for a loan up to Rs. 7.5 lakhs and 10.75% above Rs. 7.5 lakhs of the loan amount
HDFC Bank Education Loan Apply Online
HDFC bank offers education loan for studying in India or abroad for up to Rs. 10 lakhs. The rates are competitive with an insurance cover. It offers quick loan approval and good customer service.
Features of HDFC Education Loan
- The loan of up to Rs. 10 lakhs in India
- Applicant age should be between 16 to 35 years
- For loan up to Rs. 4 lakhs, no security or collateral
- Loan tenure of 10 years for loan up to Rs. 10 lakhs and 15 years for above 10 lakhs
- Get an insurance cover for your education loan
- Loan disbursement in tranches
- Tax rebate under section 80(E)
- Interest rate of around 11% / annum
- Quick and easy loan disbursement
ICICI Bank Education Loan Apply Online
ICIC bank offers student loan for studying in India and abroad at very competitive rates. The loan provides support to an aspiring student for pursuing higher studies in India or abroad.
Features of ICICI Education Loan
- Save income tax u/s 80E on interest paid
- Seamless remittance to international institutes
- Collateral free loan up to Rs 40 lakh for select institutes/ courses
- Quick and hassle-free process for timely disbursement of loans
- Flexible repayment and tenure options to suit your requirement
- Competitive simple interest on your loan.
- Fee payable at college/ school/ hostel
- Examination/ library/ laboratory fee
- Travel expenses/ passage money for studies overseas
- Insurance premium for student borrower
- Caution deposit, building fund/ refundable deposit supported by Institution bills/ receipts
- Purchase of books/ equipments/ uniforms/ instruments
- Purchase of computer at a reasonable cost if required for completion of the course
- Any other expense required to complete the course like study tour, project work, thesis.
What are the factors to look at?
- Institute’s eligibility: Before approaching a bank for education loan, please check the university/institute is accredited by the ministry of HRD or not. Also, check if the university/institute is eligible for central government’s interest subsidy scheme or not.
- Loan Interest rate: Compare various bank’s rate and choose the best competitive rate. As this is going to be your EMI form the next few years. So choose the bank carefully.
- Loan coverage: Check if the bank is covering all the fees and expenses of the course or not? It is always good that the bank covers all the expenses of the course so that you will not have any additional burden during the course tenure. Some banks are not covering fees except the tuition fees and hostel fees. So better to go for the bank which covers all the charges of the course.
- The charges levied: As of now, no bank levy processing fee on the education loan. But you need to check the other charges such as prepayment charges, late payment charges, penal charges, cheque bounce charges etc.
- Loan Tenure: in education loan, the maximum tenure is usually 5-7 years. However, in some cases, the tenure can be extended to 10 years for the loan amount of Rs. 7.5 lakhs. Remember the higher tenure can reduce your monthly EMI but increase your interest burden.
- Customer service: This is the one part all of us are ignoring. The good customer service can help you keep track of your loan. It will help you to manage your finance easily. Go for a good and transparent customer service.
- Terms & conditions: Take a time to read the nitigrity of the scheme. Do not forget to read those small asterisk “*” signs which says “Conditions Apply”. It is very much important to check all the terms and conditions so that you can take an informed decision.
Benefits of education loan:
- Taking an education loan will help you to meet your expenses without affecting your current financial plan. Your existing finances are not affected and the loan can be worked out to suit your budget. your existing investment which is assigned to other important goals can be a safeguard.
- You can claim this loan as an exemption under section 80 (E) of income tax act 1961. Ensure you take the interest certificate from the bank to avail benefit of tax. The total interest paid during the year can be claimed for a maximum of 8 years.
Education is a long-term personal investment which can truly transform and empower individuals.
So, do consider an education loan; it can be an efficient way to finance your or your children’s education.